Feb. 15, 2002 – Every year, the North American insurance industry loses over $100 billion dollars due to ineffective claim-handling practices. Today, the claims cycle time is prolonged due to contact and communication friction between claim handlers and their service providers, who deliver claim related services. Much of this workflow is highly manual, labor and paper intensive, phone and fax based, with little collaboration between sources of information.
The IBC is predicting a combined loss ratio likely to finish around 110%, up 2 points over 2000, and ROE not likely to achieve 2%, ending December 31, 2001. This could conceivably be the worst year in P&C history. As overall performance continues to deteriorate and investment income is reduced, companies will apply pressure on the dollars that flow out through claims payments. However, as the industry is fully engaged in customer-centric service, the leverage on the claim dollar will likely come by way of pressure on the preferred vendors and claims service chain.
As surely as loss ratios are increasing, more internal pressure is being applied by head offices to claims departments to drive results, while not at the expense of the customer. Some insurer/vendor relations may become strained and untenable as a result of fee structures that narrow or in some instances eliminate the opportunity for profit by the service provider.
Within the claims process, there are multiple parties utilizing multiple systems and processes, yet each one is focused on the same goal, i.e. settlement/closure of the claim file. Currently, there are several companies that offer niche oriented technology solutions for contents, estimation/appraisal, glass repair, auto rental etc. Each one increases the speed and ease for adjusters to expedite portions of the claim process. Several of them are quite effective. However, as many are finding, especially at the vendor level, each company requires the use of different systems and processes. There are more logins and passwords to remember. There must exist a method to link these processes, systems and the corresponding service chain with the insurance community.
The solution? Technology based on open architecture which serves as the linkage to allow all parties to the claim process to interact within a secure environment. By using a web based platform that brings the parties into a common view, allowing for shared notes, documents, imaging, email, the users can not only manage that specific claim or task, but all claims and tasks from all parties using one password/one view; a Common Computing Platform (CCP).
Imagine the power of being able to create all tasks and events associated with the claims process, make assignments using point and click drop down windows, in real-time, from the secure preferred vendor list that is populated in a user’s view.
Through the creation and authorized sharing of information efficiencies will develop. This can be achieved through the elimination of costly duplicated activities, through common notepads, documents, and host of other collaborative links. Furthermore, elimination of courier charges and voluminous faxing, is accomplished by allowing preferred vendors to upload all reports, images, and notes, direct into the standardized claim folder or subfolder, including all information generated by the aforementioned niche technology solutions. The user determines accessibility levels to information by selecting permissions to each activity. Technology negates the need for multiple copies, faxing or couriering of reports or files, just to make an assignment to a vendor.
Vendor audits have long been a time consuming and confusing task, as there were very few consistent approaches across similar vendors. Linking the service chain, using collaborative technologies, permits the creation of real-time vendor audit reports, based on the nature of the tasks assigned, may be generated to measure performance. Thereby, providing a platform whereby all vendors will be on equal footing; nationals, regionals and boutiques will be measured by their performance to an insurer, not their profile or marketing in the industry. Allow the best to shine!
Through proactively managing the claims workflow, this service hub reduces/eliminates query or status calls from the parties since all have the appropriate access to view the real-time status of a file and take the appropriate action. Allowing the insured secured permissive access to select portions of their own claim file will put customers in a position to stay current on developments on their time. Notification of all activities associated to a task, note, or mail can be sent to the external e-mail, cell phones or PDA’s of the related user. Wirelessly moving toward the resolution of the claim.
For the service chain and vendors, this platform allows them to manage their internal business and create opportunities for more external activity by eliminating the need to learn and remember the different systems and business rules of multiple insurers. One view / one password is all that is required to access information. This open-architecture technology allows for increased efficiencies and reduced expenses, which translate into increased productivity, increased customer service and ultimately reduced average paid claims.
You are an adjuster and have received a notification of a loss. What next? Usually after several phone calls, faxes, photocopies and courier charges, not to mention time, you may have completed all the task assignments related to that claim. This is presuming that you are not engaged in a game of phone-tag.
Imagine that through an icon on your desktop you are linked to every preferred vendor of your insurance company. A couple of point and clicks later, all tasks and related documents have been completed. No voicemail, no courier, no administration; all done electronically from anywhere in the world! You have just participated in a collaborative hub!
Independent research, supported by practical applications, demonstrate returns in the range of 30-35% when businesses incorporate collaborative hubs around their service/supply chain. Accident Benefit value models demonstrate a return of $14 for every claim $1 spent.
Research has also indicated that any solution must involve the service chain as an amicable participant rather than hostile adapter, results must cross all lines and industries so as to not perpetuate the current trends. Meaning the insurers need the vendors as much as the vendors need the insurers.
Collaborative technologies provide the platform for all participants in the insurance community to exchange information, be it vendor, adjuster, manager, broker. The formation of either a public or private hub using collaborative technologies enables vendor programs across all coverage lines to maximize returns.
The era of the proprietary system is over! Through the linkage of systems and claims functions, a platform is created for all to exchange information and data on one system, which results in the realization of a true automated workflow. This collaborative platform expands the ability to perform across the broad insurance market that involves many insurers and many vendors.
Through the creation of collaborative platform technology, the insurance industry is provided with power to streamline the information exchange, between all parties involved in a claim, while eliminating the need for paper based, phone and fax communications. Claims handlers and service providers can work together more efficiently and claims professionals have the information and ability to control their resources, processes and vendor relationships in real-time. Advanced technology solutions are helping drive out the millions of dollars in unnecessary costs associated with claims processing, while increasing overall claim satisfaction to all parties.
Prior to joining Correlation Technologies, Scott Knight was involved in casualty departments for different insurance companies; with experience in the management and workflow assessment of one of the earliest paperless claims initiatives in the industry. With regional and national casualty experience in technical specialist roles, some of his responsibilities included vendor management/audit, data tracking, and claims technology in addition to a specific focus on Ontario Accident Benefits. He has been a member of the Inter-company Accident Benefits Group, presented at the Catastrophe and Disaster Conference, and on behalf of his companies participated at various levels of FSCO for mediation, arbitration and focus groups.
About Correlation Technologies
Correlation Technologies Inc. is a private software development company with a focus on developing Web-based enabling technologies for businesses. Its primary activity is to provide service chain collaborative commerce technology and solutions to various industries. Correlation customers experience real competitive advantage in their core business operations and in transaction with their partners. Correlation Technology builds service communities that benefit from increased efficiencies and reduced cost. Correlation Technologies has offices in Toronto, Vancouver, Canada and Chicago, USA.