Claims processing can be taken to another level with new technology that streamlines
By Patrick Vice
(Previously published in ci –
Canadian Insurance Magazine, March 2002; reprinted with permission)
For many years, claims processing has taken a back seat to
other insurance needs when it comes to technology. A new approach, known as
“hub” technology, may correct that oversight.
The underlying principle of hub technology is that claims
processing occurs in a multi- or “n-dimensional environment,” where the
“n” is not known. Up to the point where a claim occurs, virtually all of the
parties involved with a policy are known and can get access to information through
established channels. But once a claim occurs, everything changes.
For example, when a policy is being written, most of the
information will come from the insured or data sources with knowledge of the insured (MVR
services or prior carriers) and whom the insured gives permission to release information.
Everybody is operating in a finite universe and rights to information are easily known and transferred.
Once a claim comes into play, however, information on the
occurrence in question will be accumulated by a number of parties, from other individuals
involved in the incident to law enforcement agencies and hospitals. The insurer will have
a right to such information in processing the claim but will have to identify its interest.
Additional parties, such as physicians, estimators, repair
facilities, employers, other insurers, re-insurers and legal advisors, will also have
certain rights to obtain parts of that information. Meanwhile adjustors will be concerned
about the accuracy and immediacy of the data at hand while the insured and his or her
broker, throughout the process, will want to keep tabs on the status of the proceedings.
In short, there’s a wide variety or
“n-number” of participants in the claims process, both information suppliers and
information users. With simple claims, that network of players can be managed through a
single coordinator, the adjustor. In more complicated situations, there may be several
coordinators, each of whom has a different viewpoint.
Traditional technology is no match for that complexity.
According to Ron Young, general manager, insurance, for San Mateo, Calif.-based Siebel
Systems Inc., many insurance companies still run claims processing systems that were
designed to be purely back office accounting and reporting systems. Using such systems in
an intricate claims environment frequently results in delays, inaccurate information and frustration.
Some companies are trying to break out of this mold,
realizing that serving multiple constituencies requires different tools. Siebel Systems is
best known for customer relationship management (CRM) systems, which are used in new
business marketing and customer service, but claims technology has become its
second-largest line of business. Young says that many customers start out with assignment
of claims and workflow management and then branch out, with Siebel tailoring providing a
more tailored view of the information they use, designed to meet the needs and accommodate
the rights of the various parties involved in claims process.
For example, Siebel Systems provides technology and data
base support for call centers, where the claims process is initiated and customer
inquiries are fielded. Some insurers are taking that further and establishing Internet
sites, where claims process participants can obtain customized views of a particular claim
in process, depending on their particular needs.
In another case, Royal & SunAlliance Canada has had
significant success with its CASi system. Officially launched in 2000, CASi allows risk
managers real-time access to claims information in different presentations, such tables, graphs or text.
Those are good steps forward but they still don’t
address the fundamental problem of claims processing – that is, that the insurer
doesn’t always possess the most current or accurate information. They also don’t
take into account complex relationships where there may be multiple insurers or reinsurers
involved in the settlement of a claim. This is where hub technology really begins to shine.
Correlation Technologies Inc.’s ClaimCore product, for
example, allows multiple parties to securely access information from a variety of sources.
Heggeness and Sweet, a Toronto law firm, installed ClaimCore last year and uses it to deal
with risk managers from several client companies as well as with insurance clients such as CNA/Riskco.
Scott Knight, account executive for Burnaby, B.C.-based
Correlation, said that the Federal Privacy Act, Bill C6, has given a boost to his
company’s hub services. “While insurance companies are not required to be
compliant until 2004, all service providers transacting business were to be compliant by
Jan. 1, 2001,” he points out.
In fact, Correlation’s focus on privacy concerns has
made ClaimCore appealing to demanding users, Knight says. “Many of our current
clients are from the medical /legal fields and, as such, have a high duty of care in
relation to the management of patient/client information,” he explains. “They
have been satisfied that ClaimCore meets that duty of care.”
Meanwhile, New York-based Claims On Line Inc. has gone
forward with a centralized database that will act as a repository for claims information.
According to CEO Linda Lamel, the product is “an integrated claims query, sorting,
and reporting system allowing access to data of individual claims; groups of claims,
corresponding to specific multilevel sorts or customized group specifications, and
pre-designed management reports.
“Essentially the claims file exists on the Internet
and allows collaboration, document production, and tracking,” she says.
“Security is the highest concern, and CORS allows users to access only parts of file
to which they have rights.”
With the emergence of hub technology, a number of claims
professionals have inquired about the possibility of an industry access point, similar to
the single-entry Web-based portal now under development by the Centre for the Study of
Insurance Operations. Although the project primarily focuses on new business transactions,
claims processing – for which there are not yet any Canadian electronic format
standards – is not off the radar screen.
“I believe that we will see an increase in Web-enabled
claims inquiry services for brokers and possibly some notice of loss services as
well,” predicts CSIO president Klass Westera.
Indeed, inclusion of claims transactions might actually
increase participation in the CSIO portal project. Denis Poirer, senior vice president of
information technology for ING Canada, whose company has made a commitment to using the
CSIO portal, says that the addition of claims transactions would speed information flow
and facilitate e-payments, invoicing and procurements. As well, such an initiative would
make common technology available for everyone while reducing maintenance and support costs
for interfacing with the portal. All of that would mean better service for insureds.
The developments of standards to support hub technology are
moving much more quickly south of the border. Mele Fuller, Internet architect for Safeco
Corp., who chairs the XML working group of ACORD, the U.S. equivalent of CSIO, and serves
on the ACORD p&c steering committee, says that the claims issue has had a high
priority for several years with insurers and independent agents in personal lines.
As well, the Risk and Insurance Management Society (RIMS)
has taken a strong interest in claims over the past two years. The organization has worked
with ACORD to ensure that claims standards can accommodate commercial lines transactions.
Right now, the ACORD Standards for first notice of loss and claims inquiry response are
considered ready and available for use in pilot projects.
Fuller says that RIMS has helped broaden the view of the
claims environment, bringing in risk managers and third-party administrators. She says
that international brokers are also pushing the standards in order to rationalize their
handling of multi-layer reinsurance claims as well as claims involving manuscript and
subscription policies with multiple insurers.
Claims On Line has made substantial inroads with risk
managers from the public risk sector, including governments and universities. The Public
Risk Data Project (PRDP), a non-profit industry group based in Columbus, Md., is working
on standards for claims and Claims On Line agreed to participate in those efforts,
encouraging public risk managers to participate in a beta test of the standards-based offering. To date,
there are a total of 10 public risk beta users for the CORS hub, using the PRDP standards.
It seems that there is increased recognition of the need
for investment in technology to support claims processing, and the evolution of hub
technology is opening new doors. Indeed, Safeco’s Fuller, who has substantial
experience in Canada as well in the U.S., thinks prospects may even be more promising north of the border.
“There may be better chance for success in Canada where there is a longer history
of cooperation, and a smaller base of insurers with whom to deal,” she says.”
Next month, freelance writer Patrick Vice will evaluate some hub technology case studies.