Software standardizes claim costs

Each year U.S. insureds are involved in about 35 million automobile accidents. The cost to repair these vehicles tops an eye-popping nine billion dollars — more than the combined 1998 net incomes of Microsoft, Sears and Disney.

Not surprisingly, automobile insurance companies in the U.S. and Canada are seeking tools to better allocate their resources to control costs and better manage their business. One increasingly popular method is a software information management system that allows insurance claims executives to monitor the performance, productivity and compliance of their in-house and external adjusters. Standard or customized reports can instantly show up to 114 data elements — including parts usage, labour costs and estimator productivity — while providing regular updates on industry average claim costs.

A growing number of insurers across North America are utilizing Advanced Information Management (AIM) software from San Diego-based Mitchell International to manage costs and gauge against up-to-date industry standards. The latest release provides information from a variety of U.S., Canadian and Puerto Rican insurers updated monthly on disk.

Fred Spicer, a leader in the claims office at Royal & SunAlliance Canada, has been using AIM for over a year. He says the cost management software helps isolate costs to better optimize his operation. “Before AIM, we used to get paper reports from our appraisers with the information we wanted,” he says. “The reports weren’t great, they were too modeled and had too much information. But automobile appraisers…analyzing information is not their forte.”

Spicer says the cost management software has been useful in reviewing adjuster appraisals. Royal & SunAlliance does not use it directly to evaluate their own in-house people, but could to identify individuals not complying with company appraisal standards. “If you are using AIM to manage your people and the quality of their work…that can save a company money,” Spicer says. “And in theory, every dollar you don’t spend allows you to keep your premiums lower and remain more competitive in the market.”

Monthly updates scrutinized

Ray Trevethan, group manager, physical damage claims, for the Automobile Club of Southern California, says monthly updates assist the insurer match claim cost targets established by competitors. “We can now compare ourselves to the industry, primarily in Southern California and other areas where we do business.”

He says his staff has been using AIM for almost four years to create custom reports providing him with information — quarterly, monthly or annually — on a full array of claims decisions. “We can pull out the average productivity of our individual adjusters and operating areas so we can make staffing changes as needed to meet out business requirements,” he says adding the software reduces conflict between carrier and adjuster as the program’s estimates are based on information inputted by the in-field adjuster.

Trevethan says cost management software can help to isolate pockets of unprofitability within an insurer’s organization. “AIM has helped us to find the weak spots in our operation, to find out where we have pockets of adjusters that are not complying with organizational guidelines,” he adds.

Chris Colburn, of USAA Insurance, has been maintaining higher employee performance in his group using the software. He prints copies of work from his staff appraisers and highlights areas of difference among them. This assists in the goal-setting process of each appraiser. “This is not only a matter of productivity, but also quality,” he said. “We aren’t just interested in having our appraisers turn out large numbers of estimates. Rather, we are looking for quality estimates. Since we began using AIM three years ago, the overall quality of our estimates is better.”

Colburn said he uses AIM to prepare customized reports for his regional group. At quarterly meetings these reports are used to review the group’s overall performance and to set goals for the following quarter. “We look at the exception,” he said. “Those help us to spot areas where we might want to make changes.”

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