Looking across the industry, many traditional claims transformations have focused on the physical damage side of auto claims. System replacements and vendor management initiatives aimed at the “tin” side of an automobile accident have addressed some of the opportunities to improve expenses and better control losses. However, there is still a lot of opportunity to improve the bottom line by transforming how accident benefits (AB) and bodily injury (BI) claims are managed.
TRADITIONAL TRANSFORMATIONS
Canadian property and casualty insurers continue to seek greater efficiencies, including reducing direct and indirect indemnity costs in their claims operation. Many have embarked upon or will soon start claims transformation initiatives, including operational improvements and the implementation of claims management systems. While successes — and some failures — are widely acknowledged, the journey has really only just begun. Leading players are focusing their efforts on the next wave of claims transformation, which should include:
• externalizing business rules and leveraging analytic tools;
• integrated claims, rate and data usage to improve consistency of vendor service outcomes;
• advanced data analytics for managing fraud; and
• aggressive case management approaches to accident benefits and soft tissue injuries.
Traditional claims transformation initiatives have focused on organizational and process improvements and technology-enabled improvements through claims management systems, imaging, workflow and document management. Although efficiencies have been realized through shared services, triage and resource specialization, better processing and enhanced customer service, those embracing new and proven technologies have realized additional benefits including paperless processes, automated workflow and load balancing and early efforts in auto adjudication.
Many traditional claims transformations have focused on the physical damage side of auto claims. But what about exploring opportunities to transform how accident benefits and bodily injury claims are managed?
AB and BI claims usually carry large reserves, so improving loss management here can have a big impact on an insurer’s bottom line. For an insurer to truly maximize results, many approaches transforming the physical damage side of a claim now need to be applied to the “soft tissue injury” and “indemnity payments” side. As they did with the “tin” side, progressive insurers should continue to embrace a combination of technology and process improvements. But they should also apply that winning combination beyond the high-volume claims, to include the high-impact claims as well. Here are some approaches that can be transitioned:
EMBRACE MORE AGGRESSIVE CASE MANAGEMENT
Embracing case management through enhanced processes and supporting technology affords the greatest paradigm shift for claims management — and potentially the greatest rewards. This can be done through:
• processes and procedures tailored to the claimant and/or claim situation;
• active information management across the lifecycle of the claim supported by an electronic claim file;
• seamless integration with claims analytics, fraud management, subrogation, adjudication and payment;
• structured, scripted processes and activities to drive productivity and enhanced customer service;
• straight-through processing, balanced with enhanced controls;
• integration with external tools and industry benchmarks such as “duration of disability” guidelines; and
• more accurate and consistent reserving for larger claim amounts.
Case management delivers demonstrable benefit across the claims function, but its greatest contribution will be in the accident benefits and soft tissue injury area. Case management principles have been adopted in the workers compensation area for some time; Canadian insurers are now recognizing their applicability to bodily injury and accident benefits. Indeed, direct and indirect costs can be measurably reduced through:
• proper evaluation and identification of claimant recovery needs;
• a tailored approach to recovery and rehabilitation unique to the claimant and claim;
• pro-active management of process and third parties involved (chiropractors, physiotherapists, drug and medical, etc.); • emphasis on reducing the time to recovery; and
• improved accuracy in setting reserves.
Ongoing initiatives are focused directly on the transformation of the bodily injury and accident benefits claims management area — including the design and development of new people, process, technology and information management solutions. These fully integrated solutions include several pieces: an electronic claim file, best practices with respect to triage and assignment at first point of contact, disability duration guidelines to inform case management processes and decision making, the collection of deep and rich data for analytics and benchmarking, as well as strong case management behaviours and measurements. The end results should be better outcomes for injured parties and improved results for the insurer.
USE BUSINESS RULES AND ANALYTIC TOOLS
By externalizing business rules — which provides a retrospective review and modification by the business, with less IT support required — and leveraging analytic tools, carriers can automate processes to deliver screening and triage results that surpass those of manual processes. Analytic tools can perform a variety of functions in today’s claims departments, including triage and assignment, fraud and recovery screening, knowledge-based decision support, trend analysis and predictive modelling. These can increase efficiency in screening and triage in several ways:
• Pre-screened claims are routed to specialized, internal departments that can work with external networks to identify leakage and improve recovery results.
• A closed-loop feedback on results provides for proprietary data-marts to be refreshed and historical data mined for continual improvement. (Please see Figure 1.)
IMPROVE THE CONSISTENCY OF VENDOR SERVICE OUTCOMES
Integrated claims, rate and usage data improves consistency of vendor service outcomes by actively managing vendor networks. Forward-thinking insurers have recognized that treating vendors as partners will facilitate knowledge and data-sharing, improve decision-making accountability and align incentive programs. Vendors (such as external adjusters, repair networks and legal services) can make better decisions if they are provided with reliable, complete case data.
Both carriers and partners should be able to update data. As a result, they can leverage detailed data to conduct audits, historical analysis and trending to reduce the variability of claims outcomes. Extreme variability is of particular importance because it has a disproportionately higher impact on overall claims operations leakage than minor deviations. Historical data can also be used to develop granular spend strategies and provide incentives to align partners. (Please See Figure 2.)
MANAGE FRAUD WITH ADVANCED DATA ANALYTICS
Managing fraud using advanced data analytics improves the ability to identify high-quality referrals. For instance, dynamic scripting, fraud questionnaires and more comprehensive up-front data capture reveals potentially suspicious claims early in the claim’s lifecycle. By combining analytics with structured data, carriers can analyze suspicious claims using proprietary claimant data, special investigation unit (SIU) data and external industry databases. The use of analytic engines and modelling tools focuses the efforts of the SIU on the highest-value targets for both single incident and multi-party investigations. Once a suspicious claim is identified and re ferred to the SIU, the carrier can use case management software to track the claim through to resolution. (Please see Figure 3.)
THE ROAD AHEAD
Canadian insurers recently embarking on claims transformation should be commended for their efforts because significant strategic and competitive advantages have been achieved. These initiatives are laying the foundation for the next wave of transformation — which is only just beginning.