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Web-based Systems are the Next Evolution in Claims Technology

Steve Discher | March 12, 2014

Claims technology in the Property & Casualty insurance industry has significantly changed over the last 20 years and continues to evolve rapidly. Companies with significant investment in existing claims systems may find it too costly to keep up with important technological advancements, which will adversely affect their ability to compete in an increasingly competitive technological and customer service–driven business environment.

The key is to establish a long-term claims technology strategy, one that’s shaped by review of current systems, processes, and staffing in order to address present and future needs.

The next phase of the claims system evolution will focus on enhanced web-based systems, elimination of manual “system workarounds,” and flexible third-party integrations to improve productivity, such as mobile-based, integrated field-damage estimating. The emphasis will include claim metrics, predictive analytics, data mining, and integrated recorded statement-taking. As social networking expands its footprint, companies will find it increasingly challenging to manage viral reputation damage resulting from poor claim handling.

The addition of mobile technology will improve productivity, enhance customer service, and improve a company’s competitiveness. New systems will need to be tailored for user-friendly navigation and processing, fully integrated with email clients, and readied for the next wave of technological advancements, including cloud technology, integrated video conferencing, and voice recognition. This type of rapid change requires claims systems to be more versatile and adaptable to new technology; the alternative is an entire system replacement.

Claim technology has undergone three broad transitions. Twenty years ago, the environment was paper-intensive (the manual phase), after which the typical P&C claim operation migrated to a combination of paper and automated processes (the automated phase). Today, paperless claim files (the electronic phase) are the norm.

As an industry, we have come a long way with claims technology; however, future advancements will need to focus on process improvements that yield cost savings that lower loss and expense ratios, and systems must be adaptive to rapid change.

Insurance companies have spent a lot of time and expense implementing state-of-the-art claims systems with advanced features and benefits. The question posed by many executives is whether the system features and benefits have streamlined operations, improved productivity, and reduced costs.

For example, can an adjuster who handles claims electronically handle more claims than the adjuster who handled claims manually many years ago? Have claim workloads changed with improved technology? Has the quality of claim handling improved with technological advancements such as electronic notes, automated diary management, and integrated document management?

The claim handler’s job has changed so much in the electronic environment that it is difficult to compare the past with the present. Employees who lack advanced technology skills or are unwilling to change will not be successful in a rapidly changing environment. Workloads have not changed significantly at the adjuster level; however, processing methodologies and technology have changed rapidly, improving efficiency and productivity. Staff adaptability to electronic work environments will be critically important to achieve costs savings through improved technology.

Although it’s true that staffing reductions have been a major technology-driven cost reduction, more important is that new technology has improved the quality of claim handling through predictive analytics, data mining, and metrics-driven reporting, which  positively affects loss and expense costs.

With technology changing continually, now is the time to establish a long-term claims technology plan. Start by reviewing your current systems, processes, and staffing to size up the potential. A claims operational analysis, whether internally led or with outside assistance is well worth the effort and investment.  It will help to identify process improvements and technology enhancements that will boost your bottom line. And equally important from a management perspective, it will prepare you to manage effectively in an environment of rapid evolution.

Steve Discher is executive vice president at The Nolan Company, a management consulting firm specializing in the insurance industry. For 40 years, The Nolan Company has helped insurance companies achieve measurable improvements in service, quality, productivity, and costs through process innovation and effective use of technology. Discher      can be reached at steve_discher@renolan.com,

 

 


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