– June 20, 2012
Once upon a time there were three claims managers who were told by their CEO to go out and make sure they have the best organization possible. Since they all knew that the best way to a good organization was to develop process and procedures and make sure all who worked there understood them, that’s just what they did. Each built an oversight program to ensure all was well and to prevent being attacked by all those wolves out there.
The first manager built a review program out of straw, the second out of sticks and the third out of bricks…..
Please work with me here as I am trying to be metaphorical.
The Manager Review of Straw
The first manager was a proud manager. She knew she had a good group and they worked just fine. She had instructed them on her way of doing things and had provided sufficient training to let them know was expected. Her “straw” review program was to wait for something to happen and then if there was a problem to fix it. One day a huge claim showed up on her desk. She had never seen or heard of this claim, but it was big – the type of claim that could really cause her a problem. Well that claim, it turns out, had been in the office for over a year. Information had been received to provide sufficient warning for everyone to make sure the company was ready. If only she had known about it.
After dealing with “fixing” the problem a knock came on the door. It was the manager’s big reinsurance company. This reinsurer was large and seemed to come out of no where. The manager was shocked. This reinsurer said….”manager, manager, let me come in” the manager responded “not by the hair of my chinny chin chin!” The reinsurer responded, “then I will huff and I will puff and I will blow your department down.” And that’s exactly what the reinsurer did.
The manager lost his house of straw and somehow landed a new job at her manager friend who said come on over you will feel protected in my department of sticks.
The Manager Review of Sticks
The Manger of Straw’s friend, the Manager of Sticks, sat her down and told her how it was going to be. We here in the land of sticks are prepared for any possible problem. We have a wonderful review program made of sticks. This program is so good we can prevent all those problems that got you blown down in the house of straw. We also have procedures in place, the Manager of Sticks said, but we oversee it all with regular reviews. We spend time reviewing claim files and recoding all that information on these sheets of paper. We catch it all before a problem arises so he told the Manager of Straw that she will be fine here in the house of sticks.
The stick reviews went on every quarter. The sticks were filled with all this great information and captured all this detail about the claims and what was working and not working. The problem is the sticks piled up and once they were in that pile it was hard to understand what was working. Someone had to put the sticks in an order to really understand how many problem sticks there were. Low and behold a day came when a whole series of claims came in all seemingly insignificant. It turns out there was a trend and a real problem brewing with a particular type of claim. Individually they seemed fine, collectively they were significantly under reserved. Those sticks had the information but it was so spread out and disorganized that the information was lost. Without the information available, the company rewrote that book of business and was now going to face a very big problem to explain to the shareholders.
The Manager of Sticks was about to get a knock on the door!
Knock knock….”who is it” asked the Manager of Sticks? It’s the Chief Underwriting Officer, the Chief Financial Officer and the CEO. See it turns out that they had some explaining to do to the board about a reserve charge that seemed to have come out of no where. “Manager Manager please let us in” with the Manager of Straw next to him nodding her head thinking oh I know what’s next, the Manager of Sticks responded “not by the hair of my chinny chin chin.” Well those executives were not about to be shut out and said “then we will huff and we will puff and we will blow your house in!” and that is exactly what they did.
Amazingly, the Manager of Sticks and the Manager of Straw were able to find jobs again in their friend the Manager of Brick’s company.
The Manager Review of Bricks
Working for the Manager of Bricks was actually not as bad as people thought it would be. Yes he was a tough manager and expected a lot from his people, but in the end he wanted them and the organization to succeed. The Manager of Bricks was keenly aware that when procedures were working and followed there was less of a chance of surprise. He also knew that the way to avoid those surprises was to have a very specific audit and oversight program in place. Because the Manager of Bricks also knew that using technology in the right way was a benefit, he made sure he had an oversight tool in place to manage the review process and make sure he captured, and not wasted, all the hard work performed by his reviewers.
The Manger of Straw and the Manager of Sticks had never seen anything like it. All the reviews were coordinated in one place online (of course they used the Audit Portal). Issues were categorized and follow-ups documented. Trends just popped off various dashboards and made it so simple to proactively run the department.
Then one day there was a knock on the door. It was the big bad mean regulator trying to find a violation. “Manager, manager let me come in” the regulator yelled. The manager of Bricks responded….”sure come on in and look around.” The regulator had apparently wanted to see the offices the Managers of Straw and Sticks but there was nothing left there to see. The Manager of Bricks had nothing to fear. When the regulator asked for controls and a plan it was all ready to be shown. Issues that had been identified and corrective action plans were clearly in place and the regulator was pleasantly surprised. After giving the Manager of Bricks a clean bill oh health he left with no adverse claims findings.
Don’t you love a good story? Maybe if we were all like the Manager of Bricks things would be better!