Monthly Archives: May 2010

Welcome Claims Magazine Readers

Posted on by

The Claims SPOT is now a featured blog for Claims Magazine

Identifying opportunities is easier when you know how to SPOT the issues

Welcome Claims Magazine readers to The Claims SPOT. I founded The Claims SPOT to be a forum for new ideas and insights into the world of Claims. Bringing together the best and brightest claims experts to SPOT claims issues and trends. I hope you enjoy what you read and become an active participant by commenting on our posts. We welcome your input and are excited about the opportunity to be part of Claims Magazine.

At The Claims SPOT, our goal is to provide information to help claims professionals, and organizations, be more efficient and do their jobs better. The Claims SPOT is a blog by and for the claims community. We are writing articles and sharing resources to provide information about claims and related issues.

Whether you are a claims professional working in an insurance company, for a third party administrator or in-house for a self insured, The Claims SPOT is about helping you to do your job better.

For information on our authors check out their complete bios under the Authors and Contributors tab above.

Upcoming Features

Over coming weeks we will be adding new features and contributors to expand our current suite of offerings. In addition to our regular contributors, The Claims SPOT will have a section dedicated to industry insider points of view as well as a section for Counsel to highlight legal issues that could impact the claims profession.

To Contribute

As we expand, we would welcome contributions and suggestions for articles. If you would like to contribute please go to our how to contribute page to learn more.

3 Settlement Techniques That Will Help Move A Case To Resolution

Posted on by
4

Is your claim at an impasse?

There really are better ways to help resolve the dispute

As a claims professional, you know you have cases that will ultimately settle, and can settle, but for some reason or another you just can’t get there. Recently I came across a great blog dedicated to providing different ideas and solutions surrounding the settlement process. Settlement Perspectives, written by John DeGroote, provides insights and “thoughts on how to resolve disputes and get your deal done.”

In a recent article posted on their blog, Lawsuit Settlement: 7 Ways to Get There Faster, Better and Cheaper — The Presentation, John DeGroote gave a few different approaches to help move those difficult cases to settlement.  I am sure many of you out there have used one or all of these techniques in trying to get by an impasse, and there are certainly many more techniques that can be employed, regardless the list is a great starting point.

Of the seven suggestions, I like the following three the best:

  1. Managing Expectations –  In his article, Managing Expectations: An Unexpected Lesson on the Bus to Hertz, John gives a great example of his expectations being managed about how long it would take to get to the rental car lot after getting on the airport shuttle bus. Having had his expectation managed, it allowed him to foresee an outcome different than he had anticipated. Settlements are the same, and managing both the clients, as well as those of the opposing party’s, expectations is a great way to help avoid an impasse.  Settlements are always a compromise and before entering discussions setting out expectations may avoid problems later.
  2. Decision Tree Analysis – If you have never worked with a decision tree I strongly recommend you try it. The process itself can be extensively debated, however, as another tool it’s is worth a try. The essential component to the “tree” is trying to place an empirical approach to evaluating and settling a claim. Decisions are raised, values are assigned and an outcome is determined.Once completed, a decision tree is a tool that can be shown to an opposing party to explain the basis for a position being taken. Many will argue the values and measures that you placed on the various “decision” points, but it is a technique that can remove the emotional aspect of a negotiation and demonstrate an objective approach to a decision.  You can learn more about using this approach in Decision Tree Analysis in Litigation: The Basics.

  3. Offers of Judgment – Federal Rule 68, and similar state statutes, imposes a penalty on a party who refuses a reasonable settlement offer. Using this tool is a great way to help move an opposing party to take a long hard look at their case. In Rule 68 and Offers of Judgment, Part I: How They Work and Why You Should Care, John gives another great overview of how these rules can assist in moving a case at impasse. We have all had a case where you know what it’s worth, and know it should be settled, but you just can’t get the opposing party to move. Using an offer of judgment is a way to require the plaintiff to at least respond or suffer various penalties.

Keep being creative to help lower claims expenses

As I previously wrote in Improve bottom-line outcomes on claims by thinking outside-the-box!, being creative is a great way to improve claims handling and lower costs. Trying some of the suggestions above are  innovative ways to help resolve claims earlier and lower costs.

Have you used different methods to help move a case at impasse to resolution?  Share your experience and tell us about it.

How Do You Effectively Manage A TPA? Speak Up And Be Active!

Posted on by
3

Become The Squeaky Wheel To Actively Manage TPA Outcomes

As claim practitioners, most of us are familiar with what to look for when we shop for a third-party claim administrator (“TPA”).  One recent discussion on this blog cited such elements as claims systems, data reporting capabilities, and quality control (6 Essential Elements When To Explore When Choosing A Third Party Administrator).  While such things are important, we often overlook one basic factor that is key to the success of our outsourcing venture: ownership of the TPA relationship. Here I’m not speaking in financial terms, but, rather, about a fully-dedicated partnering approach by the insurer or self-insured corporation to managing TPA performance.

During my career where I have managed and audited hundreds of unbundled claim programs, I have been frequently struck by the dearth of oversight exercised by insurers and corporation over TPAs.  Too often the attitude of the buyer of claims services is that it is the TPA’s problem if claims are not handled appropriately or losses are under-reserved. While such an arms-length approach may appeal from a contractual perspective, it does not fully consider the potential impact of TPA performance (or non-performance) on program profitability and relations with reinsurers, regulators, and other stakeholders for which the buyer remains responsible and ultimately bears the brunt for better or worse.

In my experience, the risk of sub-optimal TPA performance, and the resulting ills, declines with buyer oversight of the TPA.  Moreover, TPAs generally prefer to work with an insurer or self-insured that wants to work with them and remain involved in the claims process.  This enables the TPA to better understand and respond to client needs and requirements and is less likely to lead to unacceptable outcomes for the client and conflicts between the parties.

How to stay squeaky

With respect to individual claims, insurers and self-insureds should pro-actively provide feedback on the claim actions undertaken by the TPA, propose strategies for future claims handling, review case reserve adequacy, and ensure the TPA remains focused on claim disposal.  At a “big picture” level, TPA performance data should be periodically reviewed for consistency with claims service requirements, claims best practices, and financial goals.  Performance issues should be surfaced, and solutions identified and quickly put into action.

Getting the most from TPA relationships is just as much up to the buyer as it is the TPA. We can avoid the situations that lead to finger-pointing if we take responsibility and become an active business partner with our claim service providers.  This is just another example of the squeaky wheel getting the grease.

The Claims SPOT Expands With New Contributors And More Insight

Posted on by
1

Another Bright Idea

The Claims SPOT is expanding to provide even more information and updates on issues affecting the world of claims. Over the coming weeks additional contributors will share insight into claims issues and suggest further ways to help claims and claims related entities lower costs and become more efficient.

In addition to our regular contributors, the Claims SPOT will be seeking articles and interviews from leaders in the industry to highlight trends and get a new perspective from their experiences.

I hope you enjoy the fresh ideas and articles from true leaders in the industry.

Our newest contributors:

Taylor Smith

Taylor is the founder and principal of Suite 200 Solutions, LLC, a consulting company that connects insurance and legal executives with innovative technology and service offerings to improve their businesses.

Taylor has more than 25 years of experience in insurance and insurance technologies, with an emphasis on improving claims and litigation processes. He started his career managing claims for Norcal Mutual and CNA Insurance Companies. At MMI Companies, Taylor directed a consulting practice that designed and supported litigation management programs for self-insured clients.

Taylor has held executive positions with a number of Web-based technology companies offering solutions for insurance carriers and legal organizations — including products designed to support and improve underwriting, litigation management, spend management, case collaboration, vendor management, and other operational and strategic initiatives.

Taylor’s articles have appeared in Claims Magazine, Claims Advisor Magazine, AM Best Review, National Underwriter, and DRI’s For the Defense Magazine.

Claire Louis

Claire joins the Claims SPOT team with over 25 year of experience in claims. A hands-on property-casualty insurance claims executive skilled in managing complex technical, financial, and operational claim issues Claire has extensive experience helping to improve claims operations. Throughout her career, she had advised corporations, brokers, MGAs, and others on insurance claim program design and claim practices.

Claire began her career holding several position at Continental Insurance Company in liability and environmental claims. After spending time as a claims manager for Elf Atochem (now Arkema), Claire spent a significant portion of her career as a Director in the Insurance Claims Practice Group of PricewaterhouseCoopers, LLP. There she counseled insurance and insurance related entities in a multitude of issues from claims operations to coverage issues to issues of Pollution and environmental concerns. Claire was retained by Turner Surety & Insurance Brokerage to build a start-up operation creating policies and procedures and developing service standards for this new operation.

Presently, Claire is an independent claims consultant affiliated with Lanzko Consulting, Inc.

Thanks for reading and please send us your comments and suggestions for future articles.

2 Chores that should not be neglected to become a stronger claims organization

Posted on by
Reply

No one likes to cut the grass, but to make the lawn grow strong, it needs to be done regularly

Lets face it – no one really likes to do mundane things. Nonetheless, it’s those very chores that have to be done regularly to ensure a strong organization. Like cutting grass, the longer you let it go the worse it is for your grass, and the harder it will be to fix the mess that has been created (for more on cutting grass read the The Importance of Mowing Frequency).

There are certainly enough chores that need to be done in the world of claims that no one likes to do. You know what they are and can include writing notes on files, keeping a diary and paying bills. But as any good claims handler knows, if you fail to do those tasks regularly, not only won’t your grass grow, but you will have quite a clean-up later.

Two chores that can really help claim departments grow nice healthy grass are in the areas of training and managerial assessments. Taking time to do these two chores regularly will go a long way to creating a stronger claims group.

Education and training

Claims is an ever changing world, and whether it’s a new legal issues or keeping skills sharp, you can never stop learning.  Malcolm Gladwell, in his book Outliers, discusses the 10,000 hour rule. Mr. Gladwell explains that to get good at anything it really comes down to the amount of time you spend doing it. I know it seems like common sense, but even common sense needs to be repeated from time to time. To improve the skills of your claims professionals it’s imperative to keep the learning process going.

Becoming a world class claims organization requires, not only hiring talented claims professionals, but is also in how you keep those skilled workers fresh and up-to-date. Lunch and learns, continuing education, reading articles in trade publications, or subscribing to a great blog on claims, are all ways to encourage claim handlers to learn and grow. The effect on your operation will be clear – better, smarter and more efficient claims professionals.

Managerial File Reviews

Despite hiring the right people, and training them regularly,  you still have to review their work from time to time. You can’t just wait for problems to happen before doing something about it. Conducting regular informal managerial reviews of claim files is the best way to prevent problems before they become disasters. Being proactive about reviewing files will help you truly understand how your claim’s professionals are working and keep you abreast of developments and trends that are occur.

Doing a basic review should take no more than a few hours a week and should become part of a routine. Take a look at one or two claims files per handler or adjuster every week. These reviews can be quick assessments as to basics practice such as proactive handling and reserve adequacy. Save the detailed “section by section” review for an annual best practice audit. Keep these reviews simple and short. Maintain a basic record of the files reviewed, and create a simple rating system of “acceptable” or “needs improvement.” Make sure it’s informal, so it’s less of a chore,  and let the claims professionals know how they are doing regularly. If there is an issue or trend developing you will know about it, and be able to correct it, before it becomes a real problem.

Be the envy of your neighbors in the industry

There are certainly other chores to address for claim handlers that if left unattended will leave a garden full of weeds and a lot of work for the future. So mow the lawn often and save yourself time and money later. Your organization will grow strong, more efficient and be a leader in providing the best claims service.

What mundane tasks do you hate to get to but know need to be done to make you a stronger organization?

Is Your Caims Department Becoming A Bus Company?

Posted on by
Reply

Are you going through the motions and can’t seem to get out of the traffic circle?

Seth Godin, author of well known business books such as the Purple Cow and Linchpin, recently wrote in his blog about companies Becoming a Bus Company. As he noted, “We all have a vision of the typical bus company, slowly moving people from place to place, going through the motions and showing a lot of fatigue.” Seth points out that companies fall into a place where they start acting like bus companies which becomes evident when the some of the following begins to happen:

  • Aging equipment in need of a functional and design refresh
  • Tired staff, punching the time clock
  • By the book mentality, with no room for humanity or initiative
  • Treating all customers the same (poorly) and knowing (and caring) little or nothing about them
  • Attitude that tomorrow will be just like today

Recognize any of the above? Claims departments can, and do, fall into the same traps where it feels like they can’t get out of the same old routine.

Here are three suggestions to break up the bus company mentality and help make the organization stronger:

  1. Closing Day – Spend a day dedicated to closing files or looking for closing opportunities. The idea here is not to work the files, but to glance through them quickly and see if there are any files that can be closed. Even with the best diary systems in place, there are always files that some how didn’t get closed. Whether it’s a file that had a statute of limitation expire, or one that had been denied with no appeal, dedicating time to focus on closings only will pay dividends. Not only does this type of day break up the normal routine, it can result in a reduced pending, the lowering of reserves and feelings of accomplishment.
  2. Take a poll to find the roadblocks– Ask your claims staff for the top 5 issues that they feel make their jobs difficult. Is it a system problem? Is it an inability to get information from other departments? Or maybe there is a process that is not adding any value, but is taking up much of a handler’s time. You will of course receive the standard complaints, but if you dig into those complaints you might find a common theme that could be correctable. If you have never asked you may be surprised to learn of a roadblock that can easily be removed to make the handler’s jobs easier. You will also benefit from learning more from your claims professionals and giving them the opportunity to be part of a solution.
  3. War Story Lunch – Claim handlers love to tell war stories so why not give them a forum to let loose and share the information. The experience and teachings learned from war stories can be used as a training tool to make the department stronger. Invite claims handlers to lunch and have each claims professional bring a story of success or failure from their past. Claim handlers can use that information to promote out-of-the-box thinking and learn new ways of handling future problems. Want to get even more from the process? Invite underwriters to come and listen – maybe they will learn a thing or two about the risks they are writing.

Changing the way things are looked at and done in a given day will promote new ways of looking at old problems, and will keep your department fresh. Tired staff, punching the time clock attitudes, or by the book mentality, with no room for initiative is a sure way to become a bus company.

How do you stay off the bus and stay out of the traffic circle?

Does Hiring More Staff Improve Claims? How To Know When The Time Is Right

Posted on by
1

The Age Old Question: If I Add More Resources Will It Solve The Problem?

Alright, maybe the above is a little exaggerated, but it did remind me of how difficult the question of hiring more staff is. Whether it’s today’s or any economy, the decision to bring on more staff is one that needs to be watched closely.  Often there is a knee-jerk reaction that taking on additional staff will solve problems and improve your operations. As Dilbert points out so well, hiring more does not always solve the problem. As I wrote about in With old claims systems come old claims processes – You can’t change one without the other!, knowing what you have in place first is important before making an investment on more. This is true with staffing as it is with claims systems.

Before you bring on more staff review your staffing model, see if there any trends affecting file loads and take a quick look inward at your operation. Once these assessments are completed, you will be in a better position to know if hiring is the right decision.

What – No Staffing Model? Here Are Suggestions For Creating One

Having a staffing model will allow you to objectively look at your operation and help determine if it’s a good time to hire more staff. How do you know what model to choose? Here are 3 suggestions for creating one:

  • What kind of organization are you? Are you highly technical with low frequency, or are you in a high volume business? Are you a “touchy feely” organization that wants to be in the customers face often, or not? Understanding the strategic position of your claims organization is critical to understanding what kind of staffing model is relevant
  • Decide on a metric to develop your model: The metric you choose will help to determine the model, but will be wholly based upon the types of claims organization you are. If you are an excess carrier that is sharing risks and attaches at a high level, then you may not be concerned about the number of new claims that come in. Maybe your claims settle quickly, as in some property matters, so the number of new claims a handler receives in a month is a more critical metric. It will depend on you business and needs – come up with a number an live with it.
  • You now have the metric – test the staff and come up with the model: Once you settle on a metric, check your top performers against the new metric you have selected. How many files are they handling and still managing files within best practices? At what point does their ability to manage those files well breakdown? Take an average of the top performer’s metrics and you will have a staffing model to give you a benchmark.

Just remember that models are models and they tend to always look good on paper and in photographs – there is always the subjective that needs to be addressed. Regardless, the staffing model is a good management starting point.

So You Have A Staffing Model, How Do I know If It’s Time To Hire?

I am all for the staffing model, but sometimes it just isn’t enough to know when you hire. Don’t forget other claim metrics and trends. Is there a recent influx of claims due to a change in underwriting or because of a CAT loss? Understanding the rest of your organization is just as important when deciding to hire or not hire additional staff. Speak to your underwriters and learn if there has been some new marketing initiatives. Did they write some new account that explains an increase, or decrease, in claims frequency or severity? A blip in the numbers may be just that, a blip. Regardless, ask around and dig into your numbers to see if there is a short term explanation or whether it is the beginning of things to come.

Hold On, A Model Is Good, Knowing Current Trends Is Good, Understanding If You Really Need More Staff…..Priceless!

Even though you have the staffing model in place, and have looked at the metrics for the operation, there is more to explore before jumping in with new staff. Take a regular operational pulse of your entire organization. There is always room to look for waste and improve efficiencies. There are also ways to improve handler efficiency at a more minimal cost, as I wrote about in 2 Cost-Cutting Solutions To Get Work Done Without Overloading Claims Handlers and Cutting Costs Without Overloading The Claims Handler – Part 2 Of The Series.

Do a quick assessment of your operation and determine if there is some issue preventing claims handlers from getting their core job function completed. Maybe some older internal report that no one is using can be eliminated and free up a handler’s time.  Are they being asked to take on tasks that can be done more efficiently, and if so, what would the impact be in eliminating that task.  As organizations grow, process grows, and not always for the right reason. The potential need for more staff is a good opportunity to explore those processes.

Hiring more staff is an expensive proposition for any organization. Take time to truly explore what is needed. Once this done, and you can objectively know the need is there, then hire away.

(For good advise about hiring – check out my fellow blogger Jay D’Aprile in Talent Tracks)

What types of models does your organization use?