Monthly Archives: July 2010

Why Can’t We All Get Along? Making The Agent A Partner In The Claims Process

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Working together to create a strategic advantage through improved agent carrier relations

The relationship between claim adjusters and agents can be an adversarial one.  Each side often finds itself correcting issues created by the other side.  Agents may set the wrong coverage expectation for a customer, leaving the adjuster to deliver the bad news.  Adjusters may get overloaded and not return phone calls in a timely manner, resulting in a complaint to the agent’s office.  In the worst case scenario, adjusters and agents may badmouth each other to customers, putting customers in the middle.

Aligning incentives to help agents and adjuster work to the same goal

Adjusters and agents work for the same company and should have the same overall goals – right?  Not always.

Some agents want to keep their customers (and commissions) at all costs, even if that means covering a claim that shouldn’t be covered or paying more than what is owed.  Adjusters want to retain customers, too, because fewer customers means fewer claims and ultimately, fewer adjusters.  However, losing a customer doesn’t result in an immediate reduction of income for an adjuster as it does for an agent.   And, many companies place a stronger emphasis on claims process compliance – opening practices, estimating accuracy, etc., than on customer satisfaction.  Too many inappropriately paid claims can result in an adjuster losing his or her job altogether.

Efforts can be made to better align goals and incentives such as incorporating a loss ratio component into agent bonuses and placing a stronger emphasis on customer satisfaction in adjuster measurement and compensation.  These tactics help.  But, due to their relative roles in the organization, some tension between adjusters and agents may be inevitable.

Use the customer’s expectation to work with agents to help the claim process

Therefore, should agents be involved in the claim process at all?  Most customers understand the difference between agents and adjusters and don’t expect agents to handle their claim.  But, as long as customers buy insurance through agents and pay them a commission, they will expect them to be involved, at a minimum, to explain their policy and to serve as their advocate if claim issues arise.  Equipping agents to meet these expectations through training on policy coverage and access to claim status information can go a long way toward preventing or resolving potential issues.  And, by meeting customer expectations, agents can help improve claim satisfaction.

Agency staff and locations can give claims an advantage with customers

In addition to meeting basic customer expectations, are there ways for agents to actually help the claim department?  In my recent blog post Increasing Claim Satisfaction Doesn’t Mean Increasing Staff, I mentioned the cost and customer satisfaction benefits of enabling agents to answer claim status inquiry calls, instead of referring them to the adjuster.  There are other ways to leverage agents in the claim process.  Agencies are often the first place customers go when they have a claim.  Having the claim reporting application at the agent’s fingertips to take a complete report and get the claim started reduces hand-offs for the customer and saves time for claims.  For small claims with clear coverage, there is an opportunity for agents to settle the claim, within specific guidelines.

There are particular customers and claim types where the agency role is more critical.  When a customer speaks a foreign language, especially one other than Spanish, agency staff may have capabilities the claim department doesn’t.  Customers will likely have a better experience speaking in their own language directly to an agent versus going through a translation service paid for by claims.  The elderly customer who needs special assistance is another example of a customer type that may benefit from agency involvement in the claim process.

The agency relationship and proximity to the customer are also important for large, individual losses and catastrophe claims.  In-person empathy and “hand-holding” can be highly valued in these situations.  But the agent’s proximity to the customer provides another advantage.  In the era of claim centralization, where offices are closing and more work is done over the phone, agencies provide a point of presence in the community.  During hurricanes, when phone lines are down and people are scattered due to evacuations, agents can take claim reports and issue payments for temporary living expenses until adjusters arrive on site.

Clearly, agencies have a role to play in the claim process.  Enabling agents and their staff to perform their role efficiently with empathy and professionalism can benefit customers, agents, and the claims department.

What has been your experience with agencies?  What role do you think agencies should play in the claim process?

Increasing Claims Satisfaction Doesn’t Mean Increasing Staff

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Looking At The End of the Rainbow For Your Claims Satisfaction Pot Of Gold?

Is it possible to increase claim satisfaction and decrease cost at the same time?  Many claim representatives say no.  Some view that satisfaction is driven by the ratio of adjusters to claims – having more people to handle claims means higher satisfaction, although also higher loss adjustment expense.  Some believe that higher settlement amounts result in higher satisfaction and higher loss costs.

There is some truth to these views.  If having more people means that estimates are completed earlier, calls are answered instead of going to voicemail, and checks are issued faster, then satisfaction will likely increase.  If the higher settlement amount meets, but not necessarily exceeds, previously set expectations, higher satisfaction may result.

Drivers of Customer Satisfaction In Claims

But is hiring more people or paying higher settlements required to increase satisfaction?  Let’s look at some of the key drivers of claim satisfaction from the JD Powers survey:

  • Expressing genuine concern
  • Ensuring customer is at ease with the claims process
  • Giving customers a time line and meeting it
  • Providing flexible appraisal appointments
  • Answering all customer questions
  • Managing expectations regarding the settlement
  • Returning phone calls
  • Sharing information between representatives
  • Providing proactive updates
  • Avoiding negotiated settlements

Communication and Reducing Cycle Times Are Keys

Communication and cycle time are the key themes among these attributes.  Reduced cycle time generally results in lower costs for most industries.  And, there are many ways to improve communication in the claim process that can also reduce cost.  Take, for example, claim status.  In many companies the process goes something like this:

  1. Customer calls agent to inquire about claim status
  2. Agent calls claim adjuster because he or she can’t access that information in the system
  3. Agent calls customer

This is a simplified process that doesn’t reflect the phone tag that usually occurs.  Still, a minimum of three calls are required to answer a question that might have been answered on the first call.  Better yet, if the information were available online, no calls would have been required, saving agency and claim adjuster time as well as telephony costs.

There are many other examples of ways to reduce cost and improve customer satisfaction at the same time:

  • Automated email or voice updates on claim status to minimize inquiry calls
  • Expanded capacity in drive-in claim centers to reduce usage of field adjusters, a more expensive and lower satisfaction option
  • Earlier identification of total losses, typically a low satisfaction claim, to reduce storage and rental costs and overall cycle time
  • Work load balancing across claim offices to ensure timelier claim handling and increase staff utilization
  • Increased usage of non-exempt staff for inquiry calls as well as back-office functions to free up adjusters for more complex issues
  • Automation of any part of the claim process that results in reduced cycle time for the customer and reduced adjuster time

Clearly, having the right level of staffing and meeting customer expectations regarding settlement are important to maintaining or improving customer satisfaction.  But hiring more people or paying more than required will not necessarily increase satisfaction unless the fundamental communication and cycle time requirements are met.  Insurers would be better off focusing first on those opportunities that improve customer satisfaction and reduce cost at the same time – creating a “win-win” – as opposed to throwing money at a satisfaction goal, with negligible economic benefit.

How do you increase satisfaction without increasing staff?

In Claims Don’t Let The Process “Thing” Get In The Way Of Doing The “Right” Thing

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Making a check in the process won’t ensure the matter is done right

Mark Suster,  was the founder of Koral, a Palo Alto company which was sold to Sales Force. There he was VP of Product Management and then left to become a member of a venture capital firm.  He is also author of a blog called Both Sides of the Table and recently wrote about Doing the Right Things is More Important than Doing Things Right. In this interesting article he discusses how sometimes companies get caught up in “things”, or process, without worrying about the outcome. Tasks become the driving force not the outcome.

“When you hire people in functional roles they want to show that they’re achieving results and results are easiest to measure by tasks accomplished.  But many CEO’s and management teams fail to set clear guidelines on what the company objectives are and make sure that everybody is driving toward the same goal.  It’s actually quite hard to lay out an annual company strategy that is articulate and underpinned by facts.

So many CEO’s just carry on being … CEO’s –>  fund raise, get media attention, attend conferences, hire staff, “set direction”, whatever.  But this leads to organizational drift because staff will continue to produce “work.”

Everybody should be able to answer the question, “why am I doing this?”  Otherwise they’re likely to be doing things right, but not the right things.”

I have written, and am a big proponent of, the importance of good process as a way to ensure good results. Putting a proper process in place is a road-map to help move claims to a prompt fair resolution. Nonetheless, doing and focusing on the process without making sure the outcome is sound is doing things right without doing the right thing.

It’s so easy in claims to focus on the process and not use the process as a means to the end

In a recent audit of a hospital system’s claims department I saw an excellent example of what happens when focusing on the doing things right resulted in something not being done right. The claims staff had been instructed, like most claim departments, to place notes in the file on various issues such as coverage, damages and liability. They had previously been cited for poor documentation so a priority was placed on ensuring notes were in the files.

While every file now contained a note, there was absolutely no independent thought to the claims handler’s comments. Almost all the notes had been cut-and-paste word for word from counsel emails. They even went so far to include the salutations and signature lines. One note I found was a complete doctor’s CV that went on for over 30 pages. This type of note taking added little to the claim file and provided no insight into the thought process and evaluation of their claims staff. It was another example where doing things right was not doing the right thing.

Another client required the claims staff to create detailed damage time lines regardless of the nature of the claim. Claims adjusters would spend hours completing outlines, and sometimes even outsourcing the reviews to others, whether the case needed the assessment or not. There was no review as to whether these time lines were adding value to the claims process. Instead of using the process as a tool it was turned into a requirement for the sake of doing a requirement.  Clearly the process was being done correctly it was just not the right thing to do all the time.

So the lesson learned is when focusing on process make sure the process is not the only thing that is being done.

How many of your processes are the “thing” getting in the way of doing the right thing?

“What’s The Point” Claims Process And How To Avoid Them

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Being able to truly focus on what’s important is a path to success

Claims organizations are notorious for multiple process and procedures. Many of these procedures are truly necessary and are required to maintain controls, prevent fraud or comply with a multitude of regulations facing the insurance industry. Nonetheless, doing something for the sake of doing it is no way to be an efficient organization.

I have referred to Seth Godin’s Bolg in the past for its plain statements about business management and wonderful insight. His most recent post speaks so well about the need for projects and process to “have a point.” As Seth wrote:

“An idea turns into a meeting and then it turns into a project. People get brought along, there’s free donuts, there’s a whiteboard and even a conference call.

It feels like you’re doing the work, but at some point, hopefully, someone asks, “what’s the point of this?”

Is it worth doing?

Compared to everything else we could be investing (don’t say ‘spending’) our time on, is this the scariest, most likely to pay off, most important or the best long-term endeavor?

Or are we just doing it because no one had the guts along the way to say STOP.

Are you doing work worth doing, or are you just doing your job?”

How to say STOP

Take a look at any of your new projects and take some time to see if there is truly “a point” to what is being done. Is that new system enhancement really going to achieve what you need it to? Will adding that new report or requirement assist the claim handler or management to make better decisions? If not, then just say no.

Look at the first three habits of Stephen Covey’s 7 Habits of Highly Effective People, which I have rearranged to fit this purpose, as a way to manage what needs to be done:

  • Begin with the end in mind – develop a goal
  • Put first things first – do only those things that are going to meet that goal
  • Be proactive – get to it and actively work to meet that goal

So don’t just do things for the sake of doing things. Ask “what’s the point” and have the guts to on the brakes.