Monthly Archives: June 2012

A Claims Tale Of Three Little Managers And Their Review Programs

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My Take On The Old Story Of The Three Little Pigs

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!

At Lanzko we can help shore up operations to become more like the Manager of Bricks using our Audit Portal application. Give us a call to learn more.

 

Everybody Wants to Make Improvements In Claims But No One Actually Makes It Happen

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It’s Like Selling World Peace. Everyone Is For It But No One Wants To Pay For It

There is so much that needs to be done in the world of claims. Operations need fixing, technology needs improving and a futures need to be defined.  For some reason however, we are all really good at talking about it and not so good about doing anything about it. The industry needs to take action.

We need leaders who will drive the initiatives needed to improve and modernize the claims industry. We are mired in an “it’s always been done that way” mentality and not doing anything about it.  I know the day-to-day is an ever growing series of issues. It is because we are forever being asked to do more with less that action is needed. Strategic planning is a necessary evil and a plan must be put into place to improve the whole or we will be destined to “always do it that way.”

Claims departments need to think creatively and “out-of-the-box” if we are going to attract new talent to the industry. This also means acting and not just talking about acting.

Take Action With These 3 Ideas

So how do you act?  check out these three suggestions for getting out from the wanting to improve to actually taking action:

  • Bring in a consultant for a fresh set of eyes… there is more there than you realize and having someone removed from the day-to-day operation will be like cleaning dirty windows. The clarity will allow you to see both good and bad and will give you the first steps to make improvement.
  • Buy one small application to help fix some aspect of the department. There are plenty of innovative technologies out there to help with everything from adjuster compliance (Xeneros) to claims auditing (the Audit Portal). Try one, they won’t cost too much but they will save you so much in time and expense.
  • Talk to your claims professionals.  Spend a day with a few of the people on the floor and listen to them. Unfortunately many continue to do tasks they know to add little value because they too fall into the “it’s always been that way” frame of mind. I promise you they know more and if given the chance will provide some fairly decent suggestions to improve the operation.  And guess what – this one won’t cost you anything.

How are you going to take action today?

 

 

2 Preventative Steps To Help Avoid Claims Crisis Before They Become Emergencies

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Want To Save Some Real Money? Don’t Have An Emergency Room Mentality In Claims

Seth Godin in his wonderful blog recently wrote about Emergency room doctors in organizations. These are the people that are really good at, and are rewarded, for stopping bleeding. Seth is questioning where is all the strategic thinking to prevent those emergencies in the first place?  In claims we tend to hire and support that emergency room doctor mindset. As Seth states about these doctors, ”

It’s a mindset, not just a job.

You can pitch them as hard as you like about having them work to persuade their patients to give up smoking (after all, it saves lives in the long run), but I think you’ll find that they’re a lot more interested in stopping the bleeding.

Claims departments seem to be more interested in stopping bleeding than preventing it in the first place.  We hire those specialists and reward those that can deal with the crisis as quickly as possible.  Unfortunately we in claims don’t spend enough time trying to prevent the causes of the crises. Again, as Seth writes:

We need emergency room doctors, no doubt. I just wonder if we have too many of them in your organization. If all we do is reward fast first aid in what people do at work, is it any wonder we don’t have enough attention to the strategy and choices that would eliminate the need for all that running around in the first place?

So what can be done? How does one change the mindset?  Well I will tell you so keep reading…

Prevention Is Not That Difficult If You Try

Prevention does require a base of knowledge and to “know how prevalent the emergency room culture is” within your organization.  There are two simple ways to have your organization stay ahead of those emergencies and that is conducting an operational assessment and to develop an active internal review program.

1. Operational assessment:  Take stock at where your organization is.  When mired in the emergency room mentality it is easy to loose perspective.  The operation seems to be getting along so what could possibly be improved. Or my favorite statement of “we’ve always done it that way and there is no time to change.” Is that really how you want your department to function?

Organizations change. Technology changes. Businesses are evolving.  If you don’t assess your operation from time to time and look for possible areas to improve you are destined to continue the emergency room approach. At the very least, take a look at those repetitive tasks such as bill payment and taking in new losses to see if there there are opportunities to improve.  Explore the technology offerings in the industry and see what if anything is available to enhance the ability of claims professionals to do what they are supposed to do – analyze files, set reserves, move cases to resolution and doing it all over again.

2. Internal Review Program: An active audit program to review for best practices is one of the best tools available to learn about your organization and ensure claims departments don’t get mired in the that emergency room approach to management. A regular program sets out the expectations for a review and creates comparative benchmarks to measure for future reviews. This of course is enhanced when the process is clearly defined and the review is consistently executed. Conducting regular reviews is a sure way to ensure emergencies don’t happen.

You Are Not Alone – Help Is Available

At Lanzko we work with clients to perform these operational assessments. I strongly believe that having someone that is detached from your organization is the best way to identify issues that may be ripe for improvement.Sometimes employees are too close to a problem inside an organization to identify it. Bringing Lanzko in can also help move change along. Let’s face it. No one likes change, especially Corporate America. But sometimes change is needed, and we can help “get the ball rolling.”

From an audit and internal review perspective, Lanzko’s The Audit Portal is a tool designed to help manage those internal reviews, create consistency and create benchmarks to become a more strategic organization. With a tool in place, Audit data is not just lost to a spreadsheet or attached as an appendix to a report. There is great information being lost in the traditional audit. We change that and provide meaningful, actionable information to improve operations.