Why Engaging an Independent Claims Expert is so Critical to Successful Technology Implementation


Yes, I am biased. I am an independent consultant, but I have also worked at a large consulting firm.  The current insurance environment is in a rapid state of change, where claims departments are struggling to be competitive and efficient due to increased claims volumes and complexities. Technology could transform every step of the claims process, from intake through resolution—but successful implementation requires more than just technological know-how. But to make that a reality, subtle understanding is needed from the claims landscape itself.


To bridge this chasm, what insurance leaders require is not some standard-issue consulting firm but a professional claims expert well-versed in the deeper nuances of the claims process. For large implementations that span multiple years the large consulting firm can be an invaluable resource.  However, when the implementation is small or your company is smaller,  hiring an independent claims consultant can make all the difference in realizing a technology implementation that not only transforms the operations but does so with efficiency and precision.

1. Process-Driven Technology Integration: Understanding Claims from the Inside Out


The processing of claims with high levels of accuracy and efficiency, but with empathy nonetheless, constitutes the core mission of the claims department. Without an implementation approach which places the process of the claim at the forefront, technology can quickly turn into a disruptive force rather than a supporting tool. Unlike larger consulting firms, independent claims consultants focus on bringing in technology to meet the unique workflows and departmental business objectives. This ensures that the process of claims drives the technology, not the other way around.

2. Solutions Customized with Flexibility for Real-World Claims Challenges

Independent claims consultants bring an unprecedented level of agility and customization that larger firms simply cannot match. Because they are not bound by rigid frameworks, they can move more nimbly to meet the particular needs of each department, from property to casualty claims, without unnecessary layers of oversight. This will introduce flexibility for active consultants to tailor solutions within the existing ecosystem, including claims data analytics, fraud detection, and maintaining the human touch necessary in ensuring customer satisfaction.

The scalability of the solution will also be catered for by a focused consultant to enable your department to evolve with the technology over time. They have practical experience in how to spend each working day projecting the daily challenges an adjuster and manager face so that the technologies implemented will be as pragmatic as they are innovative.

3. Cost-Effectiveness: Maximize ROI without the Big-Firm Overhead

One of the values in retaining an independent consultant over a large consulting firm often has to do with bottom-line economics. Independent claims experts are unencumbered by all of the trappings and demands of higher overhead-greater office space, for example, more administrative personnel, an extensive marketing program-and maintain a lean approach focused exclusively on delivering results. That is to say, more of your budget is directly invested in the project, yielding a larger return on investment for your claims department.

Another major factor: essentially, independent consultants have a stake in the success of every case. They will work hand-in-hand with internal teams, offering hands-on guidance throughout the process. This kind of processing will typically result in faster project turnarounds and faster adoption, which means a faster return on investment.

4. Proven Process: How a Claims Consultant Drives Successful Implementation

New technology implemented within a claims department requires a clear, structured approach beyond generic project plans. Here is one specific way an independent claims expert would drive a successful implementation, step by step:

  • Assess and Plan: First, take a deep dive into where current claims workflows enhance pain points, resource needs, and department goals. The result is that the technology solution will focus on the particular needs of the claims department, not just industry standard needs.
  • Solution Design: Having worked in close cooperation with the department heads, the consultant now designs the solution to be adapted for smooth integration into the workings of the department. The focus is then on nuances of the claims process, so that one may target areas where technology will add value without disrupting processes.
  • Pilot Testing and Iteration: Before the rollout, pilot testing paves the way for live insights and iterations. A claims-focused consultant can quickly identify and rectify any issues to make technology work right in the life conditions of claims.
  • Training and Adoption Support: The successful implementation of technology requires user adoption. More often, independent consultants provide hands-on training, tailored for different roles within the department. They help each member of the team understand how the new technology makes their workflow easier and more intuitive to perform their tasks.
  • Ongoing Review and Adjustment: The true claims expert knows that after implementation, the work is not over. They remain involved with performance monitoring, suggesting adjustments, and ensuring the technology meets their changing needs.

5. Partnership, Not Just Completion of the Project

Probably one of the most valued elements in working with an independent claims consultant is the relationship they will build with your team. Unlike larger consulting firms that might simply focus on delivering the project and moving on, independent experts truly invest in a partnership. They work side-by-side with internal teams, understand their challenges, and adjust in real time to feedback for long-term success. This harmony makes for trust and confidence in the new technology as team members learn to fully welcome the change. Over time, the partnership offers consistent ways it assists departments in not just attaining immediate implementation goals but also in fostering a culture of continuous process improvement and innovation.

The Strategic Advantage of Partnering with a Claims Expert


The challenges of claims implementation require much more than a one-size-fits-all solution. In engaging an independent claims expert, C-suite executives and claims leaders receive a partner focused on expert-level talent, flexibility, and hands-on involvement their large consulting firm counterparts often cannot match. Using their specific knowledge, they make sure that new technology underpins the claims process for tangible gains in greater efficiencies, customer satisfaction, and financial performance, amongst other benefits. The right consultant will be the difference between ‘disruptive change’ and a ‘transformative solution’ in today’s competitive insurance landscape. Embrace expertise that puts your claims process first, and watch technology become an enabler of growth rather than just another operational hurdle.

Navigating the Choppy Waters of Claims Technology Implementation

Let’s face it, implementing a new technology into existing processes and systems is no easy task. But in today’s fast-paced insurance world, it’s not just about upgrading tech—it’s about transforming your entire claims ecosystem. So, how do we ensure that this shiny new penny enhances rather than disrupts our current processes? Buckle up, folks, because we’re about to dive into the deep end.

1. Map It Out and Take Your Time Doing It

Before you jump headfirst into this tech tornado, you need to know where you’re standing. As I like to say, “knowing where you are is just as crucial as knowing where you want to go.” So, roll up your sleeves and get mapping of your existing processes and how the new technology will fit into that process. Assess your current processes, systems, and challenges. Trust me, this homework will pay off when you’re not lost in the implementation wilderness later.

2. It’s Not Just About Claims, People

In some instances, the impact of a new system initiative goes way beyond the claims department. Don’t adopt new technology in a vacuum. This isn’t just a claims thing—it’s a business thing. Drag your underwriters and actuaries into the mix when needed. Their input will help create an enterprise-wide solution that improves overall business outcomes, not just makes claims handling easier. Remember, we’re all in this together.

3. Executive Champion: Your New Best Friend

A project needs an executive champion who can move mountains (or at least meetings). This isn’t a part-time gig—you need someone who’s all in. Yes, it’s a big ask, but the payoff in streamlined decision-making will be worth every executive hair that turns grey in the process.  It’s also important for change management to ensure executive buy in and not just in approving the project but being involved in the process.

4. Passion: Not Just for Romance Novels

Your project team needs to live and breathe this implementation. They should be more excited about this project than a kid on Christmas morning. We like to ensure that there is a focus on minimizing disruption and maximizing ROI. That’s the kind of passion we’re talking about and such passion will be infectious to help with adoption.

5. Scope Creep: The Silent Killer

It’s tempting to keep adding bells and whistles, but remember—every change needs to bring value. Before you add that shiny new feature, do a cost-benefit analysis. Some enhancements might take time to show their worth, so be patient. Measure the impact over time, and don’t be afraid to admit if something isn’t working out. No system or technology will be perfect right out of the box.  Teams need to use and learn how best the system integrates in the process.  Get it working and look at future enhancements as part of an iterative development project.

6. Integration: The Name of the Game

It is so important to try and seamlessly weave cutting-edge technology into your existing claims ecosystem. This isn’t about out with the old, in with the new. It’s about creating a beautiful harmony of efficiency and familiarity. Think of it as a tech tango—new and old, dancing in perfect sync.

7. Customize, But Don’t Go Crazy

Yes, tailor those workflows to match your unique claims processes. But don’t go overboard—you’re implementing a new and modern approach, not building a spaceship. Find that sweet spot between customization and out-of-the-box functionality. Your future self will thank you when it’s time for system updates. Scope creep can be put in check and adoption rates will go up.

8. Remember the Humans

At the end of the day, your fancy new system is only as good as the people using it. Invest in training and make sure that interface is more intuitive than your smartphone. I like to stress that a user-centric approach is key. After all, a technology that no one can use is about as useful as a chocolate teapot.

9. Measure, Tweak, Repeat

Once your system is up and running, don’t just sit back and admire your handiwork. Keep fine-tuning for optimal performance. Use those data analytics to spot areas for improvement. Remember, in the world of claims technology, standing still is the same as moving backward.

Implementing a new system might feel like trying to change a tire while driving, but with the right approach, it can transform your operations faster than you can say “subrogation.” The goal isn’t just new tech—it’s creating a claims process so smooth, it helps claims professionals do their job better.  We all love the idiom of work smarter not harder!

So, claims leaders, what’s your secret sauce for successful system implementations? Share your wisdom in the comments below—let’s learn from each other and keep this industry moving forward!

Social Inflation has Commercial Casualty Losses up 11% Over the Last 5 Years: 3 Claims Department Strategies That Will Help You Navigate The Problem

Swiss Re’s latest report on social inflation is a must-read for claims professionals. Their sigma No 4/2024 study, “Litigation costs drive claims inflation: indexing liability loss trends,” offers a comprehensive look at this growing challenge. The findings are sobering: the U.S. liability risk pool is expanding rapidly, with commercial casualty insurance sector losses growing at an average annual rate of 11% over the last five years. Importantly, this isn’t just a U.S. phenomenon anymore. The UK, Australia, and Canada are also experiencing similar trends, albeit to a lesser degree. As claims leaders, it’s crucial we understand and adapt to this changing landscape. With that in mind, let’s explore three essential strategies that can help your claims department navigate the complexities of social inflation.

1. Embrace Your Inner Data Nerd

In today’s claims environment, data should be at the forefront of your decision-making process. Modern claims departments need to utilize their data effectively, not just for reporting, but for predicting future trends. Predictive analytics can help you identify potential high severity claims before they escalate. 

By analyzing historical data, court rulings, and social trends, you can spot patterns that may indicate where social inflation is likely to impact your claims. This foresight allows you to proactively adjust your strategies, whether in reserving, settlement approaches, or litigation decisions.

If you’re not using your claims data to anticipate future challenges, you’re missing a crucial tool in managing social inflation. The ability to predict which claims are likely to result in larger-than-expected payouts can be a game-changer for your department.

Predictive does not always mean some hi-tech analytics model. Predictive can also be developing, using and analyzing the correct trends within your existing data. 

2. Early Case Assessment: Your New Best Friend

In the age of social inflation, early case assessment has become more critical than ever. The sooner you can identify high-risk claims, the better positioned you’ll be to make informed decisions about how to handle them.

Your early case assessment process should be comprehensive and efficient. It should help you quickly identify claims that have the potential to result in large verdicts or settlements. This might include cases in jurisdictions known for high awards, claims involving severe injuries, or those that touch on hot-button social issues.

By identifying these high-risk claims early, you can develop appropriate strategies – whether that means early settlement negotiations, allocating additional resources for defense, or preparing for potential litigation. Early case assessment is your first line of defense against the impacts of social inflation.

3. Invest in Advanced Technology

If your claims department isn’t leveraging advanced technology, you’re at a significant disadvantage in today’s environment. Advanced data analytics tools and AI can process vast amounts of claims data quickly and accurately, identifying patterns and predicting outcomes that might not be apparent to human analysts.

These technologies can help you process claims more efficiently, spot potential fraud, and assist claims professionals in making more accurate reserve estimates. They can also assist in identifying trends in jury awards and settlement amounts, helping you stay ahead of the curve in your claims handling strategies.

However, it’s not enough to simply have these technologies – you need to use the insights they provide to inform your strategies. Use this data to adjust your reserves, refine your pricing models, and guide your overall claims handling approach.

Adapting to the New Normal

Social inflation is reshaping the claims landscape, and it’s clear that this trend isn’t going away anytime soon. By embracing data analytics, prioritizing early case assessment, and leveraging advanced technology, your claims department will be better equipped to navigate these challenges.

Remember, the goal isn’t just to react to social inflation, but to anticipate and mitigate its effects. With these strategies in place, you’ll be well-positioned to manage claims effectively in this new environment.

What strategies is your claims department using to address social inflation? Share your thoughts in the comments below – let’s learn from each other and develop best practices for this ongoing challenge.

15 Excuses For Not Changing And 5 Reasons To Change The Way We Make Change

96005727Going Along With How It’s Been Done Is Not The Best Way To Go Through Business

I have a client that is so entrenched in its way of doing things that a significant part of my job has been to manage change. Change is hard for everyone and how and when to change has been debated and discussed in companies since the first company was formed.  What is never debated are some of the excuses used for not changing. People are resistant to change and despite the need to move forward people generally prefer to live with what they have. Fast Company put out a list of Reasons Why We Cannot Change and these are my favorite 15:

  1. We’ve never done it before
  2. We’ve been doing it this way for 25 years
  3. It won’t work in our company
  4. Why change — it’s working OK
  5. It needs further investigation
  6. It’s too much trouble to change
  7. Our company is different
  8. We don’t have the money
  9. We don’t have the personnel
  10. You can’t teach old dog new tricks
  11. It’s too radical a change
  12. I don’t like it
  13. You’re right, but….
  14. We’re not ready for it
  15. We’re doing all right as it is

“Men Plan, God Laughs”

This list was originally complied in 1959!!! by E.F. Borish a product manager for a Milwaukee company.  Amazingly these excuses are as true today as they were over 50 year ago. So we plan to make change and address the list of excuses to help achieve a positive result. Regardless, in addressing these excuses it is important to accept that change is difficult and also understand that great strategic plans may still not yield desired results. Management must acknowledge during any change process that “culture eats strategy for breakfast” (a quote attributed to management guru Peter Drucker).

5 Changes To The Way We Change

To help address the culture and achieve success, Harvard Business Review’s Bill Taylor suggests changing the way to approach change in his article The More Things Change, the More Our Objections to Change Stay the Same.

Mr. Taylor continues asks –  “so what have we learned in the twenty years since Fast Company was created, or the 54 years since E.F. Borisch compiled his list?”  He suggests 5 possible principles to consider to change the way we make change:

  1. OriginalityFor leaders to see their organization and its problems as if they’ve never seen them before, and, with new eyes, they need to develop a distinctive point of view on how to solve them
  2. Break from the past without disavowing it – The most effective leaders…don’t turn their back on the past. They reinterpret what’s come before to develop a line of sight into what comes next.
  3. Encourage a sense of dissatisfaction with the status quo – persuade colleagues that business as usual is the ultimate risk, not a safe harbor from the storms of disruption
  4. Requires a sense of “humbition” (humility and ambition) among leaders – enough ambition to address big problems, enough humility to know you don’t have the answers. When it comes to change, nobody alone is as smart as everybody together.
  5. Be consistent in the approach – If, as a leader, you want to make deep-seated change, then your priorities and practices have to stay consistent in good times and bad times.

Change does not have to be a bad thing but managing the change process must be addressed. Strateigic plans must have an approach to dealing with change to achieve a measured success.

How Do You Address Cultural Issues During the Change Processs?

Part 3 on Leadership: Challenges and Assistance in Leading Change

The mechanismCollaborating Can Make The Successful Difference

In Leadership: The Change Process In Claims Requires A Different Approach, I put forth the position that changing a claims organization needs a new brand of leadership skill that does not usually exist in the traditional claims organization. In Part 2 on Leadership: Developing a Strategic Transformation Team, I addressed how to break from existing management process to achieve effective strategic results. In the final installment, I discuss how challenges around leading change make it beneficial to bring in strategic support to help achieve the desired success.

Additional Challenges in Leading Transformational Change

Oftentimes, managers are too close to individual problems to have the necessary perspective to see what needs to be done to benefit the whole organization. As a result, many fail to achieve true Strategic Transformation.

There are three main reasons why building Strategic Transformation can be such a challenge:

  • Lack of Independence – Management has political ties and history within an organization and are not always free to ask the sometimes difficult questions and make recommendations that are truly in the best interests of the organization.
  • No Objectivity – Often companies are attached to their existing organizational and procedural structure. Despite very good intentions, it is human nature for individuals to get emotionally connected to a particular method of doing things. Management can be entrenched with emotional or political agendas as to how things are being done. Change requires an objective, fresh viewpoint–without worrying about what people in the organization might think about the results and how they are achieved.
  • Limited Experience –Strategic Transformation requires a set of skills that combines project management with a strategic sense of determination. Managers have experience and skills on how to execute what has been done but lack the depth of knowledge to execute change that transforms their organization. Most claim managers come from a purely technical claims handling role and may lack experience addressing organizational problems, thus failing to grasp all the process concerns of their own operations.

Facilitated Strategic Transformation to Achieve Success

Bringing in an expert from outside the organization is one way to jump-start the Strategic Transformation process. Independent, objective experts can help facilitate the building of teams and focus the organization on successful, rapid implementations. In addition, the best facilitators will have specific capabilities in managing large scale project management, and insurance industry specific knowledge with proven methodologies in management. Such facilitators can:

  • Identify Problems – Sometimes employees are too close to a problem inside an organization to identify them. Facilitated sessions can help draw out what many in the company already know but could not see.
  • Supplement The Staff and Minimize Disruptions – Getting staff to focus on problems is difficult when the call of everyday business comes. Having a dedicated independent resource helps to balance those situations and ensure projects move forward on time and on budget. Delays can have disastrous effects down the chain and across other projects. Supplementing staff can help avoid these pit falls.
  • Objectivity Allows 3rd Parties to Act as a Catalyst- Most employees resist change. Regardless, change is needed, and an independent may be brought in to “get the ball rolling.” In other words, the facilitator can do things without worrying about the corporate culture, employee morale or other issues that get in the way when an organization is trying to institute change. They can also be there as the independent voice to validate how the change will help improve the organization.
  • Inject New Ideas – A fresh set of eyes can bring experiences from other transformation projects to inject new change ideas. At one time or another, most businesses need someone to administer “first aid” to get things rolling again.

The Time to Change is Now

In today’s market it is harder for insurance companies to distinguish themselves from competitors. For companies to gain an advantage, carriers must adapt to changing market conditions, embrace technology and further expand their use of data analytics. Moving rapidly to manage change requires new ways to manage multiple initiatives. Strategic Transformation is a method for meeting these challenges and ensuring that projects are rapidly deployed on time and on budget.

How Have You Tried to Move Your Organization Through the Change Proccess?

 

Part 2 on Leadership: Developing a Strategic Transformation Team

Different from the crowdBreaking the Linear Approach by Leading Strategic Transformation

In my last post, Leadership: The Change Process In Claims Requires A Different Approach, I put forth the position that changing a claims organization needs a new brand of leadership skill that does not usually exist in the traditional claims organization. Continuing with this theme, I will address what it means to break from existing management process to achieve effective strategic results.

Breaking from the linear approach to management is the key to leading Strategic Transformation. A standard organization will have a head of claims and then a variety of department heads to manage each line of business. Depending on the company there may be additional senior managers to handle various operational aspects of the group, which may include support staff, call center, technology and data analytics. Under this method, projects get initiated and managed within the same linear organizational framework. The result of this approach is a development process built in a silo that limits input and understanding of possible interdependencies that may exist outside the framework.

A Strategic Transformation Team, however, is formed with a center to lead change over multiple projects. Each project team consists of people from a variety of departments and levels. The teams are charged with creating objectives, setting priorities, securing buy-in, and executing on the vision. The teams are not formed within a linear framework and can draw upon different expertise to get the project completed. The Strategic Team in the center can drive all projects, manage interdependencies, and facilitate moving projects forward without distraction from the day-to-day management. Their focus is on the bigger picture and not limited within an individual project silo.

The Best Transformation Happens When Dedicated Transformation Teams Are Formed

To make effective change rapidly, it’s best to create a dedicated team to deal with change as their sole mission. This team will have the principal objective of producing outcomes and will be dedicated to adopting and improving the organization on an ongoing basis and not as part of some once every five year strategic plan. The independent team will also have multiple benefits which would include:

  • A central pressing vision to produce valuable effective change
  • Being focused on the big, as well as little pictures
  • Rapid deployment capability to get things moved to implementation
  • The ability to challenge the status quo to break conventional methods of project deployment
  • Expanded institutional knowledge about multi-disciplinary impacts to improve team efficiency on future projects

While building such a team internally is possible, there has to be an initial effort on getting commitment and focus from the staff to work in a new framework that is different from their existing work environment. For this reason, it is often best to bring in a third party to help facilitate the process.

How a Strategic Transformation Team Works

Getting from point A to point B requires a methodical approach to projects. The Strategic Transformation team will typically establish a Project Management Office (“PMO”) to help to successfully execute those projects identified “as needed to improve the operation.” The areas of responsibility under a PMO include:

  • Project identification and defining project purpose and requirements
  • Organization and management of work resources to execute projects and requirements
  • Assuring timely and useable deliverables
  • Coordinating multiple projects and dependencies
  • Reporting to key stakeholders and organizational communication

With a PMO established, projects can be outlined and staged appropriately to both manage costs and deal with interconnecting parts. Additionally a PMO can facilitate the gradual introduction of new processes and technologies which might otherwise disrupt the existing environment. This will allow an organization to phase in procedural changes in a manner to help gain cultural “acceptance” and “buy in” from employees.

The main team will go through a series of steps following established project management techniques to define, plan and execute on multiple strategic concerns simultaneously. The overall focus will be developed; and for each project, a similar multistep approach will be used and address the following.

  • Business champion/leadership assignment
  • Prioritization of project within scope of organizational needs, other projects and budget
  • Strong objectives established
  • Well defined project charters drafted and approved
  • Interdependencies/relationships explored and managed
  • Develop a risk analysis
  • Rapid and timely implementation
  • Buy-in and adaptation to change addressed with staff and stakeholders
  • Conclusion and re-explore

Achieving strategic transformation is possible with the right teams in place. Regardless, sometimes those efforts still hit road blocks.  In my next post I will discuss how assistance from thrid parties with transformation experience can help to expedite the process or, at the very least, provide a second set of eyes to oversee the work being done.

 How successful has your transformation team been?

 

 

Leadership: The Change Process In Claims Requires A Different Approach

SuccessMeaningful and Successful Improvements to Claim Departments Require a Different Approach to the Management of the Change Process

Successful organizations are always changing and adopting to improve their operations, lower costs and increase efficiencies. Claims departments are no different and have been under pressure to transform their operations and live by the mantra of doing more with less.  Good claims organizations continuously evolve and adapt to ensure they add value to the overall business. Regardless, changing to meet the challenges of the marketplace is often fraught with problems and difficulties.  Many initiatives fail to get off the ground or fail in the implementation process. Change can be very successful and if managed and led correctly.  To change effectively there must be a strategic approach and a change in how these initiatives are led.

Why is claims transformation so difficult?

One reason claims transformation is so difficult is that claims departments are generally linear organizations. The claims value chain, or the process of moving a claim from first notice to resolution, is always looked at in a straight line. A claim comes in, is evaluated, reserved, and then resolved.  Of course there are many steps in between depending on the claim, but generally all claims follow a similar pattern from beginning to end.  Claims departments are often structured in a linear pattern as well. From intake units, to claims handlers, adjusters, managers, and operations – the claim moves through the organization in a linear pattern. Claim managers know this pattern and manage it well. However successful transformation does not follow a linear path. As such, many claims managers fail to have the transformational leadership skills needed to move projects to a successful outcome.

Change Leadership is Different Than Management

Management of the claims process is not the same as providing leadership to change processes and the culture that has been entrenched to those processes. Leading change is very different than managing change. Management guru and Harvard Business School Professor Dr. John P. Kotter puts is best when he said that:

[m]anagement makes a system work. It helps you do what you know how to do. Leadership builds systems or transforms old ones. It takes you into territory that is new and less well known, or even completely unknown to you.

Although most claim managers are well suited to managing core business functions such as staffing, claim volumes, customer satisfaction, budgets, day-to-day process and other operational and technical aspects of running a claims department, they often lack the skills necessary for effectively managing strategic change initiatives. In order to successfully lead change, a strategic vision and a specific program for management of a series of transformational projects to support those visionary objectives needs to be developed. Taking short-term approaches to individual tactical solutions will not create the strategic outcome needed to transform the organization successfully. Achieving this type of Strategic Transformation requires a new paradigm and skillset to deal with managing multiple interconnecting projects.

Another reason transformation is so difficult is that in response to problems, claims executives will initiate a variety of complex transformation projects to improve operations based upon the same linear task based approach to their day-to-day management. Claims executives use this linear approach to identify problems, conceive and implement solutions, manage expectations and results all within an enterprise environment where multiple interdependencies and stakeholder interests may impact outcomes.

Transformation Requires a Different Appraoach

Despite good intentions to improve operations many initiatives become ad-hoc responses to an immediate problem rather than a holistic solution to operational ills. This reactive focus means that projects will often get initiated in a vacuum, not managed fully, delayed or simply never implemented. To transform organizations, and achieve Total Outcome Management, executives need to adopt a proactive holistic Strategic Transformation approach to changing the organization for the better.

How Should Organizations Approach Change?

Claims Challenge: It’s Time for a Change – Are You In?

Person and lightbulb symbolThere are enough of us out there so let’s come up with some new ideas!

I have been in the claims industry in one way or another for the past 23 years. When I started as an insurance defense attorney only the secretary’s had computers and I was fighting with colleagues to hand over the case law book I needed to finish my research. Business applications were limited as were computer networks. Mobile phones were expensive and lap-tops were slow and bulky.

That was the world’s reality not long ago but since then technology has helped to innovate the fabric of our lives and transform our businesses. We have almost limitless information in the palm of our hand that 20 years ago would have required a library to access.

I for one revel every few years at how much we actually now take for granted was not even around ten years ago (both Facebook and LinkedIn are only 10 years old). Despite the innovation to the world around us, the claims industry has transformed very little in decades. There has been improvement in technology that helped to speed up claims processing and provided ways to prevent fraud and streamline the process. There has been more data to assess to help provide insight on what has come and what may come. And there has been more speicalization and focus on training and development. However with all of these changes, there has been little change to the core way claims are evaluated and paid. Claims have a process that they must go through that goes from intake – to investigation – to evaluation – to resolution – with a variety of detailed steps in between. This has been the case since the first claim was ever filed.

Claims as an assembly line

The claims process has evolved over time in a similar manner that manufacturing innovated at the turn of 20th Century. Claims have become like an assembly line. Claims follow a specific path and  specialization for aspects of the process has helped to streamline the flow and increase productivity for claims resolution (i.e. property damage adjsuters seperate from bodily injury adjusters). This has been a good thing for the industry and has enabled claimants to receive fair compensation where appropriate much faster than in decades past.

Look at many of the natural disasters of today versus those of only a few decades ago. While there are always the obligatory problems and issues, if one looks that claims processed for Sandy one would find “it took an average of almost nine days to get inspectors to a site after first receiving a claim, almost four days after that inspection to provide an estimate and almost six days from that estimate to issue payments.” (NY Companies Report In as Sandy Insurance Claim Numbers Climb, Online Auto Insurance News, 1/7/13) That is an impressive effort that could only happen with the factory like efficiency that now exists.

Certainly there is a place for factory like productivity and nothing is likely to change too dramatically for claims in  the future.  At the end of the day, that workflow of the claims value chain will endure. Regardless, what takes place within that workflow can and should certainly be innovated.

The challenge

So here is my challenge.  We belong to a community of claims professionals which extends across this World Wide Web touching thousands of current and past experts in the field. Through avenues such as The Claims Spot, LinkedIn Groups and other resources we can connect and discuss what works and ways to change and innovate. So let’s bring the power of this community to bear on various problems that may face the industry to debate new ideas to improve what we are already getting better at.

Let me start: The collaborative claim file

Here is an idea I would like to see discussed and debated:

We now have the ability to gather and digitize tremendous amounts of information rapidly and efficiently making it available instantly anywhere you happen to be. Every claim brings with it new challenges yet it is rare that the facts and circumstance of a claim have not been seen in the past. Currently it is usually the responsibility of one individual to follow the claim assembly line and determine an outcome.

With the ability to share information what if it was the responsibility of a team of people to review and assess claims as information is coming in? What if multiple claims professionals could collectively work on a matter to bring shared knowledge and experience to a claim file to help ensure a proper investigation is undertaken and a consensus is reached as to an appropriate valuation and outcome? It would be like creating mini virtual claims committees on every file. Everyone could bring their experience and assist in moving the case to a quick and fair resolution. This would be a truly innovative way of looking at the claims value chain.

What do you think? How would this collective community of claims professionals adress truly innovate the industry?

4 Areas Of Concern From The Latest Insurance Executive Conference

Gaze into your crystal ball and predict the issues of the past year to be addressed in the coming one!

It’s that time of year. The top 10 lists, the reflections, the can I possibly attend another holiday party and survive through to New Years? Well I will not give you a top ten list but I will list out 4 key issues that seemed to highlight the sentiments of the speakers at the 23rd annual Executive Conference recently held in New York.

The title of the conference was “Driving Growth in the Life and Property-Casualty Insurance Markets.” The annual event brought together several key executives in both the Life, Health and Property & Casualty Insurance arena. This year the audience heard from the likes of Starr Insurance, Endurance Specialty, Aspen Insurance, Lincoln Financial, ING, and Zurich Global Life among others.

Nothing too shocking with these 4 issues to address

While the topics of discussion varied from panel to panel, a set of themes emerged from the various discussions. When looking back over the last year, and forward into the future, it seems that there were consistently 4 areas that these business leaders seemed to be concerned about. Each issue impacted each company differently, however, the the themes permeated throughout the program.

  1. Technology and the use of data.  A somewhat mixed statement about technology seemed to emanate from the various speakers. On the one hand it was acknowledged that the industry lags behind in adopting and using technology. Many companies still are working off antiquated systems that could use an overhaul. On the other hand it was noted thatthe industry is filled with valuable data that needs to be analyzed and used to improve outcomes. Companies that can use their data more effectively will have a critical differentiator in the future. Predictive analytics and modeling will be the key to increasing underwriting profit needed in these times of continued low interest rates.
  2. Climate change and catastrophes. With the conference so close to the events and location of Sandy, the talk of underwriting and managing CAT losses was on the mind of many. There is a clear belief that climate change has affected weather patterns and will continue to create larger storms for the foreseeable future. The importance of getting the appropriate rate for risks, being better prepared from a continuity perspective, and looking to opportunities to underwrite new risk and innovative risks were just some of the topics discussed. Some of the issues around CAT management also related to governmental intervention that effectively re-wrtie contracts making it more challenging to underwrite.
  3. Increased regulations. Solvency II, the fiscal cliff, the impacts of Dodd-Frank legislation, Systemic Risk (systemically important financial institution (SIFI) designation), the Federal Insurance Office’s (FIO), unclaimed property,  tax compliance with SSAP 101 and FATCA are just some of the many potential compliance issues that could increase costs and expose companies to additional fines for non-compliance. While the general feeling was increased regulation was not going to change the industry for the better, the need to deal with changing regulations was going to have a real impact.
  4. Social media as in customer relations as well distribution. Social media is here to stay and many have begun to address how to use this medium in both dealing with customer complaints or improving customer relations. There was a clear acknowledgement that social media can be the genesis of grass roots negative campaigns unless managed correctly.  A few panel members spoke of how they have created new ways to communicate with customers and create more positive images around their products and services.

Looking ahead to 2013

I think the themes expressed by the insurance leadership at the conference need to be dealt with in the foreseeable future. Addressing technology and using data analytics will be the key to building productive, profitable and efficient organizations.  That is all well and good, but the industry must also work to improve its image.  For some reason the message gets lost that during castrophe’s the industry rapidly pays out billions of dollars in a relatively short period of time without any complaints. Adopting social media and engaging customers will help.

The future seems bright to me and I am looking forward to another year.

What do you think are the key industry issues from 2012 and what needs to be focused on for 2013?