Tag Archives: Claims Audits

“Summer’s Here And I’m For That” With 2 Ideas To Improve Your Claims Operations

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Don’t Let The Hazy Lazy Days Of Summer Prevent You From Making Some Real Improvements

Let’s face it, no one wants to work in the summer. It is OK you can admit it. Vacations are being taken and it’s just not that easy to get work done. People are away and it’s harder to schedule meetings and get calls returned. Offices receive less claims and courts close down often resulting in a small chance to catch up with the work piling up.

Because of this, summer can also be a great time to look inward and focus on refining your organization.  Last year I wrote about 3 Suggestions To Beat The Summer Slow Down In Claims.  In that article I suggested ways for Claim Handlers, Managers and Claims Executives to productively use summer slow downs to improve operations.  Those suggestions still hold true and can be a valuable way to improve your group.

This year, 2 ideas come to mind as a way to put your organization in the right position to improve quality and productivity long past the summer.

Improve Your Claim Review Process

Are you conducting internal or external claims audits?  If not, then you really need to consider them.  As W. Edwards Deming, famed management consultant said, “you can only expect what you inspect”. If you are not inspecting then you really have no way of predicting quality or productivity and your results will most certainly vary or deteriorate. In order to plan, to stay ahead of the curve, and to be competitive, you must conduct regular claim file reviews to check for quality and ensure expectations are being met.

Doing reviews are a good thing as long as they go beyond the need to dot an “I” or cross a “T”.  Audits are a great way to see what is is going on and make improvements.  Successful reviews are looked at as a positive, not negative, event and are always done in an organized consistent manner.

If you are doing reviews then how would you answer these questions:

  • Do you have a process in place for conducting reviews?
  • Are you getting any value from these reviews or are they just another requirement that needs to be done?
  • Are you producing consistent reports from review to review or are all reviews different?
  • Are you able to look at data in different ways, or are you just receiving what is provided in an anecdotal narrative report?
  • How long does it take you to produce a report?
  • Can you provide immediate feedback, or does it take time to produce results?

Reviews can have such value when done in an organized consistent fashion.  Take a look at your review process and ask yourself the questions above.  It may be time to put an audit process in place and build more structure around your claim reviews.

Improve your process by establishing best practices which includes information on file selection, review criteria and an easily defined rating system. Get the most out of your reviews by collecting data not just commentary. It’s 2011 and it’s time to get away from the handwritten forms for conducting a review. Data is key and using a system like The Audit Portal™ will create a structure around the review and provide information not previously available.

Conduct A Workflow Audit

I have often referred to Seth Godin who writes a wonderful blog on leadership,  marketing, change and productivity. In a recent post, Seth described  conducting a Workflow Audit.  In it he wrote:

Go find a geek. Someone who understands gmail, Outlook, Excel and other basic tools.

Pay her to sit next to you for an hour and watch you work.

Then say, “tell me five ways I can save an hour a day.”

Whatever you need to pay for this service, it will pay for itself in a week.

I think this is one of the best ideas I have heard in a long time that would go a long way to saving time and money.  I cannot tell you how many times I would sit in a room with a colleague watching them struggle with the most basic Excel or Word skills. There is so much power in the basic tools and people are only using a small percentage of features making their jobs more difficult.  Have you ever had to reformat the work of another person because they didn’t know how to indent a paragraph and used the space bar instead?  Enough said.

This type of workflow audit does not have to be limited to the “office” suite of tools either. Let your best claims processor go around and sit and watch how other claims handlers use the system. I bet you will find that there are hours being wasted because of inefficient use of your systems.

What Are Your Summer Improvement Plans?

Shakespeare & Claims: Looking Inward

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Looking In From The Outside

Ariana Huffington recently wrote about taking responsibility for ones own action in her article On Dominique Strauss-Kahn, Shakespeare, and the Enemy in the Mirror.  As she reflected on some of the recent news of the week and reminded us that

in the game of life, as Cassius said in Julius Caesar, “The fault, dear Brutus, is not in our stars — but in ourselves…” This was a frequent theme of Shakespeare’s, who put it another way in All’s Well That Ends Well, when Helena says: “Our remedies oft in ourselves do lie, which we ascribe to Heaven.”

So what the heck doe this have to do with claims? More than might appear at first glance.

Insurance companies and claims departments are quick to blame all sorts of issues when problems arise. The loss was unexpected, we didn’t know the information was available, or my favorite, it was the other guy’s fault. As Ms. Huffington went on to write

In the end, if we spent even a small percentage of the time we devote to obsessing about those we consider our rivals, competitors, and enemies on examining where our own fault lines are, it’s hard to believe we wouldn’t be more successful

For companies to be successful they must look inward and then act on what they learn.

Don’t Let History Repeat Itself

Recently I was part of a claim review that found significant issues in not only how claims were being managed, but in how policies were being issued. I provided my report and commentary about what was found. Regardless, the client chose to move forward to renew the account.  It reminded me again of the time when we in claims had recommended the company get out of a particular class of business only to be told “it’s OK we doubled the premium.” Then reality sank in two years later when the loss ratios went over 220%.

Now I am not against writing business. I agree with the principal I learned from the CEO of one of my former companies that it’s not about not writing business it’s about writing the right business at the right prices and terms. Regardless, reviews done in both those cases provided valuable information that could help to improve the operation.

Claims auditing is a way to look inward and learn the faults within our ourselves.  A good claims review can identify weaknesses and provide a road map to improve an operation.  Regular reviews can help prevent surprise and insure the department continues to improve. Of course, the information needs to be used to improve decision making and not ignored.  As has been said “those who ignore history are bound (or doomed) to repeat it.”

Learn From What You Already Know And Review Your Claims Regularly

Looking Back On 2010 And Forward To 2011 In The World Of Claims

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Pop The Cork And Say Goodbye To 2010 And Look For A Brighter Future Ahead

I for one am glad 2010 is coming to a close. It’s been a tough year and just when you thought things wouldn’t get worse they did anyway.  Regardless, there is much to be thankful for including joyous family events, health and happiness.

Thanks For A Great First Year

I am so very proud of, and thankful to, the readers of the Claims SPOT for making our inaugural year so successful. Since our inception in January of 2010, we have been read in all 50 states and in over 100 countries. Our over 13,000 visitors to the site have looked at nearly 24,000 pages of 81 posts over they past year. The Claims SPOT received national recognition as the featured blog for Claims Magazine and was voted one of the top insurance blogs by Lexis/Nexis.  Thanks again to all who commented on our posts and helped to keep the discussion lively. We very much look forward to providing information that can truly help the world of claims in the coming year.

The year began with continued economic concerns, a poor job market and no recovery in sight. It has come to a close with a booming stock market, improved job numbers and a better outlook for 2011 (for the top ten insurance stories of 2010 check out National Underwriter’s). Looking back on the year in claims and looking ahead to the future of claims is always a fun exercise this time of year so here we go!

Staffing Crunches, Cut Backs And “The” Oil Spill

Global Recession and Staff Reductions. As with many businesses, the insurance industry was not immune to the economic crisis that began in earnest at the end of 2008 and continued so strongly in 2010.  Many claims departments cut back on professional and support staff as yet another victim of the recession. The “we need to do more with less” mentality seemed to dominate the landscape leaving claim managers scrambling to keep up with the normal pressures in claims.  More work for claims professionals meant relying more heavily on adjusters and attorneys to take on additional work increasing claim expense costs.  Trying to improve operations and take on projects to enhance the claims department needed took a back seat to the realities of the day’s needs. All this with a looming claims staffing crisis and decreasing talent pool in the industry (McKinsey study).

Deepwater Horizon. Really not much more needs to be said about this one. The tragedy surrounding the largest oil spill in US history dominated the headlines for much of the year. As we reported in June, the impact on claims will be extensive and even to this day have yet to be fully realized. What struck me as the most concerning was the public outcry that claims were not being paid quickly enough. As big a tragedy as this was, public pressure cannot create an environment for poor claims handling. Fraud and overpayment of claims will only result in increased premiums over time and will do nothing to help the consumers and those in need of compensation. I applaud the statement made by Kenneth Feinberg, head of the government led claims fund,  about paying “legitimate” claims. We in the industry must be reminded in CAT loss situations how important it is to pay those fair claims promptly, but to not just pay for the sake of paying (Leader on BP claims blames fraud for slow payouts).

Interestingly, despite no major hurricane hitting landfall this year, 2010 proved to be an active year for CAT losses worldwide (see Worldwide Insured Cat Losses Nearly Double In 2010).

Enough Of The Past, It’s Time To Look Forward

With the hope and belief that things are looking up this coming 2011 (2010 Now On Target To Be A Profitable Year For P&C Insurers), it is time for the claims industry to get back to work on improving their overall operations. Here at the Claims SPOT we are never shy about giving our two cents so here is what we feel are three key issues to be addressed in 2011:

Compliance Audits: Let’s face it – one of the reasons that the economic meltdown occurred was due to a lack of internal controls and compliance. Whether it has already happened, or is being considered, further regulation of the insurance industry is a certainty.  As a result it will require further diligence on claims departments to ensure claims are being appropriately managed and reserve and settlements that are put forth are accurate reflections of losses. Having the controls in place will not be enough. While it may sound silly, it will be important to have controls over the controls. What this means is it will not be enough to just perform an audit from time to time. Guidelines as to when and how those audits are done will be necessary to demonstrate to governing bodies that procedures exist and are being followed.

Whether you are a reinsurance company reviewing Cedent’s claims, a claims department looking at best practices, an excess carrier reviewing a primary carrier’s losses or the paper behind a MGA managed program, having a proper audit program in place will be a key element going forward.

Next Generation of Claims Professionals: We hear it again and again that the industry will be in crisis if they do not begin to address talent being attracted to claims. As the industry has matured, specialization has resulted in cost savings and better claim results. The same specialization has also contributed to stagnating the profession.  As the older generation of talent begins to leave claims departments, the cross-disciplined experience in claims is disappearing. This will need to be addressed if the talent needed for the next decade will be ready to handle even more complex claims.

Technology and Claims:  Used correctly it can save an organization tremendous amounts of time and money, used incorrectly it will cost it more.  While there is still a long way to go, and it still amazes me to learn how far behind many major claims organizations are, the use of technology in claims has been improving. Unfortunately many groups fail to grasp what these systems can do. Either they spend too much money to buy a system not designed for their organization, or they fail to adopt their process to the new technology, failure becomes inevitable.

For 2011 adopting new technology that can help claim professionals be claim professionals and not just create more work will be the imperative. Using the mountains of data contained in the modern claims system to help make better decisions, and assist the rest of the organization to benefit from the claims data, will be the wave of the future. Regardless, it will be important to know what you are, know what you need, be selective, and implement correctly to get the benefits that new technology can bring to an organization.

Of course there are more trends from the past and future. Tell us what you think the future will bring!