Why the Future Is Now – AI’s Inescapable Role in Modern Claims Management

Posted on May 15, 2025 by Marc Lanzkowsky

What was once hypothetical is now inevitable. AI is actively transforming claims processing, fraud detection, triage, customer engagement, and much more. For forward-thinking claims organizations, the challenge is no longer whether to adopt AI, but how to do it quickly, responsibly, and at scale.

The property and casualty (P&C) insurance industry is no stranger to change. From paperless processing to mobile FNOL and predictive analytics, we’ve seen waves of innovation reshape how we work. But today’s transformation is different. Artificial Intelligence (AI) isn’t just another tool—it’s a seismic shift in how claims are managed.

The Industry Is Moving—Fast

According to a 2024 survey by the Ethical AI in Insurance Consortium (EAIC), only 14% of P&C insurers are currently leveraging AI for operational decisions. However, 66% plan to integrate AI into their operations this year, indicating a significant shift towards AI adoption in the industry. Risk & Insurance

A 2025 survey by Roots Automation reflects this momentum, revealing that nearly 90% of insurance executives express a positive opinion about employing AI, with 67% “strongly in favor” of adopting it in claims. This growing C-suite confidence is propelling the industry forward at an unprecedented pace. roots.ai

Proven Results from Early Adopters

Early adopters of AI in the insurance sector are already witnessing tangible benefits:

Sedgwick: Implemented generative AI to expedite claims processes, aiming to reduce resolution times and enhance overall efficiency. Sedgwick
CURE Insurance: Leveraged Cloverleaf Analytics’ platform to enhance claims risk assessment and fraud detection, leading to more efficient claims processing. Cloverleaf Analytics
Gallagher Re: Reported that 63.4% of global InsurTech funding in Q3 2024 was allocated to AI-focused solutions, underscoring the industry’s investment in AI technologies. Gallagher

These examples highlight the practical applications and measurable outcomes of AI integration in insurance operations.

It’s More Than Efficiency—It’s Survival

AI isn’t just about reducing workloads or automating tasks. It’s a response to evolving customer expectations, increasing claim complexity, and growing pressure on loss adjustment expenses. And the longer organizations delay adoption, the wider the gap grows between early movers and everyone else.

Competitors are settling claims faster.
Customers expect real-time updates and transparent processes.
Regulators are starting to ask hard questions about bias, privacy, and governance.

The time for tentative pilot programs is ending. This is a leadership moment.

Want to explore what successful AI adoption looks like? Request a copy of our full white paper for detailed case studies, benchmarks, and implementation strategies. https://lanzko.com/contact

4 AI Myths Holding Claims Teams Back

Posted on April 23, 2025 by Marc Lanzkowsky

In our line of work, myths can be more dangerous than mistakes. They slow progress, fuel hesitation, and prevent claims teams from embracing tools that could make their lives easier and their outcomes stronger. Nowhere is that more true than with Artificial Intelligence. Despite proven use cases and mounting industry adoption, AI in claims still faces serious skepticism. Let’s set the record straight—one myth at a time.

Myth #1: “AI will replace adjusters.”

This is probably the most common fear—and the most misguided.

The truth? AI isn’t coming for your job. It’s coming for your busywork. Think copy-paste, form-fill, and sorting PDFs. Not human judgment, empathy, or strategy.

Reality check: 77% of insurers are already using or testing AI, and not one reported cutting adjuster headcount in Conning’s 2024 survey (Risk & Insurance). Even Lemonade—famous for its two-second claim bot—relies on human adjusters for disputes and negotiations (Insurance Times).

Let’s be clear: AI handles the mundane so adjusters can focus on what matters—coverage decisions, customer experience, and settlement strategy.

Myth #2: “Only the big carriers can afford AI.”

Ten years ago? Maybe. But today’s AI is plug-and-play, not build-from-scratch.

Thanks to cloud-based APIs and usage-based pricing, even mid-size and regional carriers are embracing AI—and seeing results fast.

Proof point: 65% of carriers (large and mid-market alike) are already piloting large language models in claims ops (Risk & Insurance). One federal benefits agency processed over 115,000 claims in just three months using Hyperscience, achieving 96% accuracy—without a core system overhaul.

Start with one pain point. Pay for only what you use. Scale when you see the ROI. That’s how smart transformation begins.

Myth #3: “Regulators won’t allow AI—it’s too risky.”

This one stems from a misunderstanding of the compliance landscape.

In fact, the National Association of Insurance Commissioners (NAIC) adopted an AI Model Bulletin in 2023. It doesn’t ban AI—it outlines how to use it safely and transparently.

The bulletin calls for:

Transparent data use
Explainable models
On-demand audit trails

So compliance isn’t a roadblock—it’s your roadmap. Choose vendors who log every decision and make model logic understandable, and you’ll satisfy both regulators and your internal risk team.

Myth #4: “AI means a multi-year core-system overhaul.”

Not anymore.

Modern AI is designed to coexist with your current tech stack. Low-code tools, REST APIs, and orchestrators like n8n can have you up and running in weeks—not years.

Take this real example: Hyperscience plugged directly into an existing mailroom workflow, hit 99% automation, and saved $45 million annually—with no core upgrade required.

So keep your legacy system. Let AI do the grunt work around it. Innovation doesn’t have to mean disruption.

Don’t Let Myths Block Your Momentum

It’s time to stop seeing AI as a threat and start seeing it for what it is: a force multiplier. When used correctly, AI makes claims professionals more efficient, more focused, and more impactful.

Curious where AI fits in your claims shop? DM me or grab 15 minutes on my calendar. Let’s separate fact from fiction and find your first best use case.

Improving Litigation Management: A Data-Driven Approach

Posted on November 18, 2024 by Marc Lanzkowsky

Addressing the Challenges of Accurate Data

The integration of data analytics and predictive modeling into litigation management can revolutionize how insurers handle claims, especially considering some of the new technologies hitting the market. For years the focus has been on billing data to help manage counsel and litigation. This type of information provided some insight into counsel performance and compliance with billing guidelines but did not really translate to better litigation management. I would argue that some of this taken the effectiveness of litigation in the wrong direction but that is an article for another day.

The success of this data-driven approach relies heavily on the quality and consistency of the data itself. For many claims departments, the hurdles of poor data input, unstructured information, and inconsistent data formats remain significant challenges. In addition, busy adjusters are being asked to spend more and more time inputting data which is taking away from their primary function as claim professionals. Addressing these issues is essential to unlocking the full potential of analytics in reducing litigation costs and improving outcomes.

Challenges in Achieving Accurate Litigation Data

1. Inconsistent or Incomplete Data Input by Claims Professionals

Claims professionals often prioritize immediate claim resolution over data entry, which can lead to missing, incomplete, or inaccurate information. Key details about litigation—such as court timelines, case strategy, or witness information—may be overlooked during input, reducing the reliability of downstream analytics.

2. Unstructured Data in Litigation Reports and Court Documents

Much of the critical information for managing claims litigation resides in unstructured formats, such as adjuster notes, attorney reports, and scanned court documents. Extracting insights from this data requires significant manual effort or sophisticated technology, which can slow down processes or introduce errors.

3. Data Inconsistency Across Systems

Data from different sources—claims systems, legal databases, and external platforms—often lacks standardization. Disparate formats, conflicting terminology, and varying levels of detail make it difficult to integrate and analyze data effectively.

Strategies for Overcoming Data Challenges

1. Improving Data Input Quality

Simplify Data Entry Interfaces: Design claims systems with intuitive, user-friendly interfaces that guide adjusters to input essential information without overwhelming them.
Incentivize Accurate Data Collection: Recognize and reward claims professionals for thorough and accurate data entry as part of their performance metrics.
Automate Data Entry: Leverage technologies such as natural language processing (NLP) and AI to extract relevant information from adjuster notes and reports, reducing manual workload and errors.

2. Structured Data Extraction from Unstructured Sources

Implement Text Mining Tools: Deploy NLP and machine learning algorithms to scan unstructured data sources, such as litigation reports and court documents, for relevant information. These tools can identify key data points like settlement ranges, precedent cases, and critical deadlines.
Centralized Data Repositories: Consolidate unstructured and structured data into a centralized system, allowing claims teams to access and cross-reference information more effectively.
Invest in Document Digitization: Use optical character recognition (OCR) and AI-powered data extraction to digitize physical documents and integrate their contents into claims systems.

3. Standardizing and Validating Data Across Systems

Create a Unified Data Schema: Establish a standardized framework for entering and storing claims and litigation data to ensure consistency across all systems and teams.
Cross-System Integration: Use middleware or APIs to synchronize data from disparate systems, ensuring that all platforms are working with the same information.
Regular Data Audits: Conduct periodic reviews of data quality to identify and address inconsistencies, duplicate entries, or missing information.

Enhancing Litigation Management with Reliable Data

Once the challenges of data quality are addressed, the true potential of analytics in litigation management can be realized:

Early Identification of High-Risk Cases: With accurate data, predictive models can reliably flag cases likely to result in significant litigation costs, allowing early intervention.
Improved Resource Allocation: Better data consistency enables teams to allocate legal and claims resources more effectively, focusing efforts on high-priority cases.
Enhanced Outcome Prediction: Clean, standardized data improves the accuracy of predictive analytics, helping to forecast settlement ranges and litigation timelines.

Building a Culture of Data Excellence

To address these challenges, claims leaders must prioritize a cultural shift toward data excellence:

Training and Education: Provide regular training for claims professionals to emphasize the importance of accurate data entry and how it supports better litigation management.
Collaborative Tools: Use tools that facilitate collaboration between claims handlers, legal teams, and IT departments to ensure data flows smoothly across functions.
Continuous Improvement: Establish feedback loops to refine data entry processes and adjust technology solutions based on user experiences.

Conclusion: A Foundation for Data-Driven Success

Accurate and consistent data is the foundation of a successful data-driven approach to litigation management. By addressing the root challenges—poor data input, unstructured information, and inconsistency—claims departments can unlock the full potential of predictive analytics and streamline litigation processes. While technology plays a vital role, building a culture that values data accuracy and consistency will ultimately ensure sustained improvements in litigation management.

How does your organization ensure data quality in litigation management? Share your strategies in the comments below, and let’s explore solutions to elevate our industry together.

3 Types Of Claims Metrics Every Department Should Be Looking At

Posted on February 12, 2016 by Marc Lanzkowsky

There is gold at the end of the rainbow!

Good news! – claims departments are now flooded with great data.

Seems like great news doesn’t it. It is great news, or can be, if you’re using the data to help improve the operations, lower cost or predict the future. However, many firms aren’t using the data they have to provide valuable information for the operation.

With the advent of more modern claim technology there has been a push to input more and more information about claims. Claims professionals are being asked to capture very specific fields of information presumably to be used by others within the organization. In addition, more sophisticated data models are combining claims data with underwriting and financial data that when used correctly can be a treasure trove of information.

With all that information available what is the best way to use the information?

At the very least data should be used to manage the operation, reveal trends, or be predictive.

Metrics to Manage the Operations

At the core, information coming out of the claims system should be used to manage the people handling files. Daily, weekly, monthly quarterly and yearly metrics around performance issues should be used to ensure claims professionals and support staff are performing at their best, responding to claims promptly and managing workloads and staffing levels. Typical metrics to manage the operation would center on matters coming and going out (i.e., open, closed, closing ratios); aging reports (i.e., throughput, time from receipt to setup, open to close); workloads (i.e., caseloads and closing ratios by adjuster); or financial in nature (i.e. reserve changes from one period over another, average reserves, total paid).

Metrics to Reveal Trends

There are trends in your data if you know where to look. Trends in loss frequency and severity, which may be caused by external factors, such as legislative, environmental and economic forces, are all developed from claims data. Trending claims data will help underwriters ensure pricing and terms are appropriate and allow problems to be addressed before they become disasters. There are numerous examples of companies that succeeded because they were able to review claims trends and adjust their business before it was too late. There are conversely many companies that failed because they did not have or use their claims data to spot deteriorating books of business in enough time to address it. Information from claims is the lifeblood of the organization and should be identified and regularly shared to help the organization make better decisions about loss reserves, risks, investments, and resources.

Captives and self-insured can benefit even more on using data to trend losses and lower costs to the bottom line. In an article in Business Insurance about how Captive Insurers Provide Owners With Key Risk Management Tools, the authors discuss how Direct TV used claims data to trend key issues that allowed them to significantly improve results in their Workers’ Comp program:

DirecTV Inc. used claims data from the past several years …to help it manage claims more aggressively for its installation crews…DirecTV used the claims data identified to implement changes to its safety programs, its training programs and its return-to-work strategy…. The claims data also showed opportunities to improve fleet risks. Over a three-year period, the safety changes resulted in a 43% reduction in calls on the Driver Alert phone line. The data also found delays in reporting claims and lengthy lost time due to worker injuries. As a result, the company implemented a formal return-to-work program, which resulted in a significant decrease in lost time, and used additional training on claims reporting to reach the point where 91% of claims now are reported within three days of an incident.

Metrics to Be Predictive

Using data is not just about spotting trends but predicating outcomes. Using predictive analytics is not about deciding claim outcomes without the involvement of skilled claims professional, but rather it is about providing a tool to assist in the process. Predictive analytics can correlate multiple aspects of data and draw conclusions in an instant that claims professionals would not be able to do without hours of analysis. Predictive analytics tools are being successfully implemented to combat fraud and streamline the claims intake process as Gen Re noted in Predictive Modeling – An Overview of Analytics in Claims Management, some other uses of uses of predictive analytics include determining:

Outlier Claims
Reserve and Settlement Values
Defense Strategy
Litigation Expense Management
Subrogation Potential

The benefits, if used correctly, are limitless when robust data sets now common in the claims world are used. More and more companies are using analytics to improve operations. In fact, according to a Towers Watson study in 2012, 63% of Chief Claims Officer’s surveyed stated they were starting to use predictive analytics in in their claim’s operations (see study).

Predictive modeling has been limited in the past because systems were not as robust and the amount of data available to run data models was limited. Times, however, have changed and most carriers should have more than their share of data that could prove invaluable. Of course data integrity must be as clean and accurate as possible for these new models to be effective. Regardless, the possibility for significantly improving claims outcomes is compelling.

How are you using data and analytics?

3 Claims Department Musts That Will Let The CEO Sleep Soundly

Posted on March 23, 2015 by Marc Lanzkowsky

Let’s face it, running an insurance company is no easy task. Market pressures, changing cycles, balancing the right mix of products and ensuring an efficient operation will certainly keep a CEO up at night. Having a smoothly run claims department is essential to ensure costs are maintained and customers continue to return. No one likes claims, however they are the largest expense an insurance company will have and as such it is essential that they run efficiently.

[Answer our Poll below]

There are many elements to a well run claims department. As with many areas of business it comes down to people, process and technology. Good people will drive the success of any department and working with defined efficient processes, as well as technology tools that support the organization, are basic core requirements to any well run department.

3 “Must Haves”

Specifically what people, processes and technology make up a good claims department is a subject for another day. Regardless every claims department should be using metrics, performing audits and have a business continuity plan in place as a minimum.

Metrics – Today’s claims department should be filled to the brim with claims data. If your claim system doesn’t provide robust data then there are bigger issues to deal with. Data from the claims department should be actively used to address different needs from various internal stakeholders. Claims managers should have information about the efficient handling and disposition of claims. Underwriters should have information about client activity and trends. And actuaries should be able to develop claims data to ensure reserve are adequate and pricing is appropriate. Dashboards of claims information should be available to the CEO to help identify trends and allow for both a tactical and strategic view of the operations.

If you are not getting or using your claims data to provide valuable metrics then sleep is the least of your worries.

Auditing – File reviews are an essential tool for claims departments and should be part of the overall culture of the organization. Performing regular internal claim audits helps ensure that reserve practices remain consistent and appropriate and the operation is running efficiently. More specific audits can help target various operational issues to ensure quality and compliance and can include data audits, financial audits and customer service reviews. Auditing should be a regular part of the business landscape and be conducted in a formal way and on a regular basis (see my article A Claims Tale Of Three Little Managers And Their Review Programs).

If your’e a CEO and you don’t need sleep, then don’t worry if your claims department is auditing. However, if you like to rest easy – this one should be a no-brain solution. Make sure there is an audit plan and program in place and it is running regularly.

Business Continuity – Are you really ready for the next disruptive event that could derail the operation? The main question for your claims department is can they manage, restore and recover essential functions, processes and data during and after disruptions to operations? If there answer is – I don’t know – then you probably aren’t sleeping at night.

The claims department should develop an incident-agnostic functional recovery program that can establish a predictable recovery priority that maintains a “going concern” and can ensure that the claims “supply chain” continues to operate. Like the rest of the organization, there needs to be a proper Business Continuity Plan in place to ensure the company is ready to handle any disruption.

Ensuring a smooth running claims department is vital to a successful running organization. Even well run companies should take a look to make sure that three “must haves” are in place so the CEO can sleep better at night.

[poll id=”4″]

What else is keeping you up at night?

Part 3 on Leadership: Challenges and Assistance in Leading Change

Posted on March 25, 2014 by Marc Lanzkowsky

Collaborating 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

Posted on March 17, 2014 by Marc Lanzkowsky

Breaking 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

Posted on March 10, 2014 by Marc Lanzkowsky

Meaningful 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?

Posted on January 14, 2014 by Marc Lanzkowsky

There 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?

Claim Files Are Evaluated Using A Form Of Root Cause Analysis So Why Not Do The Same When Evaluating The Department?

Posted on March 5, 2013 by Marc Lanzkowsky

Assessing operational ills requires the same skill needed to evaluate a claim file

We have heard the mantra time and time again about how treating the symptom of a problem doesn’t do anything to cure the cause of the problem. As one of my favorite bloggers Seth Godin recently wrote in Signals vs. causes, “A fever might be the symptom of a disease, but artificially lowering the fever (ice bath, anyone?) isn’t going to do anything at all to change the illness.”

Assessing a claim file is like doing a Root Cause Analysis. Looking at the damages and paying the claim may move a file but it doesn’t tell you whether the claim should be paid in the first place. Analyzing a claim file is learning to know the what, why and how an event happened which is essentially what Root Cause Analysis is.

Root causes are specific problem or faults that create a breakdown in an operation or process. Claim files are a result of some event that causes a claim to arise (i.e. an accident, malpractice, property damage). It is the claims professionals primary job to assess these events and determine what happened and why prior to paying a claim. In general, root causes can be defined as an event that is:

Underlying to the problem
Reasonably identifiable
Within managements control to correct
When corrected will be effective in preventing recurrences

Despite Root Cause Analysis being a core skill in handling a claim file, claims management doesn’t always approach departmental issues with same type of evaluative assessment. Using the same techniques in assessing the root cause of a claim, management can assess operational problems.

Since the techniques are already in use for claims analysis why not use them for operational assessments?

Doing a Basic Root Cause Analysis: The 5 Whys

Similar to a claim file analysis, operational problems require an assessment as to what happened, how it happened, how could it have been prevented, who was at fault, what’s it going to cost to fix the claim and are there any lessons learned. For example, let’s say payments are being delayed resulting in fines being assessed against the department. If one looks at the fines as a claim one would want to determine what caused the fine? how did it happen? and how can it be corrected? An analysis of the “claim” needs to take place prior to making any decisions.

A great technique for getting to the root cause of a problem is to ask the question “Why” question five times. “By repeatedly asking the question “Why” (five is a good rule of thumb), you can peel away the layers of symptoms which can lead to the root cause of a problem. Very often the ostensible reason for a problem will lead you to another question. Although this technique is called “5 Whys,” you may find that you will need to ask the question fewer or more times than five before you find the issue related to a problem.” (Determine the Root Cause: 5 Whys – from www.isixsigma.com)

Going back to our example of a payment delays causing fines, and using the 5 “whys” technique, one could assess the problem this way:

Why are we being fined?
Because payments are being delayed by 5 days
Why are payments being delayed 5 days?
Because they were delayed in getting to finance
Why were they delayed in getting to finance?
Because they were not in the outgoing tray for approved payments
Why were the not in the outgoing tray?
Because they were sitting on a manager’s desk for signature and the manager was on vacation
Why was there no plan to have another manager cover the vacationing manager’s desk?
Because there was not procedure in place

The example above is simplified but it truly demonstrates that similar types of issues can be explored with a series of basic questions. Getting to the root cause is essential to moving a problem to a solution.