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?

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

Posted on June 11, 2012 by Marc Lanzkowsky

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

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

It’s a mindset, not just a job.

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

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

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

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

Prevention Is Not That Difficult If You Try

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

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

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

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

You Are Not Alone – Help Is Available

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

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

3 Ways To Help Defense Counsel Help You Make Claims Management More Efficient

Posted on September 3, 2010 by Marc Lanzkowsky

You can’t always get what you want but you can get what you need – If you ask for it!

Thank you Rolling Stones for reminding me what sometimes needs to be done to help get the job done better. As claims professionals we are always being stretched to do more with less, and sometimes can never get what we need from our partners in the industry; our hired defense counsel. Getting to the basics of claims management to evaluate losses, setting reserves and moving a case to resolution requires a good partnership with counsel. Given the current economic environment it has never made getting what you need from defense counsel so important.

So if you can’t always get what you want, less files and more staff to help, how do you get what you need to help?

Here is a novel response: Ask for it!

Defense counsel correctly spends much of their time focused on defending their clients. Unfortunately, and all to often, many counsel reports are designed to justify some activity in the invoice rather than providing useful information. Does reporting about sending medical authorization out really provide any valuable analysis to help the claims professional make a reserve or resolution decision?

Getting what you need

So how does one focus counsel to help provide better information for claims? Try these three suggestions to help them help you get better results:

Educate counsel on the world of claims – Attorneys are great at defending their clients, but many no very little about what goes into a claims professional’s day. When speaking to attorney friends I am often amazed how little they truly know about the day-to-day business of claims. Spend a few minutes telling your counsel about your claim file responsibilities such as reserving, regulatory requirements, documentation and how many files you have, will help the understand your needs better. Even a basic discussion of file counts will enlighten counsel to what it means to have to go through hundreds of correspondence a week while still having to make appropriate decisions.
Give counsel a clear understanding on what you need to make decisions – If you want counsel to provide damage assessments early in the case, even with limited information, then tell them exactly what you expect and hold them to it. If you don’t want them to put a number on a file until discovery is complete then be clear about that too (although I would not recommend waiting till the end – and we can save that for another blog article). Today’s attorneys are being asked to complete different reports and forms and follow different reporting guidelines for a variety of clients. If you don’t tell them specifically what you need to help you get your job done then you will never get what you need. It may take a little extra time when the case is assigned, however, it will pay dividends down the road with information that will help you make claim decisions better.
Be persistent – The squeaky wheel always does get the grease. Attorneys I speak to want the interaction with their clients. If counsel doesn’t provide you what you need then call them up and remind them again. Getting what you need requires a little effort and there may be a break in period where they learn exactly what works and what doesn’t. Accepting what has always been is no way to ever get what you really need. So speak up, don’t be shy, and don’t accept what hasn’t worked in the past.

No attorney is going to say that they don’t want to make a claims professional’s job easier, so help them to help you. Start by telling them what you do, ask for what you want, and then make sure they do it.

You may not get what you want all the time, but you will get what you need.

How do you help counsel help you?

New Claims Technologies To Help Companies Drive Revenue And Differentiate Themselves

Posted on April 12, 2010 by Marc Lanzkowsky

Still Working With Files? Time To Reevaluate Your Technology

New Study By The Gartner Group Shows 10 Technologies With The Greatest Impact For The Property/ Casualty Industry To Drive Revenue

The Gartner Group, Inc., in a new report, has identified 10 technologies that they feel will have the greatest impact for the Property and Casualty industry to help differentiate themselves and drive new revenue.

“There is a long list of technologies that P&C insurers can use to improve their processes — from product development through customer service. Many of these technologies, however, provide only incremental or minor improvements, have limited or no return on investment (ROI), or do not promise to help P&C insurers radically change their business models, reduce operational costs or generate revenue,” said Kimberly Harris-Ferrante, vice president and distinguished analyst at Gartner. “With budgets challenged and with limited funding for discretionary spending, it is imperative that organizations prioritize their investments favoring those that will generate the greatest ROI and drive the most value.”

Many of the technologies suggested by Gartner can have a significant claims impact. Below I comment on 4 that I feel can have the greatest impact on claims:

Modern Policy and Claims Management Systems – Companies with modern systems, that integrate well with the rest of the organization, have enhanced workflow and business process management (BPM) capabilities. Such systems are easily adoptable as business changes occur and give the company a clear competitive advantage. As Gartner points out, “the adoption of these systems by personal and commercial P&C insurers can provide significant value, including reducing the total cost of ownership, when legacy systems are decommissioned.
Business Intelligence and Analytics – Data and analytics are a logical extension following the adoption of updated systems. Customers are demanding more information and can easily be provided what they need with newer analytic tools. Having better information will also lead to better risk decisions and pricing. In addition, as more states require specialized claim reports, these types of analytics are required to ensure compliance with ever changing data requests.
Advanced Fraud Detection Solutions – Gartner put it best on this one by saying “it is key that insurers reduce losses and leakage to retain profitability. Better control of fraud is essential in accomplishing these goals. Advanced tools analyze data (structured and unstructured) to identify fraudulent claims in real time at point of data entry. This will assist P&C insurers in reducing losses that result in driving up operational costs and may result in companies having to increase insurance premiums based on these losses”
Mobile Devices/Technologies – Any way a consumer can submit a claim promptly and easily will be an invaluable tool. The buzz word in business is mobility and it is no different with claims. With most mobile devices now containing cameras, documenting losses early in the process is easier and can assist in preventing fraud. From the adjuster side, stronger, integrated, mobile technology will greatly speed up claims processing significantly reducing costs.

Failing to adopt new technology will put companies at a competitive disadvantage. Every company should look to evaluate their current systems and offerings and create a strategic plan to keep up-to-date with software and solutions. Staying ahead of the curve is a sure way to help drive costs down and stand out from those who don’t.

Prior to going down a new technology road, I would again encourage an assessment of your claims operations. For further comments on how to manage new technology, please see my prior posts of Putting Puzzle Pieces Together and the Challenge of Creating a New Claims System, as well as With old claims systems come old claims processes – You can’t change one without the other!

What trends are you seeing in claims technology that will be essential for companies in the coming years?

Thinking Outside The Box: Litigation management program initiatives can substantially lower costs

Posted on February 25, 2010 by Marc Lanzkowsky

There is money to be saved by managing the litigation puzzle

Managing litigation is an easy way to save extra expense costs on claims files. A strong litigation management program designed to help foster improved communication, and streamline defense of insureds, benefits all parties involved. As I wrote about the cost savings benefits of out-of-the-box claims handling, using new and forward thinking strategies for litigation management is an excellent way to save money as well. This is even more important in complex litigation found in the areas of product liability, class actions and D&O claims where defense budgets can often trump the loss side of the claim.

A different perspective on how you can manage the larger litigation process

I was recently reading about cost reduction in the Sophisticated Litigation Support blog by Kevin Brooks, Managing Partner of Teris, a litigation support company. These types of companies provide eDiscovery and document management services that can significantly reduce expenses in litigation. Managing eDiscovery and other large document productions is a critical step to control defense budgets.

In his article, Is your outside counsel costing you time, money and case results?, Kevin explains why this vendor–provided service can be particularly beneficial:

You may believe that litigation support management is better left to your outside counsel. And in some situations, this may be true. However, in many cases your law firm could be costing you time and money, as well as affecting case outcome. Law firms are experts in the law, but very few have the resources and data expertise to manage your litigation life cycle properly.

If you take a more active approach by utilizing different types of vendors that compliment each other, you can considerably reduce spending while also having confidence that your operation is both efficient and effective. You as a claims person can proactively manage those services by leveraging specialized vendors instead, at a much lower net expense.

Kevin’s article continues with a list of ten important reasons for why your organization should hire a Litigation Support vendor directly. Four of the ten stand out as significant cost reduction opportunities:

Cost and Expense Forecast – Consult directly with data experts to more accurately identify costs for each project and keep expenses down. Vendors can also help cut future costs by proactively consulting on your data.

Budget Management – Identify points of savings by being able to initiate volume discounts. The service provider can extend volume discounts as they build long-term relationships directly with corporations. You can also avoid the markup from some law firms which could increase your costs for services from 25 percent to as much as 100 percent.

Streamlined Litigation Management – Reduce the number of vendors your corporation works with. This is especially relevant if your company works with several outside counsels and all have their own separate lit support vendors.

Resources – Access the most cutting-edge technology for handling data. Small and medium-sized law firms may not have an in-house IT department to manage large numbers of electronic documents.

I have been involved in a number of litigation projects that would have significantly benefited from support services provided by companies such as Teris, Xerox Litigation Support , Trial Solutions and others (as a side note, I have not worked with any of these vendors and cannot specifically endorse their services here). Litigation costs can get out of hand on large cases in a hurry so paying close attention to them is essential. The largest part of those costs can often be the handling and management of documents and eDiscovery, and not all attorney’s have the skill and technical capabilities to handle the types of services supported by these vendors.

In addition to those mentioned above and in Kevin’s article, there are many different kinds of vendors available to help lawyers streamline the litigation process. These include medical records retrieval companies, litigation graphics and video reenactments to name a few. Claims managers can and should suggest using additional resources to assist law firms which will also help lower litigation costs.

Evaluating your total litigation management process to streamline the procedures, understand the costs in advance, and ensure resources are effectively allocated, will allow for proper expense reserves to be set, and in the end reduce the amount of money spent.

A note on expense reserves

Expense reserves are often the forgotten stepchild of the reserve process. Many time claims handlers will adjust the expense reserve in the beginning of the claim and then increase it over time as expense bills come in. Good claim handlers will establish litigation budgets and evaluate expense reserves in a similar manner as a loss reserves. Regardless, ensuring expense reserves are accurate will help you manage costs across the board and enable you to truly understand the true expense exposure to your organization.

5 expense reduction opportunities insurance CEOs should not overlook

Posted on January 27, 2010 by Marc Lanzkowsky

Increase your profits with efficient claims operations

Take a look at the annual reports of top performing insurance companies and you will see a similar message from their CEO’s. Expense management and efficiency is a principal driver of profitability. As the Ward Group noted in the Ward’s 50 2009 Property-Casualty Benchmark Report “‘Top performers understand that efficient operations result in pricing advantages passed on to the consumer and keep the customer at the center of the business decision.’ In 2008, expenses relative to revenue were 5.5% lower for the Ward’s 50 property casualty group of companies.” According to the Ward Group, net premiums grew 10.1% for top performing companies compared to 1.8% for the industry as a whole.

In a tight market, doing less with more without sacrificing quality or customer service is the edge needed to be a top performer. The claims department is the perfect place to lower costs and improve the customer experience at the same time. Here are 5 key areas that should be looked at for cost savings:

Control what you can control: You can’t control the types of losses that can come in, but you can control allocated loss costs with effective oversight programs. Establishing litigation management guidelines can easily save 10% as well as improve outcomes through better communication. Control non-legal vendors with a program to “vet” providers and subsequently rate their performance. Audit your Third Party Administrators to catch harmless, but costly, errors.
Utilize your technology to its full capabilities: Do you have the right technology and has it been implemented correctly? Failing to incorporate technology appropriately can increase costs. Procedures must be coordinated with new or existing technology so claim adjuster’s jobs are easier and the customer, not repetitive tasks, are the focus (also see our post on implementing claims technology and processes).
Create strong reporting tools and use them: Comprehensive reports and analysis are essential to profitable business. You can’t manage growth without accurate benchmark reports and a good reporting tool will allow your claims department to look for trends. Using these reports to work closely with actuaries and underwriters will help ensure pricing is accurate. Good trending will also improve underwriting decisions around expanding or contracting in specific lines of business.
Review your current operational procedures: Old process can equal costly operations, but change for the sake of change is not always a good thing. If you are performing tasks because you have “always done them that way” it’s probably a good time for a check-up. A regular assessment will almost always find cost savings and improve efficiencies (for an example see, Case Study: Improving file set-ups).
At the very least meet minimum expectations: Customers will complain about problems when they arise, but will rarely complain when basic needs are not met. Before you can dazzle your customers with new services make sure you are first providing the basics. Regular communications and flexible reporting capabilities are minimum standards that must fulfilled or you will lose in the renewal process. You are in a competitive environment and providing mediocre performance is a non-starter.

Follow the example of the top performers, and don’t just talk about cutting costs. Take affirmative steps to reduce spending and improve your customer experience. There is no better place to do this than in the claims organization.

The Claims SPOT

Identifying opportunities is easier when you know how to SPOT the issues

Tag Archives: Efficiencies