Tag Archives: Lessons Learned

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

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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.

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

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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. Originality – For 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?

Insanity: Claim’s Departments Can’t Expect Different Results Without Changing Their Organizations

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Why do we keep traveling in circles?

Maybe I care too much about our industry or am just frustrated by the lack of attention to quality claims handling, but this is annoying. Why should claims make up half of the most frequent market conduct issues for the Property & Casualty industry as listed by Wolters Kluwer for the 5th straight year? As part of their review they track and analyze the results from state market conduct examinations. As with their prior studies, claims issues continue to dominate the list of state concerns.

In the 2010 incarnation, claims departments are being exposed to market conduct fines for:

  1. Failure to properly acknowledge, investigate, pay or deny claims within specified time frames
  2. Failure to provide required disclosures in the claims process
  3. Improper documentation of claim files
  4. Failure to process total loss claims properly
  5. Failure to pay the appropriate claim amount
  6. Failure to respond to the department of insurance and/or produce records requested during the exam process

I went back over the last 5 years of this study and the same issues keep coming up.  Figure 1 charts all the issues and how many times they showed up on the study.  These findings can be prevented with some focus on identifying issues and working to correct the problems.

Figure 1 * Five Year Market Conduct Claims Issues

For the individual result, see years 2006, 2007, 2008 and 2009

It’s time to raise the game!

Why are the same things coming up as issues year after year? We are now in an era of useful technology that should give companies an advanced look into their operations. Through oversight and a quality review program, claims departments are truly in the best position to prevent many of the issues raised on the top ten list. So whys has nothing changed?

I am sure every company is different and there are a lot of reason, but I feel there has been less and less attention to internal claim reviews and audits.  When times are tight operations are thinned and doing an internal claim review is considered a luxury.  Claim departments need to get back to preventing issues before they occur as the consequences for not doing it will result in increased claim costs.

So how does a claims department put themselves back on track? Here are a few suggestions:

Create standards: I know people are reluctant to create claim manuals for a variety of reasons, but there have to be some best practices in place that can be measured. Best practice documents can be drafted appropriately to minimize the risks of them being take out of context in a law suit. (Also if you are concerned, see our prior post of 7 Consideration When Drafting Claims Guidelines). Setting the standards and having staff work to those standards is a good starting place to ensure consistent results.

Audit for compliance: You can’t just sit there and expect everything will be fine you must review the work and ensure compliance. Audits are sometimes looked at with disdain, but when managed correctly they are a wonderful tool for training and improving the operation. Don’t just audit the old way, but instead collect data with a tool like The Audit Portal and understand where the breakdowns are (see Claim Reviews Empower Better Decisions By Putting Critical Information In Hand). From there you can truly assess how to correct the problem.

Fix and track problems: Getting all the information collected nice and neatly is a good start but now you have to improve on what was learned. Gather the information and look for trends and attack the problems. Is there a systemic problem or was it isolated? Can it be fixed with training or is there a technology solution that needs to be addressed? Analyze the issue and then develop a game plan for correcting the problem.  Then – re-audit.

As a claims community we can do better. Let’s start a quality campaign to get claims issues off this list!  Send this along to others in the industry and let’s start a trend.

Claims And A Half Plate Of Vegetables – Teachings From The New Dietary Guidelines

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Creating A Visual Reference To A Complex Issue Can Simplify It

The government just announced new dietary guidelines for the American public (see New Dietary Advice From Government: Just Eat Less).  One of the best pieces of advice that made the most sense was to fill half your plate with fruits and vegetables. This is so simple to understand and makes a lot more sense then telling people to eat an extra serving of healthy food.  What is a serving anyway?

Margo Wootan, the director of nutrition policy at the Center for Science in the Public Interest, said previous guidelines — which are revised every five years — offered “big vague messages” about reducing cholesterol, salt and sugar. The guidelines released Monday, she said, were “much more understandable and actionable.”

OK I know you are asking why this should in any way relate to claims?  Well I will tell you. Simplicity and looking at the obvious in an easy to understand way is a tool that would go a long way to helping the claims professionals be better at what they do. Being understandable and actionable can only be a good thing in claims.

What the government did by saying to have half your plate covered in fruits and vegetables was to provide an easy to understand visual cue as to what they were talking about. In claims, there are often complex issues that could benefit from shifting the perspective to something completely different. Using a new visual representation to demonstrate an issue may make it easier to understand.

Simplify The Complex Issue With A Visual Representation

Whether having to explain to a novel claim issue to a company executive, or trying to convince a claimant to accept a fair settlement, getting them to understand the issue will lead to more action. Changing the way these issues are presented can be the difference.

For example, I once had a complex medical malpractice case that involved a brain damaged infant and the management of the mother’s blood pressure prior to delivery.  There were dozens of notes and lab records and blood pressure readings to sort out.  To help understand the process better, I put all the critical readings into a spreadsheet and then represented them on a graph.  Being able to look at the numbers visually, instead of just as numbers, made it easier to see just  how much the blood pressures were rising over time.  It was a complex issue that became very easy to understand and explain to others.

When looking at claims issues involving numbers – break out the spreadsheet and make a graph or chart. I am not saying it will always carry the day, but taking a look at it differently will almost always make it easier to understand. It may also open your eyes to an issue lost between the numbers.

Operations Can Benefit From Visual Cues

Operational issues are almost always easier to grasp when seen visually. Getting from here to there can seem like a daunting task when seen as written steps on paper.  Take the steps and throw them into a flow chart. You don’t need special software or experience to show steps flowing through a process.

When putting steps into a visual box you almost always have to shorten the text and get to the point of the process.  Also, operational processes almost never move in a linear fashion across an organization. There are always intersecting parts and steps that can get lost when written down as just steps. Drawing it out will open your eyes to steps in the process that may not be adding value. Once a new process is developed you will also be able to easily see what improvement will look like.

I was able to do this with a client as it related to their first notice of loss process.  Before we drew the process out as a flow chart it appeared that there were some areas for improvement, however, all in all it did not seem that bad.  Drawing it out created a flow chart that covered 4 pages.  In looking at the flow, we were able to see redundancy and wasted efforts in the process.  The new process was now able to be reflected in a one page diagram. More importantly, we eliminated wasted steps and reduced the time to set up a claim file by an average of 7 days.

Simply put, looking at things a different way is always a good thing. Trying to explain complex issues visually will always be worth the effort. This is often done in multi-layer and participant policy situations. Looking at coverages in a grid gives a much better picture of the who is covering what, at what layer and for what amount.  Trying to figure that out by reading it on a sheet of paper is never as clear.

How have you used visual representations to understand a complex claims issue?

Promote Creative Thinking To Get The Most Out Of Your Claims Staff

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So how do you train the next leaders in claims? How about challenging their creativity!

If you do not know about TED, I strongly recommend you take a look. To quote them directly:

TED is a small nonprofit devoted to Ideas Worth Spreading. It started out (in 1984) as a conference bringing together people from three worlds: Technology, Entertainment, Design. Since then its scope has become ever broader.

I recently watched the clip below from the TED archives and was so fascinated by the concepts I just had to relate them to claims.  Good workers are sometimes all that claims departments look for and, given the nature of claims these days, it is not a bad thing. There is so much to do and so little time to do it and good workers, however you define them, are great to have. But how often are creative thinkers found and rewarded?

I am a big proponent of new ways of looking at claims and trying to get people to think out of the box (see Change Hats With Someone And Free Your Mind To Make Your Claims Operation Better and Is your claims department becoming a bus company?). With increases in technology, more claims specialization and the constant pressures on staffing, the ability to freely think, analyze and resolve claims creatively is being challenged.

Sir Ken Robinson is considered a “Creativity Expert” and led the British government’s 1998 advisory committee on creative and cultural education, a massive inquiry into the significance of creativity in the educational system and the economy, and was knighted in 2003 for his achievements. He has most recently published a book, The Element: How Finding Your Passion Changes Everything, which is a deep look at human creativity and education.

Good workers but not creative thinkers

Take a look at the video below with Sir Ken. He is truly and a dynamic speaker and the will engage you quickly.  In this clip, Sir Ken asks why don’t we get the best out of people? He argues that it’s because we’ve been educated to become good workers, rather than creative thinkers. Do you recognize that employee in your organization?

Two suggestions to help promote creativity

So how do you promote creativity? How do you get the claims staff to try new ideas? It is difficult to encourage creativity when claims have to be regimented and everything is being monitored and standardized. Regardless, there are ways to attack the creative mind to open up new ways to manage claims.

  1. Challenge staff to be more creative when looking at problems. When facing a difficult situation try and put together an old fashioned brain-storming session to allow free flowing ideas no matter how crazy. The idea here is to promote creativity and come up with new ways to solve problems.
  2. Another way to try and teach creativity is to tell war stories. Have a war story lunch and see who has resolved a claim in the most creative way. I am sure you will be surprised at how creative people are and retelling those stories will help stir the imaginations of others.

How do you think creativity plays a role in claims? What have you done to encourage free thinking?

Why Can’t We All Get Along? Making The Agent A Partner In The Claims Process

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Working together to create a strategic advantage through improved agent carrier relations

The relationship between claim adjusters and agents can be an adversarial one.  Each side often finds itself correcting issues created by the other side.  Agents may set the wrong coverage expectation for a customer, leaving the adjuster to deliver the bad news.  Adjusters may get overloaded and not return phone calls in a timely manner, resulting in a complaint to the agent’s office.  In the worst case scenario, adjusters and agents may badmouth each other to customers, putting customers in the middle.

Aligning incentives to help agents and adjuster work to the same goal

Adjusters and agents work for the same company and should have the same overall goals – right?  Not always.

Some agents want to keep their customers (and commissions) at all costs, even if that means covering a claim that shouldn’t be covered or paying more than what is owed.  Adjusters want to retain customers, too, because fewer customers means fewer claims and ultimately, fewer adjusters.  However, losing a customer doesn’t result in an immediate reduction of income for an adjuster as it does for an agent.   And, many companies place a stronger emphasis on claims process compliance – opening practices, estimating accuracy, etc., than on customer satisfaction.  Too many inappropriately paid claims can result in an adjuster losing his or her job altogether.

Efforts can be made to better align goals and incentives such as incorporating a loss ratio component into agent bonuses and placing a stronger emphasis on customer satisfaction in adjuster measurement and compensation.  These tactics help.  But, due to their relative roles in the organization, some tension between adjusters and agents may be inevitable.

Use the customer’s expectation to work with agents to help the claim process

Therefore, should agents be involved in the claim process at all?  Most customers understand the difference between agents and adjusters and don’t expect agents to handle their claim.  But, as long as customers buy insurance through agents and pay them a commission, they will expect them to be involved, at a minimum, to explain their policy and to serve as their advocate if claim issues arise.  Equipping agents to meet these expectations through training on policy coverage and access to claim status information can go a long way toward preventing or resolving potential issues.  And, by meeting customer expectations, agents can help improve claim satisfaction.

Agency staff and locations can give claims an advantage with customers

In addition to meeting basic customer expectations, are there ways for agents to actually help the claim department?  In my recent blog post Increasing Claim Satisfaction Doesn’t Mean Increasing Staff, I mentioned the cost and customer satisfaction benefits of enabling agents to answer claim status inquiry calls, instead of referring them to the adjuster.  There are other ways to leverage agents in the claim process.  Agencies are often the first place customers go when they have a claim.  Having the claim reporting application at the agent’s fingertips to take a complete report and get the claim started reduces hand-offs for the customer and saves time for claims.  For small claims with clear coverage, there is an opportunity for agents to settle the claim, within specific guidelines.

There are particular customers and claim types where the agency role is more critical.  When a customer speaks a foreign language, especially one other than Spanish, agency staff may have capabilities the claim department doesn’t.  Customers will likely have a better experience speaking in their own language directly to an agent versus going through a translation service paid for by claims.  The elderly customer who needs special assistance is another example of a customer type that may benefit from agency involvement in the claim process.

The agency relationship and proximity to the customer are also important for large, individual losses and catastrophe claims.  In-person empathy and “hand-holding” can be highly valued in these situations.  But the agent’s proximity to the customer provides another advantage.  In the era of claim centralization, where offices are closing and more work is done over the phone, agencies provide a point of presence in the community.  During hurricanes, when phone lines are down and people are scattered due to evacuations, agents can take claim reports and issue payments for temporary living expenses until adjusters arrive on site.

Clearly, agencies have a role to play in the claim process.  Enabling agents and their staff to perform their role efficiently with empathy and professionalism can benefit customers, agents, and the claims department.

What has been your experience with agencies?  What role do you think agencies should play in the claim process?

In Claims Don’t Let The Process “Thing” Get In The Way Of Doing The “Right” Thing

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Making a check in the process won’t ensure the matter is done right

Mark Suster,  was the founder of Koral, a Palo Alto company which was sold to Sales Force. There he was VP of Product Management and then left to become a member of a venture capital firm.  He is also author of a blog called Both Sides of the Table and recently wrote about Doing the Right Things is More Important than Doing Things Right. In this interesting article he discusses how sometimes companies get caught up in “things”, or process, without worrying about the outcome. Tasks become the driving force not the outcome.

“When you hire people in functional roles they want to show that they’re achieving results and results are easiest to measure by tasks accomplished.  But many CEO’s and management teams fail to set clear guidelines on what the company objectives are and make sure that everybody is driving toward the same goal.  It’s actually quite hard to lay out an annual company strategy that is articulate and underpinned by facts.

So many CEO’s just carry on being … CEO’s –>  fund raise, get media attention, attend conferences, hire staff, “set direction”, whatever.  But this leads to organizational drift because staff will continue to produce “work.”

Everybody should be able to answer the question, “why am I doing this?”  Otherwise they’re likely to be doing things right, but not the right things.”

I have written, and am a big proponent of, the importance of good process as a way to ensure good results. Putting a proper process in place is a road-map to help move claims to a prompt fair resolution. Nonetheless, doing and focusing on the process without making sure the outcome is sound is doing things right without doing the right thing.

It’s so easy in claims to focus on the process and not use the process as a means to the end

In a recent audit of a hospital system’s claims department I saw an excellent example of what happens when focusing on the doing things right resulted in something not being done right. The claims staff had been instructed, like most claim departments, to place notes in the file on various issues such as coverage, damages and liability. They had previously been cited for poor documentation so a priority was placed on ensuring notes were in the files.

While every file now contained a note, there was absolutely no independent thought to the claims handler’s comments. Almost all the notes had been cut-and-paste word for word from counsel emails. They even went so far to include the salutations and signature lines. One note I found was a complete doctor’s CV that went on for over 30 pages. This type of note taking added little to the claim file and provided no insight into the thought process and evaluation of their claims staff. It was another example where doing things right was not doing the right thing.

Another client required the claims staff to create detailed damage time lines regardless of the nature of the claim. Claims adjusters would spend hours completing outlines, and sometimes even outsourcing the reviews to others, whether the case needed the assessment or not. There was no review as to whether these time lines were adding value to the claims process. Instead of using the process as a tool it was turned into a requirement for the sake of doing a requirement.  Clearly the process was being done correctly it was just not the right thing to do all the time.

So the lesson learned is when focusing on process make sure the process is not the only thing that is being done.

How many of your processes are the “thing” getting in the way of doing the right thing?

Allstate SVP of Claims Discusses The Customer And Claims At The ACE Conference

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Interesting observations about improving the customer claims experience

At the 14th Annual America’s Claims Event in Las Vegas, Michael Roche, Senior Vice President Claims for Allstate Insurance gave the opening keynote address. He spoke about the Customer and the Claims Process in an interesting speech about the inner workings of one of the largest personal lines carriers in the industry.  Mr. Roche, came to Allstate in 2002, having spent his previous career as a leader of Information Technology in the financial services arena, and spoke about the company’s recent push to enhance the customer experience.

As part of the first step to improving claims customer service, Mr. Roche explained Allstate’s transformation of their claims processing system, combining over 90 applications into a single integrated platform. The system helped the company significantly enhance the customer experience and improve their overall efficiency by linking several parts of the organization in one place.  As a result, claims adjusters were able to take claims as far as possible during the initial claims intake process. It further allowed Allstate to manage workloads, reduce cycle times and better service their customers.

It was interesting to hear how Allstate connected with executives from a major company, known for its stellar customer service, outside the insurance industry to learn more about how to improve the customer experience. Going outside to different industries is a great way to learn how to solve problems and this was a great example of what can happen when you learn from others (see my recent post Change Hats With Someone And Free Your Mind To Make Your Claims Operation Better).

Customer lessons learned and things to watch out for

Companies of all sizes and lines of business can adopt many of the initiatives undertaken to improve customer relationships by Allstate. Having committed to improving the customer experience, Allstate spent time observing their claim professionals interactions and learned:

  • Claims professionals were using internal acronyms and industry language with their customers which complicated the conversations
  • Handlers were running through a process, little understood by the customers they were speaking too, without educating them what was going to take place
  • They did not spend enough time soliciting questions and concerns and truly listening to the customer and making sure they were being understood.

As Mr. Roche said, “We need to do a better job of educating people on how well the industry works.” Allstate picked up on an industry wide problem as it relates to communicating with customers about claims. Explaining the process in terms that people, who are not part of the business, can understand will go a long way to improving the experience.

How are you addressing the customer experience in claims?

Cutting Costs Without Overloading The Claims Handler – Part 2 Of The Series

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Trying To Save Money But Can’t Figure Out Which Road To Take?

Last week I offered the first of two solutions to reduce costs in key claims cost cutting areas when hiring full time staff is not an option. As I noted in the post, 2 Cost-Cutting Solutions To Get Work Done Without Overloading Claims Handlers, overworking claims handlers with additional tasks not part of their core job function – to evaluate and settle claims – can result in some aspect of their job suffering. Key cost cutting initiatives, such as Anti-Fraud and subrogation recovery, get put aside by the handler and never get the fullest attention needed to be successful.

Having achieved improved results in my prior life, I suggested both outsourcing and hiring a dedicated part-time employee to handle certain tasks. The first example I presented centered on having an outsourced vendor put a resource “on-site” for improved results. In the context of an Anti-Fraud solution, having the vendor “on-site” resulted in more fraud reports to the states, improved claim handling through knowledge transfer, and lower costs. The program was a success.

This example tackles a similar problem of trying to improve results without the need to hire a full time employee in the area of litigation management bill review.

Claim Handlers Really Don’t Do A Good Job Of Cutting Legal Bills – A Part Time Hire Solves The Problem

Conventional wisdom has been that claim handlers are in the best position to review legal bills on the claim files they work on. The reality is legal bill review, for most claim handlers, is a dreaded task considered a necessary evil.  In addition, I find that some claim handlers rarely cut inappropriate charges because they develop a working relationship with the attorney and do not want to hamper that relationship for what are felt to be minor issues.  However, when the bill review process is separated from the claims handler, many of these concerns or conflicts go away. Handlers can focus on managing claims and developing open working relationships with counsel and billing issues can be addressed by others.

Possible Solutions

In looking for a proper solution I considered vendors that review legal bills as well as bill review software.  Legal billing vendors that provide the service usually get paid based upon the amount of money they save. This type of review can create problems and can sometimes be perceived as a conflict.  I was not trying to create an adversarial relationship with counsel, so this idea was put aside. Bill review software provides an excellent job of catching billing discrepancies that frankly can’t be caught manually. Unfortunately, billing software requires a larger capital investment, IT involvement, and time to implement. While the projects often pay for themselves through reduced legal fees, at the time, it was not a road that I was able to follow. What I needed was an attorney who understood the legal process and could work with, and speak with, counsel on billing issues. As I was working in a claims organization that hired many lawyer/claim handlers it seemed like a natural solution.

How To Make It Work

While I did not want to hire a full time attorney, I was approached by someone who knew a stay-at-home attorney looking to work 20 hours a week in a flexible environment. Being able to provide that kind of work load is sometimes not possible for many companies, however, given what I was looking for, the solution to my problem seemed to have found me. At the time, the company I worked for had an excellent claims system (since I helped design it I was always going to say this) which made it easy to set up a part time employee remotely. A new process was designed to allow claim handlers to send our litigation bill reviewer invoices for compliance analysis and review.  At first it was decided to limit reviews to invoices with known issues and ones over a certain dollar amount. Bills could be forwarded electronically, reviewed, analyzed and returned to the handler with suggested changes. A form letter was instituted where disputed charges were listed and explained. The new program was in place and it worked.

In the first year the program reviewed over $15 million of legal invoices. On average, legals bills were reduced by 10% with most of the reductions due to billing errors, duplications and failing to comply with agreed upon rates. The most fascinating findings came when we opened the services to Third Party Administrators doing work on the company’s behalf. It turns out that bill review reductions were 2-3% higher for work being done for the TPA than for work being done for in-house claim handlers. No matter what the reason, the bottom line was over $1.4 million dollars saved in the first year alone.

Lessons Learned

  • Claim handlers, despite being close to the claims process, were not in the best position to review legal bills
  • Attorney’s seem to be a little more cautious reviewing their billing submitted to the company directly than when submitted to the TPA
  • A small amount of diligence can result in huge savings – these savings add up and were clearly worth the small investment to retain a part-time employee

The solutions I offer here, and the prior post, are not limited to world of SIU and litigation bill review. Hiring a part-time employee, or “on-site” vendor,  to manage any initiative is a great idea when specialized knowledge is an appropriate way to get better results and the need for a full time employee is not needed. As noted, subrogation and salvage recovery are great areas that can also benefit from these types of programs.

I have just offered up two solutions to the age-old problem of trying to do less with more. While the solutions are not new, sometimes to become more effective you need proper execution and new ways to look at old problems.

2 Cost-Cutting Solutions To Get Work Done Without Overloading Claims Handlers

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Too Many Tasks, And Hiring New Staff Is Not An Option? (Part One of Two)

Not every company can afford to hire dedicated teams to focus on cost-saving initiatives such as subrogation or Anti-Fraud. Sometimes there is simply not enough work to justify a full-time position internally. Regardless, failing to focus on cost-saving programs can increase loss and expense payments.

So how do most companies handle the situation? By adding those tasks to a claims handler’s already overloaded job function. The problem is, the more tasks they are asked to do, the less they can focus on being a good claims handler.  The usual result of overloading the claims handler is that they not only can’t focus on the core aspects of their job – to evaluate and settle claims – but they also can’t properly attend to the additional work. Both jobs end up suffering.

Tasks such as subrogation and legal bill review are the last things claims handlers want to do. Furthermore, these tasks are better performed by dedicated staff. Take a look at any department with dedicated subrogation specialists and you will see higher rates of recovery than those without. This is also true in the areas of Anti-Fraud and litigation review. So how can a claim department maximize results and lower costs, while also ensuring claim handlers can continue to focus on their core job functions? From my own experience, two recommended practical solutions to consider are outsourcing with on-site vendors, and hiring part-time employees.

Taking a page from my past, this post presents the first of two solutions that I implemented to secure successful results.

Outsourcing As A Solution – An Anti-Fraud SIU Example

Outsourcing certain aspects of the claims department can make good economic sense.  However, not every company needs a 30-person call center, nor do they need to invest the resources to build one. In those instances, partnering with a vendor can be an ideal way to provide the best of the best. One of the potential problems, however, is if your company has only a limited need, the vendor may not always give you the most attention. Additionally, completely outsourcing the task means that claims handlers lose the benefits of the expertise that the vendor provides, and often may not even be aware of the available services offered. I was faced with this very issue when dealing with managing an Anti-Fraud unit. My solution was to require the vendor to have their employee “on-site” in our office.

What Did Not Work

Looking for fraud is a key part of a claims handler’s job, and many states require fraud reporting to state investigators. The company I was working for had a substantial commercial casualty book, as well as other specialty lines of coverage. There was not quite enough work to justify a dedicated Special Investigation Unit, but still the work needed to be done. I decided to outsource the process to a Third Party Administrator who had an active SIU unit. The vendor was contracted to handle all the company’s SIU state reporting requirements as well provide any investigation services that our internal claim handlers needed. In addition they were to provide required Anti-Fraud training to our team, and perform audits of our claim handling TPA’s for compliance with Anti-Fraud reporting requirements.

The vendor provided Anti-Fraud training to the team at the onset of the relationship, and then visited the office from time to time to provide updated training and answer questions. After a year of working with this vendor, we discovered that fraud referrals to the state were no different than before the vendor was hired. In discussing the issue with the claims handlers I learned that, despite initial training, the interaction with the vendor was typically reactive, and there was minimal regular contact with investigators. As a result handlers were not aware of the vendor’s range of services, nor did they even know how to properly identify Anti-Fraud red flags. The process and the program weren’t working and I had to make a change.

How To Make It Work

I began to look for a new vendor who would provide a solution that would produce better results.  I determined that the only way I was going to get more fraud referrals was to have someone sitting in the office on the front lines with the claims handler. For the new contract, I found a vendor that would assign a dedicated SIU investigator to sit in our office several days a week. With the investigator on-site, I was able to produce a more proactive approach to looking for potential fraud. Because they were on-site, the vendor was able to use our claims system to review files and actively monitor claims for potential fraud. This was not possible with our previous vendor in an an off-site reactive model.

Once the new program started the difference was almost instantaneous. Claim handlers sought out advice about claims with possible fraud. Investigations increased and claim handlers became more proficient at identifying industry red flags. SIU state referrals increased over 200%, and due to new investigations, several files were able to have indemnity reductions. Handlers learned that sometimes something may not be an outright fraud but instead were exaggerated claims. With the assistance of the “on-site” investigator, handlers learned new ways to analyze damages and reduce loss costs. The program was a success.

Lessons Learned

Changing the way a vendor works with your company can have dramatic results. In this particular initiative I was able to learn:

  • If it’s broken, then fix it. Don’t worry about changing your approach; it’s sometimes the best thing. Too often, leaving a merely adequate solution in place is worse than starting over to make improvements.
  • Be persistent in thinking outside the box in an effort to find new ways to approach basic solutions.
  • Having your vendors work on-site with your team can have many advantages, including the “absorption” effect. Your vendors’ expertise, knowledge, and skills are transferred to your internal staff.

In Part 2, I will give an example of using a part-time attorney to review legal bills as a way to lower your legal expense dollars.