Tag Archives: Process Management

“What’s The Point” Claims Process And How To Avoid Them

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Being able to truly focus on what’s important is a path to success

Claims organizations are notorious for multiple process and procedures. Many of these procedures are truly necessary and are required to maintain controls, prevent fraud or comply with a multitude of regulations facing the insurance industry. Nonetheless, doing something for the sake of doing it is no way to be an efficient organization.

I have referred to Seth Godin’s Bolg in the past for its plain statements about business management and wonderful insight. His most recent post speaks so well about the need for projects and process to “have a point.” As Seth wrote:

“An idea turns into a meeting and then it turns into a project. People get brought along, there’s free donuts, there’s a whiteboard and even a conference call.

It feels like you’re doing the work, but at some point, hopefully, someone asks, “what’s the point of this?”

Is it worth doing?

Compared to everything else we could be investing (don’t say ‘spending’) our time on, is this the scariest, most likely to pay off, most important or the best long-term endeavor?

Or are we just doing it because no one had the guts along the way to say STOP.

Are you doing work worth doing, or are you just doing your job?”

How to say STOP

Take a look at any of your new projects and take some time to see if there is truly “a point” to what is being done. Is that new system enhancement really going to achieve what you need it to? Will adding that new report or requirement assist the claim handler or management to make better decisions? If not, then just say no.

Look at the first three habits of Stephen Covey’s 7 Habits of Highly Effective People, which I have rearranged to fit this purpose, as a way to manage what needs to be done:

  • Begin with the end in mind – develop a goal
  • Put first things first – do only those things that are going to meet that goal
  • Be proactive – get to it and actively work to meet that goal

So don’t just do things for the sake of doing things. Ask “what’s the point” and have the guts to on the brakes.

5 expense reduction opportunities insurance CEOs should not overlook

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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:

  1. 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.
  2. 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).
  3. 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.
  4. 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).
  5. 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.

Don’t wait for your competitors to be a step ahead of you.