Tag Archives: Process

A Claims Tale Of Three Little Managers And Their Review Programs

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My Take On The Old Story Of The Three Little Pigs

Once upon a time there were three claims managers who were told by their CEO to go out and make sure they have the best organization possible. Since they all knew that the best way to a good organization was to develop process and procedures and make sure all who worked there understood them, that’s just what they did.  Each built an oversight program to ensure all was well and to prevent being attacked by all those wolves out there.

The first manager built a review program out of straw, the second out of sticks and the third out of bricks…..

Please work with me here as I am trying to be metaphorical.

The Manager Review of Straw

The first manager was a proud manager. She knew she had a good group and they worked just fine. She had instructed them on her way of doing things and had provided sufficient training to let them know was expected. Her “straw” review program was to wait for something to happen and then if there was a problem to fix it.  One day a huge claim showed up on her desk. She had never seen or heard of this claim, but it was big – the type of claim that could really cause her a problem. Well that claim, it turns out, had been in the office for over a year. Information had been received to provide sufficient warning for everyone to make sure the company was ready. If only she had known about it.

After dealing with “fixing” the problem a knock came on the door. It was the manager’s big reinsurance company.  This reinsurer was large and seemed to come out of no where.  The manager was shocked.  This reinsurer said….”manager, manager, let me come in”  the manager responded “not by the hair of my chinny chin chin!” The reinsurer responded, “then I will huff and I will puff and I will blow your department down.”  And that’s exactly what the reinsurer did.

The manager lost his house of straw and somehow landed a new job at her manager friend who said come on over you will feel protected in my department of sticks.

The Manager Review of Sticks

The Manger of Straw’s friend, the Manager of Sticks, sat her down and told her how it was going to be.  We here in the land of sticks are prepared for any possible problem. We have a wonderful review program made of sticks.  This program is so good we can prevent all those problems that got you blown down in the house of straw. We also have procedures in place, the Manager of Sticks said, but we oversee it all with regular reviews. We spend time reviewing claim files and recoding all that information on these sheets of paper.  We catch it all before a problem arises so he told the Manager of Straw that she will be fine here in the house of sticks.

The stick reviews went on every quarter. The sticks were filled with all this great information and captured all this detail about the claims and what was working and not working. The problem is the sticks piled up and once they were in that pile it was hard to understand what was working. Someone had to put the sticks in an order to really understand how many problem sticks there were. Low and behold a day came when a whole series of claims came in all seemingly insignificant.  It turns out there was a trend and a real problem brewing with a particular type of claim.  Individually they seemed fine, collectively they were significantly under reserved. Those sticks had the information but it was so spread out and disorganized that the information was lost. Without the information available, the company rewrote that book of business and was now going to face a very big problem to explain to the shareholders.

The Manager of Sticks was about to get a knock on the door!

Knock knock….”who is it” asked the Manager of Sticks?  It’s the Chief Underwriting Officer, the Chief Financial Officer and the CEO. See it turns out that they had some explaining to do to the board about a reserve charge that seemed to have come out of no where. “Manager Manager please let us in” with the Manager of Straw next to him nodding her head thinking oh I know what’s next, the Manager of Sticks responded “not by the hair of my chinny chin chin.” Well those executives were not about to be shut out and said “then we will huff and we will puff and we will blow your house in!” and that is exactly what they did.

Amazingly, the Manager of Sticks and the Manager of Straw were able to find jobs again in their friend the Manager of Brick’s company.

The Manager Review of Bricks

Working for the Manager of Bricks was actually not as bad as people thought it would be. Yes he was a tough manager and expected a lot from his people, but in the end he wanted them and the organization to succeed. The Manager of Bricks was keenly aware that when procedures were working and followed there was less of a chance of surprise. He also knew that the way to avoid those surprises was to have a very specific audit and oversight program in place. Because the Manager of Bricks also knew that using technology in the right way was a benefit, he made sure he had an oversight tool in place to manage the review process and make sure he captured, and not wasted, all the hard work performed by his reviewers.

The Manger of Straw and the Manager of Sticks had never seen anything like it.  All the reviews were coordinated in one place online (of course they used the Audit Portal).  Issues were categorized and follow-ups documented.  Trends just popped off various dashboards and made it so simple to proactively run the department.

Then one day there was a knock on the door.  It was the big bad mean regulator trying to find a violation.  “Manager, manager let me come in” the regulator yelled.  The manager of Bricks responded….”sure come on in and look around.” The regulator had apparently wanted to see the offices the Managers of Straw and Sticks but there was nothing left there to see.  The Manager of Bricks had nothing to fear.  When the regulator asked for controls and a plan it was all ready to be shown.  Issues that had been identified and corrective action plans were clearly in place and the regulator was pleasantly surprised. After giving the Manager of Bricks a clean bill oh health he left with no adverse claims findings.

Don’t you love a good story? Maybe if we were all like the Manager of Bricks things would be better!

At Lanzko we can help shore up operations to become more like the Manager of Bricks using our Audit Portal application. Give us a call to learn more.

 

What Would Steve Jobs Do In A Claims Organization?

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Innovation can be learned from the master

Thank you Bill Schoeffler and Catherine Oak of the Oak & Associates Consulting firm for the idea for this article. They wrote a wonderful piece for Insurance Journal called, What Steve Jobs Would Do In Insurance, where they so aptly lay out how Mr. Jobs would change the insurance world. They pick out several ways a Steve Jobs run insurance agency would be different and innovative.

Like many, I am a huge fan of Apple products and have been for a long time. Clearly there has been a revolution in the computer industry as a result of innovation led by Steve Jobs. One thing that is most interesting about Apple is how they not only changed computing, with the iPod and iPad, but also changed the way people listen to music, access the internet and buy and use software applications. The iPod and iPad were perfect examples of thinking outside the box. (And I like thinking outside the box – Improve bottom-line outcomes on claims by thinking outside-the-box!)

As they wrote:

Steve Jobs’ primary focus was to create great products. All else was secondary. The product of an insurance agency is the service it provides to clients. The direction Steve Jobs would take would be to provide a seamless, integrated experience for the client. People have too many things to worry about and not enough time to be able to focus on their insurance needs and problem. They want to be taken care of.

Schoeffler and Oak suggest that a Steve Jobs run agency would:

  • Seamlessly integrate the customer experience
  • Capture data about client needs easily to analyze and allow products to be tailored to individual customer
  • Innovative at it’s core providing products clients didn’t even know they needed
  • Create teams would work collaboratively at all levels
  • Hire only the best talent passionate about providing services

Steve Jobs in Claims 

So what would Steve Jobs say about our claims industry? Well, having heard about his reputation I think I will leave what he would say out of this post. Regardless, I think Mr. Jobs would see an industry with tremendous opportunities to innovate and improve the way they deliver and manage claims services.

Following the lead of Shoerffler and Oak, I would agree that Jobs would likely create a seamless way to integrate external claims information with internal business related data.  Underwriting and policy information would easily flow into claims systems and be available to the customer and claims professional easily. Claims filed through a variety of input sources would simply display information needed for all those touching the claims. The claims department, management teams, outside providers, underwriters, and of course the claimants, would have easy to understand graphical representations of relevant information. Apps would help direct those particular parties to help move the claim to resolution and seamlessly provide analytics to the company in real time.  And of course there would be beautifully designed hardware to deliver this integration in the sharpest possible way.

Claims teams would work collaboratively with other parts of the organization to deliver better claims products to customers and real time relevant data to assist in underwriting. Good companies understand the relationship claims has to the health of the organization way before a claim even comes into the office. Steve Jobs would ensure underwriters would understand the claims process and how policies sold end up yielding claims. He would make sure that claims people understand how the claims organization’s activities affect the financial health of the company on pricing and expense ratios.

Steve Jobs was a brilliant marketer. He seemed to know how and when a product was going to change the world reshaping whole industries (when was the last time you actually psychically bought a CD?). Claims departments could benefit from a little marketing as well. Whether to internal or external customers, claims departments can certainly do a better job of getting their “brand” out to their market place.

The reality is that a Steve Jobs led Apple and its success can be obtained in claims departments.  It takes a little more focus and the ability to step outside “what’s always been done” to innovate the future.

Tell us how else do you think Steve Jobs could have changed the claims world?

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

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

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

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

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

Improve Your Claim Review Process

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

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

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

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

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

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

Conduct A Workflow Audit

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

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

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

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

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

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

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

What Are Your Summer Improvement Plans?

Commentary: Claims Departments Are Facing A Crisis And Have To Learn To Encourage Innovation

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So Much Work And No Help In Sight

I hear it time and time again from colleagues all over the industry. With cutbacks many are being asked to do more with less.

This trend began several years ago as more technology was implemented into insurance companies. Gone were the support staff; why were they needed when the claims professional could do it all on their own lap-top. Gone were supporting groups like subrogation departments and litigation management assistance; why were they needed when new systems could manage it all.

More efficiency meant more time to do more work. Certainly this will translate to better results…I mean it’s supposed to right?  But has it really?

I’m Not Going To Take It Anymore

The claims industry is at a crossroads and needs to change. I know you have heard this one before, but when speaking with people in the business I was reminded me of the famous scene from the movie Network where the anchorman screams out “I’m mad as hell and I’m not going to take it any more”.  Check out the clip below to be reminded.

In a recent discussion that I posted on LinkedIn, I asked the question, How do you keep the claims department from become stale? (see prior posting Is your claims department becoming a bus company?). For some reason after seven months of posting I received a flurry of comments on how the industry is facing a crisis of staffing and turnover. Quoting one post on LinkedIn from John M. Beringer:

“A sad fact is the majority of adjusters rarely last for five years. That is not due to a lack of skill or commitment; it has to do with how their pending is counted, the layered management reporting; unrealistic expectations of claims management and management by edict rather than training and critical reasoning.”

While there were many wonderful responses to my question, the general feeling was that case loads have crept too high and there is a lack of emphasis on training and development. We as claims people have a knack for complaining about caseloads, however, this one is truly one that needs to be addressed. With more technology came more expectations for claims professionals to take on more administrative tasks. Departments contracted, and claim counts rose. In my opinion this resulted in an increase in indemnity and expenses (I wish I had the data to support this, but can only i have seen it the file reviews i have conducted over the past year).

In order to excel in this marketplace, claims departments will need to innovate and attract, and maintain, new talent. Unfortunately, we are not an industry that accepts change easily, and for the most part innovation, is slow and not encouraged.

Change Requires Innovation To Be Encouraged

I have quoted Serth Godin before and will continue to do so especially with pearls of wisdom like this:

“That’s not the way we do things around here

Please don’t underestimate how powerful this sentence is. When you say this to a colleague, a new hire, a student or a freelancer, you’ve established a powerful norm, one that they will be hesitant to challenge. This might be exactly what you were hoping for, but if your goal is to encourage innovation, you blew it.”

In my consulting practice (Lanzko Consulting) I am often confronted with clients that say something like “That’s not the way we do thing around here” or, more likely, “that’s how we have always done it.” Change in claims cannot happen unless the organization looks at, and breaks, the old habit of accepting the status quo. Challenging the norm has to become the new norm. Industry executives have known for years about the declining talent pool and that need for changes, yet they have taken few steps to modernize the technology, as well as the process.

Technology is a great tool, but it will never substitute the skills of a talented claims professional. Technology must be implemented into the process to assist, not hinder, claims professionals.  We need to move back to a time when claims professionals can be claims professionals.  We need to make the job as interesting as it can be, and not purely about automation. Without this, the profession will struggle to attract talented people to its ranks and will certainly cost companies far more in the future.

Let 2011 be the year to take the industry forward.  How do you think we can innovate the claims industry?

Getting Creative And Reducing Claim Costs Without Sacrificing Quality – Part II

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Building blocks on which to create a new foundation to improve processes

Last month, I discussed the building blocks needed to reduce claim and litigation costs, while still maintaining a strong focus on quality. Those building blocks included:

  • collecting current data about your claims and litigation
  • evaluating the claim and litigation work itself
  • settling on a carrier claim and litigation handling philosophy

These building blocks create a foundation on which to build new processes and procedures that will reduce your claim and litigation costs, and maybe even decrease you volume as well. I refer this building process as looking at What I Have, What I Want, and What I See.

What I Have – All This Data

The data you collected regarding the current state of your claims and litigation is an excellent starting point. Examine your data and identify the areas that you wish to improve.

For a couple of reasons, while the amount of your legal spend may a visible target for improvement, don’t spend too much time on rate-issues first.  This is because the impact of improved processes and procedures will likely decrease total spend naturally, without having to address rate issues. Focus instead on issues like overall litigated volume (the number of pending litigated claims), cycle time (the average amount of time litigated claims take to close from inception), severity (of your pending litigated claims), and other factors. Developing processes and procedures that improve these other factors is a good starting point.

What I Want – Creating The Benchmark

Look again at your non-dollar data. Think about what you believe those numbers should reflect. For instance, if the average time it takes a litigated claim to go from inception to closure is two years (730 days), you know that, on average, you will be paying panel counsel for two years to bring that matter to a close. Based on your knowledge and you your industry contacts, determine whether this number appears high. Do this for other non-dollar metrics that you have measured.

Look at each area you wish to improve and consider a practical benchmark and goal you would like to achieve. My advice is to not set arbitrary goals, as they bear no particular relation to what you will be able to achieve, and thus set your organization up for disappointment or worse. Instead, work with stakeholders in the process and think about how your metrics work together to form a complete picture.

Set incremental measurement points. Hypothetically, you may be starting with a two year cycle time and wish to set a benchmark objective of reducing that by six months, followed by a long-term goal of reducing it to one year. Again, always make sure that your objectives align with the other information you are obtaining. Do your objectives make sense in light of the jurisdiction, the severity of the portfolio, the type of case, and the claims handling philosophy of your organization?

You may have a very diverse book of cases and wish to develop benchmarks and goals first by line of business, or by stakeholder. In fact, when you start objectively considering all of the factors involved, you may end up with benchmarks and goals that look something like this:

  • Overall Litigated Claim Pend Time – Current Average: 730 days
  • Motor Vehicle Accident (simple): 550 days (benchmark); 365 days  (goal)
  • Product Liability 700 days (benchmark); 650 days (goal)
  • XYZ Claim Professional 680 days (benchmark) ; 600 days (goal)

These numbers are purely arbitrary for the sake of example, but they are illustrative of processes you may wish to consider when examining your current situation and deciding how you’d like them to look in the future.

What I See – You Have To Look At What Is There

A continual focus on quality is critical. Higher-quality claim and litigated file management results not only in lower indemnity payments, but in decreased costs as well. As someone who has managed thousands of files with bad faith allegations, there is nothing more expensive than trying to successfully litigate a poor quality claim file.

One of the core building blocks of the process are evaluations – evaluations of all professionals involved in your litigation life-cycle, from claims professionals to attorneys. In looking at those evaluations (whether through internal or external audit), identify those practices that need to stop and those that are more likely to extend the cycle-time of your cases.

A simple example — in reviewing a number of litigated claims last year, I noticed a consistent pattern of defense counsel granting numerous extensions to opposing counsel to respond to written discovery. These numerous extensions were causing files to last for months with no activity (other than counsel billing for those activities associated with granting the extension). During my review, I made note of such patterns and then developed ways of addressing them through new procedures and processes. In addition, I also considered what I discovered in these evaluations and my solutions for addressing these issues in my benchmarking and goal-setting.

In the next and final part of this series, I will explore the nuts and bolts of the procedures, processes and guidelines that can be used when moving forward with a revamp of your litigation management system.

There Is No Such Thing As A Pro Forma Signature On A Document – If You Sign It You Own It

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Don’t let doing something for the sake of doing something come back to bite you

I have written a number of articles on the importance of avoiding processes that have no added value to an operation. For example, I spoke of how making a “check” in the process is no assurance that things are being done right in the posting In Claims Don’t Let The Process “Thing” Get In The Way Of Doing The “Right” Thing.  Making sure that a process is adding value is essential in claims to avoid the “we have to just say we did it” way of doing things. The putting a note in the file that adds nothing to the file just because it is part of the process does nothing to increase value to the claim process and should be scrutinized. In “What’s The Point” Claims Process And How To Avoid Them I raised the issues that to be truly successful in claims it is important to focus on what’s truly important.

Mortgage foreclosures all in doubt because of a process for the sake of process

Doing things for the sake of doing things can have significant adverse consequences for an organization. It is important to realize that one day you may have to answer for every action you take on a claim file. The concept of how doing a pro forma task can come back to bite you is being highlighted as a yet another fallout of the mortgage crisis. Thousands of foreclosures are in doubt because a mortgage bank executive did not verify the documents used to justify home seizures. Tens of thousands of foreclosures are being halted because of a process in place where an individual just signed hundreds of documents without ensuring the information contained on the documents were correct.

In one of those cases an executive at JP Morgan Chase & Co. testified that her review was more or less signing the documents unless it was questionable and someone else told her there was a problem. She was among 8 others who signed over 18,000 documents a month (see JPMorgan Based Foreclosures on Faulty Documents, Lawyers Claim, Bloomberg 9/27/2010). At another bank, Wells Fargo, it was reported in the New York Times that an executive only verified the dates on up to 150 foreclosure documents signed daily (see Bank Exec Checked Only Date on Foreclosure Docs, NYT 10/3/2010).  The complete fallout from these events is still being sorted out, however it will certainly expose the banks, their attorneys and title companies to possible liability.

Claims organizations are often subjected to a variety of sign offs and controls that are instituted to prevent fraud and protect company assets. Given the volume in a typical claims organization, signatures for the sake of signatures are a possibility. Regardless, as seen in the mortgage situation, such a process can have significant implications.

Suggestion to avoid the process trap

Clearly, doing something for the sake of doing something can really have negative consequences for the organization. How many signatures do you put on documents in a given day? Do you really know why your signature is needed? Are you taking the appropriate steps to verify what you are signing? If you do not have an answer to these questions then you should be asking one more – what will happen if something goes wrong with the document that I just signed?

I believe strongly in supporting process and controls that are adding value. For example, it is clearly a good idea to have a second set of eyes prior to settling claims over a certain dollar amount to ensure company assets are being spent wisely. As a claim handler you would not want a settlement of a million dollars to go out the door without a manager’s approval and as a manager you would never want that check sent unless you were fully aware of the circumstances of the loss and the reasons for the settlement. It is this type of clear common sense that needs to be used on all processes where you are being asked to sign something.

Prior to signing a document make sure to ask yourself the following:

  • Why am I being asked to sign this and for what purpose?
  • Is my signature needed to control something, or am I just putting it down because there is a signature line?
  • Do I understand what went into preparing the documents that are asking for my signature?
  • What are the consequences if the document turns out to be faulty?
  • Do I tend to sign everything put in front of me without review?

It cannot be an excuse that “it’s just a process and it has always been done that way”.  If you had to testify about signing the documents would saying you just “signed everything unless someone told you it was a problem” sound like a reasonable response? Don’t read me wrong, controls and signatures are required for good reasons on many documents. Nonetheless, if you are the one asked to sign – make sure there is a good reason for your signature and know what your signing before you put your name down. If not, stop and ask the questions and revisit the whole process.

3 Suggestions To Beat The Summer Slow Down In Claims (If You Do Slow Down)

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It’s nice to spend time on the beach, but use the summer slow down to make some improvements

Let’s face it – no matter how busy your organization is, come August often times things begin to slow down. It seems everyone is on vacation, and while there is less coming in, there is still much to do. Now is the perfect time to clean up messes and get set for the fall push.

1. Managers & Supervisors

The summer is a great time to work on performance and training issues with your claims staff. With courts slowing down, fewer crises to deal with and less phone calls to take, now is a good time to work with claims handlers to get stronger. Even if your performance reviews are not due for several months, spend some of the extra time you may have to look for learning opportunities. Help claims handlers clear some “dead wood”, and mentor them to reach new goals for the future.  With the extra time there will be fewer interruptions and spending some of that extra time encouraging a handler to look for new ways to excel will benefit everyone.

2. Claims handlers

Wouldn’t it be nice to clear all those tasked items and clean your desk up. It’s been a busy year and things have been piling up. Emails, reports, bills,  and closings are just a few of items that can so easily stack up on a desk that need to be dealt with.  Pick a few items to clear from your long list of tasks and try and get to a clean slate. Here are a few more suggestions:

  • Clear the email folder and organize that in box so the email cascade can be more manageable
  • Look at your pending for older files that can use a little attention, or even better, be closed. Sometimes those older files just need a little push to get them to to the next level. Use any slow down time to reduce that file count.
  • Get through your snail mail. Yes people still send mail the old fashion way and if you spend a few hours a week cleaning and filing away that stack of papers on the the corner of the desk you will be better off before the next push.
  • Meet with your manager and look for opportunities to learn and improve your skills.

3. Claims Executives

Time to break out the strategic plan.  When was the last time you looked into the future? Don’t wait for Lilly pads to take over the lake (see my posting You Can’t Wait Till The Last Minute To Improve You Operation – Planning Starts Now!) take a look at future issues now. Explore your technology needs and look for opportunities to improve your operation. Focus on some key areas to target for lowering costs such as in areas of subrogation and salvage. There are opportunities there to re-tool your operation and get it ready for future growth.

Tell us how you best use slower times to improve your operation!

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?

3 Essential Report Types That Insurance Executives Should Use To Analyze Their Claims

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Metrics, Numbers, Charts, Graphs, Reports – Where do you start?

Today’s modern claims systems have a wealth of knowledge about every aspect of claims operations. With the right reports it should be easy to get a basic snapshot of how effective your claims are being managed, and how well your business is doing. With all that information where is one to start?  What are the key metrics that should be reviewed by claims and business executives to better understand their operations?

While every company will want to look at specific claims metrics around their lines of business, there are three essential report types that executives should be looking at. These include:

Claims counts

Change reports

Claims summaries

Let’s break these down further:

1. Claims Counts

Counts are simple monthly  (or weekly, depending on volume) reports showing the current state of claims in the organization. It will include claim volumes as well as financial numbers. With these reports you will have a basic snapshot of the state of your claims operation as a whole.

Examples of clams count reports:

New claims for the month

Total open claims

Closed claims for the month

Averages

Reserves on all open matters (Indemnity, expenses, medical etc.)

Total paid on all open and closed matters (Indemnity, expenses, medical etc.)

2. Change Reports

Net changes from one period to another are critical reports in any claims organization. They are essential planning tools that can help understand what areas of the organization are doing well and which areas are problematic. Spikes in a particular area could mean a shift in trends that if caught early enough could assist in making better underwriting choices. These types of numbers can also be used to ensure staffing is appropriate and identify areas for improvement.

Examples of delta reports include:

Reserve changes

Claims count changes

Total paid difference

3. Claims Summaries

Claims summaries are a more detailed report of specific losses. They include basic claims information as well as summaries of facts, damages and assessments. Knowing the specifics of a loss can help underwriters and executives truly understand the business they have written. Whether information on a coverage concern, an extreme loss, a pattern of losses, the information is critical to educating others beyond the numbers to actual losses. With this information better strategic decisions can be made regarding future underwriting.

Examples of two summary reports are:

Top 5-10 paid claims for month

Top 5-10 reserve changes for month

Bottom Line:

Check to see if these reports can be produced and if they can’t, ask why. Claims systems should be able to produce these types of reports. If they can’t then maybe it’s time to take a look at your systems again.

Regular reviews of basic claims metrics will give you a competitive advantage and allow you make informed strategic decisions. You can stay ahead of the curve, be nimble, react to changing conditions, and stand out in the marketplace.

Better claim reports can help improve producer/carrier communications (take our poll)

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Why do producers feel it’s like talking through tin cans when communicating with carriers?

Sam Friedman, National Underwriter Editor-in-Chief, recently wrote in his blog (A View From the Press Box) about the need for carriers to improve communications with Producers. Mr. Friedman was discussing the Producer Satisfaction Survey of 1,596 qualified agents and brokers by Deloitte’s Insurance Industry Group—conducted in partnership with National Underwriter (read more at Producers Seek More Input).  Improved producer carrier relationships can be a competitive advantage to help increase profitability in tough economic times. According to the survey, a key differentiator for carriers to attract more business from their producers is in the areas of claims handling and technology.

I believe that there are two areas in claims that add to communication breakdowns:

  • Poor technology creating limitations
  • Failing to use existing technology

Most modern claims systems can create automated customized reports. Producers should be able to ask for specific reports and have them electronically scheduled for delivery. If a carrier cannot provide this service it is because their technology is not up to speed or is not being used correctly. The reality is most claims departments fail to use their existing claims systems to their fullest capabilities. At the very least automated reporting should be available to include regular loss runs and trending reports, as well as notification of significant claim events. Often all you need to do is just ask for what you want.

There are of course many steps that can enhance producer/carrier relationship as it relates to claims. From the carrier side, producers assisting in getting information from insureds, promptly reporting losses and helping with deductible issues are just a few. Carriers can work with producers to provide prompt detailed reports which will benefit both parties through improved risk selections and better underwriting.

Suggested steps:

  • Agree on a suite of basic reports to provide producers monthly including loss runs and overall summary metrics that can show loss trends
  • Establish an agreed upon significant claim event report (reserve change, trial date, discovery deadlines, etc.) for prompt notifications
  • Automate reports to run and send on regular intervals

Better reporting will go a long way to improving relationships, and can only help increase profitability and enhance service to the policy holders.

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