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:
- Failure to properly acknowledge, investigate, pay or deny claims within specified time frames
- Failure to provide required disclosures in the claims process
- Improper documentation of claim files
- Failure to process total loss claims properly
- Failure to pay the appropriate claim amount
- 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.