Compared to five years ago, there is a growing sense the time has come–and the technology has matured–for companies to make substantial investments in claims management solutions and processes. Futuristic notions like adjusters using wireless technology to communicate with head office claims management systems or larger clients having real-time ability to run customized loss reports are quickly becoming not just reality, but perhaps the benchmark for best practices in claims handling.
“The biggest change is in technology,” Patti Kernaghan, president, Kernaghan Adjusters, says. “As independents we are on the brink of real change; the whole claims side of the industry is in a state of change because of technology and that will reach out for the next few years.”
In today’s competitive insurance industry, there is an increasingly entrenched realization that legacy systems cannot meet the demands of consumers in terms of service, delivery and turnaround. Many insurance companies have known for years that legacy applications act as a cumbersome brake on real-time data extraction/analysis, performance measurement and supply chain integration. The difference is that now they are doing something about it.
A recent study by market analyst Datamonitor predicted U.S. insurers would pump $4-billion into revamping claims management systems, calling it a “leading strategic area of investment.” While the numbers are not the same in Canada, there is a noticeable trend in claims reorganization and technology projects here, as well.
Several insurance companies are investing millions of dollars into making claims processes more efficient, using modern technology architecture to link more effectively into legacy systems. More current technology, such as .NET platforms and Service Oriented Architecture, allow claims systems that have built-in workflow and business rules that relate specifically to claims handling. While there is still integration work required to legacy systems, today’s technology represents a new way of approaching claims that emphasizes flexibility and open standards.
Although individual insurance companies have differing strategies, there are several common goals on the technology front. One trend is to intuitive, user-friendly claims desktop screens and web-based applications that capture as much information electronically from first notice of loss through to settlement. Many companies are building in business rules, process management and logic to automate decision-making for routine transactions. They increasingly want the ability to segment claims by specific type and complexity and then route them to qualified adjusters.
The dividing line seems to be whether companies build solutions in-house or use a third-party technology provider. A good example of the latter is two recent deals involving GuideWire ClaimCenter and Dominion of Canada and The Co-operators.
In March, Dominion announced it would be using Guidewire ClaimCenter to modernize and replace the company’s existing legacy claims system. Already in phase1 rollout with 300 adjusters, the new technology is handling personal auto and property claims, along with some commercial auto. Guidewire ClaimCenter is billed as a leading end-to-end claims system that is built on modern technology architecture and provides web client and web services interface. It offers flexible business rules design, which allows claims managers to define, enforce and refine their preferred claims adjusting practices.
“ClaimCenter’s intuitive web interface is a big hit with our adjusters who are able to quickly become proficient on the new system,” Janet Babcock, vice president and chief information officer, The Dominion, says. “The feedback from the first group of users has been extremely positive, with the remainder of our adjusters anxious to move to the Guidewire system.”
The Co-operators reported in April that it has also selected Guidewire ClaimCenter to replace its current legacy claims system for all personal and commercial lines business. “Guidewire’s solution suite is a great fit with The Co-operators’ core system needs,” Rob Wesseling, chief information officer, The Co-operators, says. “Our goal is to migrate from our current legacy claims environment to a modern claims system that will be utilized by all of our property and casualty companies.”
Other insurance companies, such as Royal & SunAlliance or Economical Mutual, have opted for different routes through in-house solutions.
Royal & SunAlliance Canada recognized the importance of restructuring the claims process, investing millions over two years in a specific claims technology initiative. Its “Claims Desktop” is a web-based solution that sits on top of the company’s platform and is able to draw data from that system. The desktop technology, which was developed internally, is accessible to all employees involved in claims handling at Royal & SunAlliance.
“We wanted to make it so that anyone could look in at any particular point in time and see the flow of the claim, from start to finish in terms of transparency and ease of understanding,” Irene Bianchi, vice president, claims and corporate services, Royal & SunAlliance, says. “People will not have to go searching for information; it is now at their fingertips.”
Economical Insurance Group has also built technology it calls the “Capture Distribution System (CDS).” Rocco Neglia, Economical’s vice president of claims, says a past challenge for the company was handling claims from different subsidiaries within the Economical group, some of which operated on unique legacy systems.
Using Oracle technology, the company built a customized Windows-based, desktop-accessible solution built on top of legacy systems. The CDS is able to extract and transfer data to and from the legacy systems without being dependent on them.
“Now, we have the same application for claims handling right across the underwriting companies,” Neglia says. “Once a claim is reported, a claims representative can plug in the policy number or name and automatically start the adjustment process.”
No matter whether the decision is to build or buy, insurers are aware of what is at stake in terms of consumer expectations. A study conducted by Accenture found that 94 per cent of consumers who filed a p&c insurance claim cited quick resolution as highly important to their satisfaction with the claims process. The survey also found that customer satisfaction with the claims process is critical for insurers because it directly affects retention and loyalty. Nearly 90 per cent of insurance consumers who were satisfied with the speed of claim resolution were likely to stay with their current provider.
Technology is, of course, just one part of the equation in terms of claims management efficiency and customer satisfaction. Many insurers have looked at integrating and executing claims best practices across their operations, revamping business process workflow and creating professional procurement teams for all vendor relationships, including adjusters. In fact, the emphasis today is on increasingly detailed, or granular, data on performance metrics in areas such as service delivery, claims cycle time, appraisals, estimates, file closure, leakage and fraud control. This focus on performance measurement is directly affecting independent adjusters.
“With the increasing trend to procurement, in many cases insurance companies are pushing hard on the performance side,” Greg Smith, vice president, national programs, Crawford Adjusters Canada, says. “For us to be that insurance company’s adjuster, we have to ask what type of performance criteria can we commit to in order to serve their policyholders well and help their internal staff be more efficient. We have to have the technology to measure that performance proactively.”
The trickle-down effect of insurance companies’ focus on claims performance and customer satisfaction is that independent adjusting firms are being asked to provide i
ncreasingly complex, customized reports to various clients.
“What we find is a lot of the measurements tend to vary between companies and what they want, so there tends to be customization,” Dale Avis, vice president, information technology for Crawford Adjusters Canada, notes. “So one company may just be looking at the shelf life of a claim where another company may have a whole different measurement. We have to ensure that the source data is there and then produce some sort of report around that.”
Avis says that his adjusting firm is trying to move away from “after-the-fact” reports and into more real-time analysis, “where you can actually see a problem before it becomes a bigger problem.”
Cunningham Lindsey is another major adjusting firm that has long realized the significance of accurate reporting and business metrics. About a year ago, it developed a “Service First” initiative whereby performance reports are delivered to clients in any format they choose–online, e-mail, disc or in person. It measures everything from first contact to average turnover for indemnity per business line.
“Our system has always been designed with performance measurement in mind,” Rob Seal, president and CEO, Cunningham Lindsey Canada, says. “But we have noticed more recently an increased demand. And everyone seems to want something a little different. So we have enhanced our system and added more fields to make it more detailed and fully customizable.”
Another technology bar that is being set ever higher for independent adjusters is the need to give clients more immediate and transparent claims file access. This could involve risk management clients with high self-insured retentions or insurance companies or even smaller insureds.
“The biggest thing is for clients to be able to look into our files,” Kernaghan notes. “That is what is going to drive change in the market–our insurance companies, self insured clients, brokers, maybe even insureds. We have developed what is called a client viewer so the client can look in and see their files.”
Kernaghan added that the company is beta testing the client viewer with certain clients and will be launching it in the next few months for all clients.
“In terms of IT, we see a huge demand from clients for access to our system,” Marguerite Locke, vice president, client services for McLarens Canada, says. “They want to be able to find the adjuster file, get access to data for their account, do in-house loss runs, etc. It is primarily about access to data. The cost of that is high. I know as a former regional adjuster, it is very difficult to make that investment.”
Cunningham Lindsey started providing client file access in 1997 “and we were kind of ahead of the curve there,” Seal says.
“Initially, it was called ‘E-link,’ it is now called ‘E-connect.’ This allows risk managers sitting at their desks to access all losses, to view all documents, all activities on that particular file. By use of our back-end reporting packages, they can pull and customize those reports,” Seal adds. “Many risk managers are looking for very specific things in their reports.”
He added that meeting budgets and targets is one of the prime motivations for risk managers’ need for more detailed information.
Smith notes that Crawford Adjusters Canada has seen sharing information with clients “become a big push. It started in the risk management sector for the most part. About five to seven years ago is when we started providing them with access to data online and it has been a continuous evolution as to how much information is available online.”
Avis says that one key development for Crawford was the provision two years ago of ad hoc reporting tools so risk managers can customize their own reports. “They can go online and do it themselves; it totally within their control,” he explains. “The ad hoc report was our solution to counter the fact that every risk manager had some unique needs.”
Risk managers are one side of the claims equation, but service vendors or the “supply chain” represent an equally important side. Many say that the claims handling process can be greatly improved if vendors, insurance companies and adjusters can communicate effectively on one platform, or “portal.”
CGI is one firm that has built such a solution through its SMART claims portal, and it is promoting it as a means of streamlining the myriad interactions between vendors and insurance companies. To date, it has signed up L’Union Canadienne, a subsidiary of The Co-operators, and CGI Adjusters to participate on the portal.
“I call it optimizing the food chain,” Wayne Beck, vice president, consulting services, CGI, says. “Just like the banks recognized there is little strategic advantage in the technology around the Interac system, insurance companies have to realize there is little strategic advantage in the technology around vendor management. There is, however, huge strategic advantage in how you leverage the processes and procedures around the technology to service the customer.”
In a nutshell, CGI’s SMART is a claims management portal that enables all interested parties (insurers, adjusters, vendors and even policy holders) to seek out and exchange information electronically. This electronic exchange of information is further enhanced by the systems ability to automate the communication process. The system has the ability to monitor product and service quality and helps to ensure efficient procurement, allowing the adjuster to focus time on claims decision-making.
Beck says newer technologies, such as SMART phones (with Microsoft operating systems that run Windows mobile), improved rules engines and voice recognition software, further enhance the value proposition by “creating more efficiencies in the food chain and allowing improved business metrics not just within insurance companies, but in the entire supply chain.”
Another portal-type solution is RiskVault from MFX, a Toronto-based subsidiary of Fairfax Financial Holdings. Its portal is an intuitive, independent web-based portal, built by insurance industry professionals to ACORD XML standards. RiskVault houses all claims data on a single, standard platform, offering real-time access to multiple users. For data assimilation, MFX writes the interface to existing legacy systems. Requiring only a PC, web browser and Internet access, RiskVault is a digital repository for all financial data and claims-related documents, including all necessary forms. RiskVault’s multi-media capabilities allow word documents, photos, sound and video files to be attached and accessed.
With claims portals, the key will be gaining a critical mass of participation, something CGI and MFX Fairfax are both keen on building.
However, the biggest gain in claims efficiency and client satisfaction may come in an area that has long held far more promise than tangible progress–wireless technology. This is not a new subject in the claims arena, but certain limitations, such as the functionality of tablets or slates, the bandwidth for large file sharing, network connectivity in remote areas and integration with existing claims management systems, have hamstrung the actual delivery of wireless solutions in the past. That is beginning to change.
“Given the strides made by mobile technology vendors in functionality, bandwidth and devices, mobility solutions for the insurance industry are increasingly reliable–and can yield significant value if developed within a coordinate strategic initiative,” according to a report released in April from research firm TowerGroup.
Symbility Solutions, based in Waterloo, provides mobile claims solutions to the p&c insurance industry throughout North America. It currently has contracts with Allstate Canada, Economical Mutual and Gore Mutual, in addition to several U.S. carriers. Dave C halmers, vice president of corporate marketing at Symbility, says the technology has matured enough to elicit strong interest levels from insurers.
“We are seeing more and more clients intere
sted in true mobility for a number of reasons,” Chalmers says. “The networks can handle more data loads now, so sending files with photos attached is a lot easier now than it was five years ago. The bandwidth is there. Also, the choice of hardware has now drastically increased with respect to the number of providers that have tablets, slates and convertible notebooks.”
Symbility provides a mobile claims solution that uses pen-based computers, wireless technologies and software to allow property claims adjusters to process claims on site.
“That means cost savings from unnecessary travel time, from time required to re-key information,” Chalmers says. “Also, by allowing adjusters to send a completed file wirelessly, that also gets the three or four people within their claims management system to start working on it. The software saves time and money, but it enhances the team collaboration inside organizations and can drive some phenomenal customer satisfaction levels.”
Symbility also offers an Internet based data warehouse and analytic engine, Symbility.NET, which companies can use to access and analyze data collected on various claims and create reports. Chalmers says because Symbility was built on a .NET platform and open standards, integration to legacy systems of insurance companies is straightforward. “We don’t run into problems. That is why we get the calls we do. Our open standards have become a competitive differentiator for us.”
Customer satisfaction is the driving force behind mobile claims solutions, according to Chalmers. “If you look at the top 20 insurance organizations in North America, I would guarantee that the vice presidents of claims are either pushing existing partnerships to get to this area or they are looking for ways to get to this area outside of existing relationships,” he says. “It is just because they are trying to drive customer satisfaction levels to a new high.”
Efficiency and customer satisfaction are also behind a pilot project at Crawford Adjusters Canada that aims to bring truly mobile, wireless and tablet-based adjusting to field sites. “This is what adjusters have been talking about for a long time,” Smith says. Crawford is currently testing the durability of the hardware, in the form of tablets, for six months. By late summer, the next phase will begin–working with an insurance company on lower-dollar property claims.
Smith says Crawford Adjuster Canada can borrow from a mature solution that the company’s sister organization in the UK has had in place for two years. There, claims are routed automatically from a central call centre to qualified and available adjusters–all via software. Details of the claim are downloaded to a tablet that the adjuster carries in the field and can process the claim on site through a wireless network. The adjuster can upload information in the tablet to the central office, where service chain providers are automatically dispatched with details of the claim and replacement needs.
“That is a mature solution, but we are not quite there yet in Canada,” Smith says. “We are looking for an insurance company that will work with us on this technology. We are saying ‘here is what we would like to do with property claims, to really start with a geographic area to open up some training and technology issues.'”
Seal notes that Cunningham Lindsey has not gone the route of PC tablets, but has invested in Marshall Swift software and Xactware, two estimating packages that their adjusters have on their laptop computers. “We have wireless access, and we are experimenting with real-time reporting at the loss site,” he says. “I would say that is the future. It is doable, but it is not cheap.”
This is just one more sign of technology moving from prototype to the real-life stage of business functionality and client interaction. Whether the issue is the move away from legacy systems to more modern, open standard architecture, detailed performance measurement, open client access to claims files or wireless solutions, companies experimenting with new solutions will face the trials and frustrations of the so-called “early adopters.” But they also gain the advantage of being ahead on the claims curve.
The question in the future is whether these investments in technology will pay off in terms of documented efficiency gains, improved customer satisfaction/ retention levels, better productivity– and competitive advantage. More and more companies seem to be betting they will.