Buyer Beware

Nine traps to avoid when implementing claims systems.

By Jim Kaiser

Claims system replacement is on the agenda of many insurance leaders. Systems now available in the market offer considerably more functionality than legacy solutions. As carriers evaluate systems, they should keep in mind how these capabilities can impact improvement in performance.

Once you have decided to start looking for a new system, it’s time to start thinking about how new functionalities can improve your results. While the possibilities to solve current problems and even accomplish new performance levels are great, there are some practical considerations to ensure these capabilities are put to good use. Let’s examine some of those capabilities and glean insights from nine common mistakes.

Trap #1: Configurable Screens

Some systems provide screen configurability options at the expert user level. However, ease of setting up a screen should not be confused with improved screen design or data management. Common issues include putting too many data fields on a screen, creating drop-down menus with too many selections, and believing that screen design will lead to better decisions because you “force” users to consider all the right things. Requiring inputs in certain fields can be valuable, but it doesn’t mean it will automatically generate better data or better decision-making. In any system, too much data and too many choices can cause user fatigue, which can lead to low-quality data capture.

Trap #2: Integration of Other Applications

A big advancement in today’s claims systems is the ability to integrate with other applications. A common mistake occurs, however, when functionalities and data in peripheral applications aren’t considered when designing screens and rules. This can make integration of the peripheral application awkward and tedious to the user. Your concepts about how to use a new system should incorporate your intentions for using peripheral applications from the start.

For instance, if your plans include a screen that captures information about the liability of various parties involved in a loss, the design of that screen may very well complicate the use of a liability assessment tool because you have not considered how the two can work together. Worse, you may have spent valuable time on a screen that you don’t even need.

Trap #3: Wizards

Using wizards to help facilitate the input of information can be useful. This is particularly so in high repetition environments, where rules for completion are generally straightforward. Setting up new losses or assigning work tasks like an appointment are common examples.

There are two things to consider, though. First, users can quickly outgrow the need for the wizard, making it superfluous to accomplishing the intended goal and, potentially, a drag on users. Second, as a user moves from supplying basic information to making critical decisions and judgments, complexity increases. The path through a liability or coverage decision quickly can become a maze. There are practical limits to what you can effectively accomplish with this functionality. Also, keep in mind that users may interpret completion of a wizard as resolution of an issue. In other words, the wizard might generate a false sense of accomplishment. When wizards are used in conjunction with judgment areas, it is critical that adjusters know to think beyond it to integration of adjudication applications.

Trap #4: Business Rules and Alerts

Business rules can bog down a claims operation if they are not used judiciously. One of the biggest traps to using business rules is combining them with alerts. If alerts are plentiful, they can quickly overwhelm the adjuster, making some claims feel nearly impossible to resolve. Start slowly with rules and alerts. Understand how they impact the user and which ones produce the desired result.

Trap #5: Workflows

Traditional claims systems do not, generally, support assignments and tracking of work. The result is that it is labor intensive to assign work to the right user in the right unit and make sure that it is completed correctly and on time. Workflow capabilities can help you do this.

However, a few unintended consequences can occur if a “processing” mindset takes hold. First, by splitting the handling of a claim among multiple adjusters, ownership of overall file quality can fall through the cracks and the customer can get lost. This can result in an efficient flow of work that doesn’t satisfy the customer and is inaccurate. Make sure you start your workflow design with these quality parameters in mind.

Secondly, your organization can become very dependent on the workflow. Having workflows that are easy to configure is not the same as implementing a new workflow. The latter requires planning, communication, and, sometimes, reorganizing and training. Changes may impact how you want to report as well. As such, you may have the capability to redefine your workflows but are limited on a practical level as to how often you can actually use it.

Trap #6: Document Management and Generation

Automating the task of creating and sending communications to customers—also known as document generation—can save a significant amount of time and greatly enhance regulatory compliance. This functionality, however, doesn’t necessarily make your communications more understandable to the recipient. Adjusters still need to know how to provide proper information to make communications meaningful. Sending out the right letters on time with the wrong information can cause customer responses that you did not intend.

Document management allows you to capture, store, and gain access to documents related to a claim. This requires effective “labeling” capabilities to make sure that the document is properly named, connected with the right claim, and delivered to the right user. This can be more difficult than it sounds if you haven’t done it before.

Trap #7: Scripting

Delivering consistent communication to the customer is powerful. This is not always the same as sending a consistent message or communicating effectively. When you consider scripting, you need only to think about your own experiences with telemarketers or others who rely heavily upon this type of technology. Customers are anxious enough after an accident; they expect someone who will listen and understand, not read to them and enter information. Consider how scripted you want your organization to sound as opposed to how effectively you want them to communicate.

Trap #8: Task Management

To-do lists are critical to claims. Being able to track the items required to complete a claim helps keep it on course for timely resolution. These lists, though, are nearly always tied to assessment of case status—issues that must be resolved and the general evaluation of liability, coverage, and damages. Separating tasks from this assessment by using a list can make it difficult to understand if the tasks on the list are the right ones. How effectively can you associate tasks with resolution of the case?

Automating tasks based upon attributes of a case also seems like a good way to build uniformity. As with alerts, system-generated tasks can become very monotonous and, in some cases, begin to feel more like a barrier to resolution rather than an aid. The last thing you want is an army of adjusters and managers whose interaction with a claim includes figuring out how to beat the task list.

Trap #9: Reporting

“What gets measured gets done,” is a telling adage. This means that, as a leader, you have responsibility for putting information in front of your staff that guides performance improvement. Reports can provide great tactical insight for assigning claims, finding those that might need a push, and understanding whether targets are being hit.

However, it’s possible to provide too much—not to mention wrong—information. This tends to make everything look important and can cause paralysis as apparent issues overwhelm users. Alternately, it can cause meddling in the process which makes it hard to understand whether it is running well and what is causing issues.

Replacing a core system is a huge project. The foregoing advice can help simplify it and avoid unintended consequences that require reactive projects of their own. At a high level, these tips are complemented by considering four general insights:

1    Don’t try to “future-proof” a choice by accounting for every last detail. Focus on making
sure your technology partner can deliver right now and has development plans complementary to your plans. Most importantly, be confident that they can deliver.

2    Keep your data model simple. The more data you attempt to collect, the less reliable each data item will become.

3    Beware of overestimating how many changes you will be able to implement. Bear in mind that technology is a component of change, not the only change. Plan out the total effort required for operational change.

4    Beware of scope creep. When it feels like you are being overwhelmed with exception processing and too much detail, step back from the effort and take a top-down view. Are you staying true to your plan?  


Tips for Thinking Through Integration

Adjudication applications, such as those used in liability assessment, injury evaluation, and estimating, help adjusters focus on achieving higher accuracy. While things like workflow, tasks, and rules help manage the processing of work, adjudication apps support the actual adjustment of the claim. It is critical these “feel” like they are part of a system of capabilities. These tips help you think through integration:

Navigation – How will users gain access to the application? Can applications be exposed through a screen in a claims system?

Data – Instead of worrying about synchronizing data, first think about the data you most need for reporting and decision-making. Examine ways to capture the data only where it is most useful in decision-making. Then, think about incorporating the data into your reporting environment. This eliminates concerns about double entry and greatly simplifies the data integration required.

Documentation – Claims notes are the place where users look to find the “story” behind the investigation. Look for ways to supply simple snippets of information from the adjudication app to your claims system.

Jim Kaiser is CEO of Casentric. He has worked in operations and technology management as well as consulting and leadership roles in the P&C insurance industry for more than 25 years. He has been a CLM Fellow since 2009 and can be reached at jimkaiser@casentric.com.

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