Where claims innovation should start
Intake process delivers value to policyholders, carriers and TPAs
By Haywood Marsh | General Manager, NetClaim
The ancient Greek philosopher Plato wrote, "The beginning is the most important part of the work." Had Plato written those words in the past century, he could have been referring to insurance claims.
Most claims follow a well-trodden path, from the first moment a claim is reported through resolution. The more a claim meanders through various processes and checkpoints, however, the longer it takes to close, the more expensive it becomes and the less satisfying its outcome. Conversely, accelerating claims handling can reduce expenses and generate better experiences for all parties. The challenge is, how can insurance companies, third-party administrators and self-insurers do that consistently?
Plato's sage advice offers an answer. The most important part of claims work occurs at the beginning, when the initial data is gathered for decision-making. The claims intake process is therefore a critical juncture for innovation and process improvement.
No matter what kind of claims and the method through which they are taken in — whether by web, phone, email or fax — data quality and integrity are important to get right, at the very beginning. Inadequate or inaccurate data are both problematic in claims. One requires additional time and effort to collect, generating inefficiencies and delays, while the other can lead to ill-informed decisions and costly financial missteps, such as underreserving. Having quality data throughout the process enables improved outcomes. Better claims outcomes therefore result from better claims intake.
For example, consider a common type of workers compensation claim. One of the top sales associates at a large retail chain badly strains her back while handling a large box of new products intended for display in the store. The accident is reported as a workers comp claim and the insured worker is referred to a doctor for treatment. The employee is unable to return to work for at least six weeks, followed by a reduced schedule while she undergoes rehabilitation. Her sales responsibilities during this recovery period are divided among other associates.
Avoiding missed opportunities
Here are only a few of the adverse consequences that might arise from such a claim — for the employer, third-party administrator and insurer — if the intake process misses some important details:
Delayed referral to appropriate care. Some injuries respond faster to specialized treatment, speeding up the claimant's recovery and eventual return to productive work. The longer it takes the injured sales associate to get referred to a specialist care provider, the greater the direct and indirect costs of her injury. Delay means the employer must do without a valued employee longer, the TPA must spend more time managing the case, and the insurer has a lingering open claim.
Claim data does not trigger escalation. The claim might appear in the file to be less severe than it really is, so corporate decision makers miss an opportunity to investigate the root cause. Are there any discernible patterns in the claims data that could prompt further analysis? Are similar claims happening to others? Could the retail company alter the weight and/or timing of inventory shipments, or provide equipment that reduces the risk of back injuries? Without complete data on each claim, loss control insights might never surface. On the other hand, properly escalating a claim and deriving insights from it deliver benefits to the employer, TPA and insurer.
Higher cost. If claim files miss data that might help the employer, TPA and insurer mitigate future claims, the cost — whether through premiums paid to an insurer, deductibles, retained losses, or loss ratio — will go up. When total costs rise, all parties lose opportunities to redeploy their capital to more productive areas.
Missing information requires follow-up and verification. At a minimum this may eat up valuable time for staff at the employer, TPA and insurer. Worse, follow-up activities may make the injured employee and her employer question whether the TPA and insurer are taking the claim seriously and wonder why the data wasn't captured correctly in the first place.
Dissatisfaction. This is a pernicious problem in claims, for employer, employee, TPA and insurer. An injured employee might well become disengaged and lose interest in returning to work. Her co-workers might also become dissatisfied and resent the additional workload they have to shoulder, impairing their own productivity. The employer might also perceive that its TPA and insurer are not giving it the attention it expects as a customer.
The flip side of this scenario, where the claims intake process captures necessary data accurately, shows much better results, including:
- Faster access to appropriate care.
- Shorter recovery period and quicker return to work.
- Rapid distribution of information to decision makers.
- Clearer picture of loss drivers.
- Lower claims costs.
Innovation in the claims intake process creates value for insurers, claims administrators as well as self-insured companies on all kinds of property and casualty claims. Accelerating claims handling and ensuring greater data quality leads to improved outcomes, reduced expense and more satisfying experiences. Claims payers and administrators also can achieve long-term benefits from accurate claims data, such as insights on loss drivers, which support investments in analytics. The downside risks of maintaining the status quo in claims intake include: more time until settlement, additional costs and claimant dissatisfaction. Can the claims industry afford not to improve claims intake?
To learn more about how NetClaim's solutions offer improved efficiency, accuracy and scalability, with advantages for every party to a property or casualty claim, please visit www.netclaim.com.
Haywood Marsh is General Manager of NetClaim, which offers customizable insurance claims reporting and distribution management solutions. He leverages experience in operations, marketing, strategic planning, product management and sales to drive the execution of NetClaim's strategy.