Adjusting for Technology

Constantly changing technology is intended to speed up processes, allow for mobile workflow and improve communication. Sometimes, however, changing technology is simply more trouble than it’s worth.

As independent adjusters constantly strive to increase their productivity, technology can play a pivotal role in offering a high level of customer service. Adjusters are now able, for example, to head out on the road while maintaining a continuous connection to the home office, the client and the claimant. Laptops, smart phones, mobile internet sticks and digital cameras have created a claims environment in which adjusters are able to receive a claim, head out to visit the claimant, gather all the required information, upload and send it off to both the adjuster’s head office and to the client — all without having to go back to head office.

Some might bemoan the fact that technology keeps them tied to the office 24-7. But many concede it allows them to be more productive in the long run. So while there are downsides — frequently being online, always being reachable and perpetually learning new software — there are also positives, such as being able to get work done from various corners of the country. This is a definite advantage to independent adjusters — a business that is frequently commission-based, says Evan Morgan, director of information technology at McLarens Canada.

There have been certain advances in technology that, while they aren’t automatically a hindrance, don’t necessarily add value or provide much (if any) return on investment. Sometimes they can contribute to additional costs for an independent adjustment firm, especially when client insurers request adjusting firms to use various different technologies while handling claims on their behalf. The firms will agree, since the various technologies benefit their insurer clients in one way or another, but it’s an additional expense for the adjusting firm’s to have to maintain multiple technology solutions.

Bill review software

Bill review software does not necessarily detract from the adjuster’s ability to do his or her job, but it does add to the overhead at the independent adjuster’s back office, Morgan says. Larger insurance carriers are looking for ways to outsource business that is not part of its core underwriting. Instead of having staff on site to review invoices from vendors, such as lawyers and independent adjusters, they are using bill review software. Instead of having staff in-house to go through invoices from independent adjusters to ensure everything is above-board, as well as handling the negotiation of charges, some insurance companies have chosen to automate the entire process. This means that, when dealing with certain insurance companies, independent adjusters now submit their invoice in electronic form to a third-party bill review provider, where the bills are reviewed and potentially flagged for follow-up. The intent is to save the insurance company both time and resources.

Unfortunately, this doesn’t translate to the same benefit to independents.

Some adjusting companies have had to revamp their entire internal processes with respect to how invoices are processed due to the implementation of a third party bill review system. This results in added costs to support the technology. By most definitions, technology should be allowing companies to reduce costs, but unfortunately, this isn’t always the case.

Plant Hope Adjusters paid a software developer to come in and integrate Allegiant — a third party bill review system — into their existing billing system to ensure a seamless transition. It was not simply a matter of replacing the existing system with a new one, because not all insurance companies are using Allegiant.

“All the information still goes into the system the same way,” says Fred Plant, president of Plant Hope Adjusters. “But the software we developed weeds it out and separates it from one customer to another or for one type of billing system — Allegiant — to the other type of billing system, which is everybody else. In addition [to developing a new internal system], every time we process an invoice on the Allegiant system, it takes us upwards of a half hour to revise and ensure — in spite of all the money we spent on this system up front — that it meets that insurer’s criteria so that Allegiant will accept it. And that’s a very costly thing for us.”

Adding complexity to the problem, the software was originally created for lawyers, not independent adjusters. In the adjusting area, there are no universal standards for invoicing, data components and structure.

Part of the premise of the third party bill review system is to provide a centralized process in addition to clear and measurable standards and service agreements with clients. The system is intended to make it easier to invoice clients in the way in which they expect, and with the level of detail they seek, which can reduce a lot of issues on the back end. One of the biggest advantage for some adjusting companies is the reduction in time spent chasing accounts receivables for customers who process invoices through a third party bill review system.

Estimating software

Independent adjusters are also being asked to use construction estimating software when working on a property claim. Adopting a single inhouse solution can be tricky: a few different packages are available, and different insurers are using different products. This means independent adjusters must purchase and become proficient in multiple estimating software programs. Although these programs perform substantially the same functions, they are different products, with different training requirements, Morgan says.

“Independents need to be able to interact with and use any system your [insurer] clients are using,” says Pat Van Bakel, senior vice president operations with Crawford & Company (Canada) Inc. “There’s no industry standard for the systems to support claims. That’s probably the biggest challenge, being a master of all the different applications and technologies.”

Because there are licensing costs for each program — and subsequently for each computer and user — independent adjusting companies must determine whether to equip some of their staff with one of the programs and others with another program. Or alternatively, is every adjuster equipped with all of the different available softwares? “The [estimating software] requires individual licenses for each computer no matter how much you use it,” Plant says. “To get all of the training necessary to use that program, and then to buy all the licenses when you’re working — particularly if you are working on an all-inclusive hourly rate — there’s no way to recover all of that expense,” Plant says. “These things are very expensive.”

In a way, there may not be that much of a choice for independent adjusters. Construction estimating software has made its way into the daily function of a lot of insurance companies with respect to property claims. Thus, in order for independent adjusters to handle the claims (recognizing that contractors are using the software to prepare their estimates), independent adjusters must also have and be trained on these programs.

“No insurer came to us and said, ‘You have to buy this program and if you don’t buy it, we’re not giving you any more claims’,” Plant says. “It’s just because it’s become so common to communicate and evaluate property losses in this way, we needed to go get it (estimating software). Really, we didn’t have a choice.”

The tools are valuable and they allow an adjuster to increase productivity, Morgan says. “But, if we must roll out multiple competing technologies, the advantages can quickly diminish.”

That said, if the kinks can be worked out, Morgan is confident esti mating software is of benefit to independent adjusters.

There doesn’t appear to be any consensus as to whether these new t
echnologies help or hinder independent adjusters. Those who embrace the new technology say it helps, both in terms of creating a more professional product and meeting the needs and expectations of the client. “The software allows them to really function as a seamless extension of the client, because in reality, that’s what the clients are asking independents to do — to be virtually an extension of their claims department,” Van Bakel says.

For others, embracing new technology is tough. This is because learning new software processes does not come easy. “That’s probably the biggest impact from an adjuster perspective,” Van Bakel says. “If you are adept at learning and embracing new technologies, then you’re enjoying all of this and find it very stimulating. If you are not, and you don’t embrace new technologies very well, then this can be all very frustrating and discouraging to some who feel that they can’t keep up. This is consistent with society in general”

Bea Boutcher, manager of Horizon Adjusters Ltd., says she’s at a point where her office could really use estimating software, even though the company hasn’t received any external requests to start using it. For her, the value comes not only as a means to do estimating, but also because she has heard the program includes accurate content valuation (ACV).

“I thought it would be great if I have a program that I can plug in my contents and it’s going to apply the average depreciation for its age,” Boutcher said. “That would be fantastic to have.”

Another advantage arises when two contractors are competing for business on the same loss. If they are both using the same construction estimating software, the information obtained is in the same language, which is beneficial to making a decision, Plant says.

But for all of its potential advantages, the estimating software — like any software, really — is only as good as the user, says Greg Merrithew, owner of Arctic West Adjusters. “The challenge that I have with [estimating software] is the way it is set up,” he says. “Individuals can use it by basically inserting information and then accepting the results that come out the other end, without any human common sense factor attached to it. [Estimating software] may not be a bad tool, but it seems (sometimes) to be inappropriately applied by individuals that don’t have the knowledge and expertise in that field.”

The tools are easy to learn, he adds. It’s easy for a user to input some data and achieve some results. The challenge comes when someone who is not well-versed in construction or renovation techniques walks onto a site, inputs the requested data into the software system and out pops a dollar value for renovation, repair or retrofitting. Based on that number alone, “they can’t tell . . . whether items can be effectively cleaned, repaired, dehumidified and brought back to original condition, short of removal and replacement,” Merrithew says.

This challenge is more pronounced in situations in which there is a large loss, such as a large flood area or significant sewer backup. “Individual firms can run around and use these programs to come up with results very quickly, with no thought as to the individual or the individual situation,” Merrithew says. “They can punch stuff in and come out with a result and do a neighbourhood very quickly.” But it takes much more effort to look at the individual items, ensuring the work is completed at a price substantially lower than it would be for removal and replacement. Also, there is a potential price discrepancy between what the software calculates and the actual cost of labour and materials in smaller communities or outer lying or remote areas. Sometimes additional costs due to travel, weather or unexpected repairs are not factored into the estimating software, but these are things independent adjusters and contractors know to take into consideration.

“Garbage in means garbage out,” Plant says. “Our job as independent adjusters is to verify verify and verify. If you take away the verification aspect of what we do, then you’re not really left with us adding much value to a file, which is unfortunate.”

Web-based management systems

Independent adjusters have sought out other software advances, such as web-based management systems, in a move to advance internal operations. For example, the Canadian Independent Adjusters’ Association set up a partnership with KLJ Solutions to offer Venue to member firms (see Claims Canada October/November issue for more information). Merrithew’s firm served as the test base for the CIAA model of the software. After using the program for a few years and modifying the program to serve the needs of independent adjusters, the software was rolled out this past summer.

“I have found the web-based management system has been just absolutely wonderful to use in the presentation of my claims data to my clients, number one,” Merrithew says. “Number two is the ability of my staff to actively manage on an electronic platform all information we acquire in the course of handling a claim. It’s absolutely first class.”

The software allows the user to input any information obtained during the handling of a claim into an electronic format on one platform. Since Venue is web-based, adjusters can still access the system and all the data associated with their claims while on the road — an essential component at Merrithew’s firm, where the adjusters cover three million square kilometers of territory. This has significantly boosted efficiency internally.

Additionally, clients are able to access their claims on the system. They are able to view data; they can even use it as a research tool, exploring such things as losses for the past year, five years, etc.

Allowing clients to view their files online was a key reason why Boutcher decided to switch her claims system over to Venue. She also enjoys the option of being able to go online and manage claims while she and other adjusters in her office are on the road. “A web-based management system is a significant asset to any independent adjusters office of my size, because realistically (larger national firms) have their own proprietary web-based management systems,” Merrithew said. “But now it’s available to the little guy through KLJ.”

Internal technologies

Insurance companies are upgrading their own internal technologies, with new claims systems and/or analytic systems allowing for more accurate writing of policies. New software systems available to the insurance industry are continuously looking for and requiring more information from users. This includes data elements that need to be inputted into a computer model. These data elements cannot be embedded in an adjuster’s report, but must be entered in a format that is recognized by the system. “We’re seeing more of that, where the adjuster, as part of his or her investigation, is being asked to code specific data elements and it varies by client,” Morgan says.

Adjusters are rolling with the punches, changing their internal models to follow suit. Once an adjuster needed simply to file a report or a file update; now, insurers are requesting additional data and tasks — all of which must be done within a certain time frame. Little thought has been given to how independents should be charging for the increase in workload or for the additional costs associated with investing in required software.

Increased reliance on third-party software and the short time frame allotted for turning around a claim means independent adjusters should continuously improve their own internal technologies. Independent firms need to ensure their systems are capable of handling the needs of the clients. This requires a substantial amount of flexibility, since each client’s needs are different.

Mobility is without a doubt the current wave, Morgan says. “Anything we can do to get an adjuster productive from anywhere is going to make their lives a litt
le easier.”

This includes ‘next generation’ tablet devices such as the iPad, the Galaxy or the PlayBook. The key to the success of this next generation of tablets will be software, both the availability of software created specifically for the tablet and the device’s ability to handle third-party software.

One national independent adjusting firm, Crawford & Company (Canada) Inc., has been using tablets for a few years now. These are laptop computers where the screen can be turned around and folded down so it’s similar to a notepad. Adjusters can then make notes with a pen tool, fill out forms, obtain customer signatures, etc. The device can also be used as a regular laptop. By having multiple ways of capturing data, adjusters are able to reduce time spent on site and eliminate replication of data. Information obtained during the initial call to the insurance company is attainable on the tablet. So when adjusters arrive on site, instead of reviewing and obtaining all of the information already supplied to the insurance

company, they are able to deal with the key elements that require onsite attention, discussion or review. The tables are completely mobile, both in terms of portability and access to the Internet. This means information can automatically be uploaded and a report created and sent to a client, Van Bakel says.

The company intends to use the current laptop-style tablets until the end of their lifecycle. Afterwards, the company will replace them with the next generation of tablets, which will most likely be even more lightweight, portable, efficient and demonstrate increased functionality, Van Bakel adds.

Crucial to portability is device consolidation. New devices are beneficial and often lead to increased productivity and ease of workflow. But there is no advantage to new technology if an adjuster is thereby forced to haul around a suitcase filled to the brim with electronic gear.

Already, smart phones have an application for dictation, reducing the need for a digital dictation machine on site. Ideally, a future device would be available that can take high-resolution pictures, record statements, send email, allow for scoping of damages and note-taking, etc., reducing the amount of luggage an adjuster needs to bring to the scene, Morgan says. New tablet devices have the potential to deliver this consolidated functionality. Furthermore, as the cost of mobile service — mobile Internet, email and calling — becomes increasingly more affordable, it becomes more feasible for companies to keep adjusters on the road.

“The key is to ensure that anything we roll out internally to increase our productivity ties in as closely as possible with what the client is asking us to do,” Morgan says. “We need to be careful that any new software tool we implement is flexible enough that we can use it across our lines of business.”

Morgan said productivity software is currently in vogue. “Our major 2011 initiative is to provide our adjusters with a new piece of claims software that will enable them to increase productivity,” he says. “From an I.T. standpoint, my goal is to provide staff with flexible information tools — making sure they can easily manage their claim files and deliver measurable performance– so that at the end of the day, we are delivering the high standards of quality our clients are seeking.”

Technology is continuously changing, so it can be tough to determine which new piece is essential to improve business functionality and which one is simply a jazzed-up piece of existing technology. It is common to get caught up in thinking one must have the latest piece of technology. However, not only is this an expensive proposition, it means taking more time to learn how to use the new device, which means time taken away from adjusting claims, says Richard Swierczynski, owner of AZ Claims.

New technology also comes with location issues, Plant says. Tablets and mobile internet sticks are valuable in certain areas, but they don’t work as well in remote locations, where there is no wireless Internet or cell tower signal for the rocket stick.

That said, adjusters must stay on top of technology trends. “We’re in the business of moving information, and it’s very important for independent adjusters to have the latest technology available to them,” Plant says. “It’s a requirement to move information in the way that the customer wants it.”

Challenges and costs

There is a significant cost associated with the continuous upgrading of technology. The bill can add up quickly when each insurer client requires a different software platform or piece of hardware, in addition to the evolving governance requirements for items like disaster recovery and business continuity now seen in most contracts. “Each year we spend literally millions of dollars in technology infrastructure, services and software to enable us to stay competitive in the marketplace,” Van Bakel says. “These expenditures have simply become the costs of doing business, and we have likely only seen the thin edge of the wedge on this issue as new and innovative technologies continue to emerge at unprecedented rates. We used to talk about technology cycles in terms of generations, and then decades, but we are now talking rapid changes in one or two year cycles.” For the adjuster, Van Bakel adds, the affordability or return on investment of technology is based on whether it improves quality and customer service, improves operational efficiency and effectiveness and satisfies the stringent requirements of our clients.

The whole purpose for insurers to outsource these processes to independent adjusters is because adjusters can supposedly do the job better with superior technology, Morgan says. “So the challenge for the independent is that we’re at the mercy of 200 different clients,” he says. “All of these technologies present opportunities for us to enhance efficiency, but we’re a bit at the mercy of what our clients are choosing and they are not always the same.”