Driving Efficiency

Insurers and repairers can start the year off right by focusing on data insight to gain a competitive advantage in claims management. Specifically, to make wiser business decisions, you can uncover and share data insights, and work together through partnerships to define key metrics that are top of mind for an insurance company and a collision repair shop.

Investing in intelligent partnerships makes good business sense in the claims industry. Deloitte’s 2012 report, Driving Operational Excellence In Claims Management, states: “Since claims are the single largest spend for a P&C insurance company, investing in operational improvements in claims management is one of the most effective strategies to drive profitable growth.”

Such operational improvements include increased transparency into claim data to pinpoint opportunities improve severities, increase profitability and enhance customer experience through better cycle times.

The Role of Data vs. Data Insight

It is important to understand the distinction between data and data insight. With today’s technology, businesses are able to collect tremendous amounts of data with relative ease. However, the data is usually meaningless unto itself. By contrast, data insight, or intelligence, translates measured data into meaningful, actionable managerial insights.

Creating a win-win scenario with data insight entails measuring, mining and managing your information by analyzing the data for trends, pattern relationships and other useful information. By leveraging all this information, you will be able to stop making decisions “by the seat of your pants” and improve the way you communicate with your respective business partner.

For instance, insurers and repairers, how efficient are your staff appraisers, independent appraisers and collision repair shops? What data do you use to determine a high performing shop? If you already use data to measure and benchmark, how are you using it? How is this data communicated and how often? Is it driving the outcomes you expect? Do repair shops know how they stack up against their competitors? Does the policyholder receive timely communication and quality service throughout the entire claims process?

Most insurers already use analytics to improve claims process efficiency, eliminate duplicate data entry and reduce delays. Now it is increasingly necessary for insurers to look deeper into their metrics. Applying data insight elevates tactical claims processing to the level of strategic claims management.

How to Get Started

Many repairers currently use data insight to work closely with their insurance partner to deliver financial results and world-class service. However, some repairers don’t and they need to begin by using the proper tools to mine their data and become educated on what the data means.

You can start by asking questions – such as, ‘What does this data mean?’ and ‘Why is this data important to my company?’ Then figure out the relationship between your repair decisions and the impact on the claim severity and cycle time. By being curious and asking powerful questions you can learn how to turn combative conversations into meaningful dialogue when you discuss the data with your insurance partners, your peers and industry experts.

It is a process but, if you are going to stay competitive in this business, you must learn how to leverage data. You must learn how to turn key performance indicators (KPIs) into insight-based actions to improve business processes, which will improve cycle time and enhance the customer experience.

The business benefits are clear, as a recent FenderBender KPI Survey Report cites: “Shops that track KPIs tend to have larger annual sales volumes and high net profit margins.” As such, repairers require more sophisticated electronic estimating and data mining resources.

Although repairers have no control over the types of damaged vehicles entering their facilities, they can control certain decisions, and monitor and understand the outcome of those decisions based on metrics.

Over my more than 30-year career in insurance, I have had the opportunity to work with some phenomenal industry leaders in British Columbia who all understand metrics and KPI, and all run very successful businesses. What I have learned from these experts is that the repair severity is often an outcome of two main decision points within the repair of a vehicle: ‘Can the damaged part be repaired?’ and ‘Does the part require replacement?’

If the part cannot be replaced, an additional question is, ‘What type of part will you use in the replacement process?’ (i.e. original equipment manufacturer (OEM), aftermarket or recycled). It is often more cost-effective to repair parts. However, some repair facilities do not consider repairs as their first option and quickly move to replace repairable parts. When reviewing your metric, as a rule of thumb, the higher the percentage of total labour to the gross repair amount, the more cost-effective the repair.

Repairers should also measure competitive data to determine how their shops compare to rivals. If you are not currently receiving this data, you should ask your insurer for it. Meaningful metrics include: cycle time, average touch time per day, average repair order, and timeliness of communication with customers and insurers. Adopting more sophisticated analytics can reveal patterns that lead to actionable, feasible decisions by repairers.

Profiting From Partnerships

To compete effectively, insurers and repairers also need to rethink their relationship dynamics. Specifically, they need to consider replacing their arm’s-length, transactional relationships with collaborative partnerships focused on common goals: quality, cost-effective repairs and happy, loyal customers.

Currently, the transactional relationships between insurers and repairers tend to use data as a stick to drive performance. However, this dynamic is becoming outdated. A more competitive relationship model involves sharing data insights to coach collision repair shops to higher performance through partnerships. Partners use data as mutually-beneficial intelligence to foster meaningful dialogue and drive sustainable growth.

In contrast to today’s transactional relations between insurers and repairers, healthy partnerships:

• Cooperatively analyze entire systems – including the claims processing value chain – in search ways to improve customer experience;

• Break down silos within and across organizations by emphasizing constructive, cooperative dialogue;

• Seek long-term relationships through a strong customer focus and a high level of contact with them; and

• Reduce stress by balancing power in the relationship.

Establishing partnerships can strengthen your performance by increasing trust, accountability and credibility through open dialogue with partners and customers alike. Partnerships can also help manage expectations, exercise autonomy and increase productivity.

Putting It All Together: Intelligent Partnerships

Deloitte determined an effective claim supplier management strategy can yield savings as high as 30% through collaborative cost control and efficiency improvements. Such a strategy combines data insights and partnerships.

To determine the types of information partners should share, Deloitte states, “One of the biggest operational challenges is a lack of analytical insight; most insurers are simply unaware of what their suppliers are costing them.” By partnering with suppliers, including insightful data providers, repairers and insurers can improve visibility, control and tracking of supplier spending, performance and risk. Partnering can enhance customer service since repairers directly engage with policyholders and impact their satisfaction with the overall claims process.

Consider the fundamentals of intelligent partnerships:

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ull; Be open to interdependence. Consider the long-term, big-picture benefits of collaborating with other organizations in your ecosystem, which includes the sum total of repairers, insurers and suppliers.

• Think strategically: Focus on the metrics that will drive desired outcomes and set targets against those metrics.

• Measure & mine data: Identify where you are and where you want to be. Measure outcomes against what matters to your customers, including fast, quality service and clear communication. Then dive deeper, translating data into meaningful insights to improve decision-making.

• Share insights: Make ongoing, constructive dialogue a priority. Meet to share data insights and translate them into feasible action items. Keep internal and external stakeholders informed to build credibility and trust.

• Commit to continuous improvement: Keep monitoring KPIs to pinpoint what works and where to improve. _

Darcy Gorchynski is Director of Business Development for Audatex Canada, where he applies his decades of insight into leveraging technology to enhance service delivery and improve the overall claims experience.