Ideal World of Claims Handling

Asked not what they can do for claims-handling technology, but rather what claims-handling technology can do for them, people in the insurance industry speak of a future that includes an integrated, publicly accessible, Web-enabled exchange of claims information

The Future of Claims Technology

Disaster strikes, and a consumer needs to report a claim. He or she contacts a broker and/or insurance agent using a company’s online Web-based portal. During this process, the consumer is given a password to track the status of his or her claim.

Once entered online, the claim is patched through to the centralized claims system of an insurance company (possibly through the broker’s management system). The insurer verifies the claim with a phone call and an offer of support to the policyholder. Meanwhile, the insurance company sends one of its own adjusters to the scene, or immediately and electronically notifies an independent adjuster to go to the scene.

Let’s say the insurance company contracts an independent adjuster to do the job. Using a wireless laptop, digital camera, a camera phone or any other portable, handheld mobile electronic device that may be available in the future, the adjuster records the details at the scene and electronically transmits photos of the damage, notes and reports directly to the insurance company’s centralized claims handling system. All the adjuster has to do is swipe a card, and the information goes to the correct carrier for resolution, no matter what the insurance company happens to be.

The insurance company’s claims supervisors access the adjuster’s images and notes. The supervisor can now approve or deny the claim within a day of the event occurring (10 years ago, this time lag was up to a week).

Assuming the claim is approved, the policyholder could log into a common inquiry-style computer database and track the status of his or her claim. [Alternatively, notices might come in the form of e-mail or a phone call, depending on what the policyholder preferred.] Policyholders would then have immediate electronic access to the claim amount, as well as an itemized, detailed description of what is covered or not covered under the approved claim. Alternatively, the policyholder would know instantly that the claim had been denied.

The insurer’s system, being fully integrated with vendors’ systems, would be able to provide electronic status updates on all the processes related to claims resolution (i. e. not just whether or not the insurer had approved the claim and/or mailed the cheque.) In an auto insurance claim, for example, consumers would have online access to daily pictures of his or her car throughout the various stages of repair [i. e. see the new paint job had been completed, for example]. In the example of a homeowners’ claim after a catastrophe event, a common inquiry system might include a summary of the coordinated schedule of repair contractors, so the consumer would know at the touch of a button what contractors would arrive to do what work and when [i. e. when the new carpet would show up, for example].

And if the claim had been refused, and a legal action started, lawyers assigned to the claim would be able to update insureds and carriers online about the status of the legal claim — including access to reports and upcoming court dates.

Technology permitting, five to 10 years from now, insurance company claims departments and claims adjusting firms will be using fully-integrated, publicly-accessible, end-to-end claims management systems perfectly tailored to the needs of the online generation.

Such systems, fully-developed, would resolve consumers’ claims with a level of ease enjoyed by science fiction characters who seemingly have instantaneous access to everything at the touch of a computer button.

Canadian Underwriter asked a number of claims professionals what they want technology to do for them over the next five to 10 years (regardless of whether or not such technology has been developed, or is already in a state of development). The question evoked a surprisingly common, overarching vision of where claims technology should be taking the industry in the future. An amalgamated, abstracted version of people’s descriptions of ideal claims-handling technology is presented in the example above, ‘The Future of Claims Technology.’

One common element of the various scenarios is a much more holistic integration of the claims-handling technology used by insurance companies and the independent adjusting firms that work with them.

“Our goal is the end-to-end integration of the claims process,” Mark Thaiss, IT manager for McLarens Canada, says. “The idea being to provide the customer with visibility into the process, into the status, for example. But from our perspective, being mostly on the back end, we’d like to be able to provide our customers — the insurance companies, for example, or the individual claimants — some kind of standards-based integration with the various claims management systems that we [adjusters] use.”

For insurance companies, ideal technology would simplify the claims process so that insurers receive the information they need quicker, so that they can resolve claims faster, says Irene Bianchi, the vice president of claims for Royal & SunAlliance Canada. And policyholder access to the process would be paramount.

“In an ideal world, we could have a customer portal,” Bianchi says. “If customers did have a claim, they could go [online] and check on the status of a claim. They could see for themselves what’s going on and they could do it at their convenience, [and not just] when we have somebody on the phone [available to] speak to them.

“UPS or Purolator has that tracking technology allowing you to track your package. Well, this way you could track your claim, track your policy, your payments, that kind of thing.”

Certainly elements of a more holistic technology are already available, notes Larry Lythgoe, the vice president of claims at ING Insurance Company of Canada. “A lot of the things we are talking about, we are already doing at some level and/or we are currently working on delivering,” he says. “I think in a five-year window, it wouldn’t surprise me that a lot of this functionality would be installed and up and running.”

Some claims handling systems are already offering a variety of new bells and whistles. For example, Aviva Canada in 2007 received recognition in a Celent survey for use of technology in helping to streamline the claims handling process. “A core element of its solution is a sophisticated first notice of loss process with dynamic questioning that improved the quantity and quality of information gathered by customer service representatives in the first call, while also enhancing claims routing and tracking,” the Celent report notes.

In the Aviva model, claims data is stored in a central repository immediately accessible to adjusters in multiple locations throughout the process, allowing the claim to be processed with fewer touch points. “Adjusters also have access to online mapping tools that let them route no-injury claims to the nearest repair partner location,” Celent notes.

In the United States, AIG Companies is providing technology to streamline the process for handling commercial claims. To this end, the company introduced “c-Claim” (centralized–Customer Link And Information Management) to process financial lines claims more quickly and efficiently. “c-Claim” provides a single point of entry for all financial lines claims, including directors and officers (D&O), errors and omissions (E&O), financial institutions (FI) and fidelity. “The streamlined workflow will promptly direct each new notice or claim to the most appropriate claim professional, facilitating client contact and efficient resolution,” AIG notes, by way of description, in a press release. “c- Claim” staff is committed to taking ownership of all inquiries and will stay actively i
nvolved through their resolution.”

CONNECTING WITH VENDORS

But although most carriers can point to individual examples of integrated claims technology innovations, no company has yet to achieve the same broad level of technological integration claims people envision for the future (as summarized on Page 25). Ideally, claims-handling technology should connect all of the main players in the claims process, sources say, including policyholders, brokers, carriers and claims vendors.

“Right now, from a technology standpoint, there’s a whole bunch of tools out there,”Rocco Neglia, vice president, claims, Economical Mutual Insurance Company, says. “Some of them work, some of them don’t. Some of them work partially. What’s missing is a holistic approach in the claims handling. The last thing we need is another tool that just adds to the complexity of it all. What we need is an integrated approach to different facets of claims.”

Neglia believes one of the first orders of business is to develop technology whereby carriers can connect directly with vendors. A lot of time in claims handling is spent dealing with vendors, he observes. “Whether you are dealing with lawyers, whether you’re dealing with health care

providers, whether you’re dealing with contractors, [or] with automobile [repair centres], you need to be able to communicate, to share documents and information with them in a much more efficient, paperless fashion,”Neglia says.

It might be assumed that some sort of centralized repository of information — a Web-enabled database or a common inquiry system, for example — would be a core component of future technology. But herein lies an obstacle to developing the ideal claims-handling technology: the privacy implications of storing large amounts of personal data.

“We do have a little bit of a wrinkle, and that’s PIPEDA [the Personal Information Protection and Electronic Documents Act], the privacy legislation,” Bianchi notes, adding that insurers are in the process of figuring out just how PIPEDA’s restrictions on personal data collection square with the kind of open access an ideal, integrated claims handling process might imply.

“There’s some information that we simply do not record electronically,” says Thaiss. “Some of our agreements prohibit us from maintaining any records of individual data, and we adhere to that very carefully to ensure we are in compliance. Specifically, we would need to ensure that any interchange of data between organizations is done in a secure fashion, both encryption and authentication being required to exchange that data.”

Lythgoe notes there are ways to comply with the privacy rules while at the same time allowing users to access a common inquiry system. “I think the approach is that for the customer, for the named insured, to log into the claim, he or she would require passwords, or a policy number or claims number, to be able to access the system,” he says. Following along the same lines, if a third-party vendor accesses the system, “there needs to be controls [in place] so they’re only able to see the exact information that they are required to see in order for them to do their jobs — nothing more and nothing less,” says Lythgoe. “But you can build securities into the system to deal with that.”

However, even with the privacy issue taken care of, the obstacle remains of how much such an ideal integrated system might cost, Bianchi notes. “People are going to have to be convinced that this is the kind of thing customers want, because there will probably be a fairly hefty price tag attached to it,” she says. “You’ve got to understand your customers and know that’s what they want before you make that kind of investment.”

Lythgoe notes integration efforts in the future are likely to be the result of proprietary technology solutions introduced by individual insurance companies in consultation with outside vendors.

This raises the issue of developing a common language across systems, or standards, Thaiss says, noting the work of the Centre for Studies in Insurance Operations (CSIO) in the area of developing XML standards. Thaiss notes individual adjusting firms and companies each have their own claims handling systems, and standards would have to be developed to connect them. “There are preliminary standards based on individual products, but nothing across platform or integrating between products,” he says. “As far as I know, there is no company or organization that’s attempting to unify any of these products in particular. There are initiatives to unify the market, though.”

THE HUMAN SIDE

In all of this, it should be noted, the point is not to completely automate the claims handling process. “There’s another piece that we can’t forget, and that’s the caring piece, particularly with claims,” Bianchi says. “You also want to be able to offer people on that initial claim reassurance that they will be able to talk to a person that understands what they’re going through. We invest a lot in customer service and empathy training, and that is to get people comfortable and to get them processes. Once they’re fine with that, then to build something at the back end that could let them check on their claim, I think is probably fairly realistic in the near future.” Bianchi says in her perfect world, a personal phone call would still be an entry point into the online claims handling system, just to make sure the consumer was comfortable using it.

The point, Lythgoe adds, is to offer choice — particularly to members of the so-called ‘FaceBook Generation,’ who frequently conduct their personal and business affairs online. “As the demographics change, the folks coming up through system now are much more comfortable on the Web and technologically savvy, so they would be more inclined to just check [their claims status] online than perhaps another demographic that would be much more comfortable talking over the phone. Just give them that flexibility.”