How to Optimize the Insurance Claims Process
Other than signing up for an insurance plan, the most common interaction customers have with insurance companies is submitting a claim. If your claims process is broken or even slightly off, you’re not providing a great customer experience.
With so many options, when insurance companies don’t provide a great customer experience, customers leave. Complaint data from the National Association of Insurance Commissioners shows that 68% of compliance across 10 insurers surveyed were related to claims. Optimizing the claims process is critical for controlling operating costs, increasing working capital, and improving customer satisfaction. But many insurance companies struggle to make significant improvements because they:
Can’t clearly identify the execution gaps and root causes of the “friction” in their processes
Can’t effectively implement and monitor the actions that close each gap
We’ve written before about how process mining can be used in the insurance industry. This post explains how the Doculabs’ Claims Management Execution Solution will help you address these two challenges. The App is a process optimization solution for claims organizations, natively built on the Celonis Execution Management System. The solution provides claims executives and directors an end-to-end solution that will help to improve the efficiency and effectiveness of any insurance provider’s claims process.
Executives and directors can use the Claims Management Execution Solution to identify execution gaps, such as assignment to the wrong adjusters, lack of process standardization, rework, lack of automation, and loss adjustments. The tool then helps you identify improvements and monitor how the improved process is performing.
To explain how this works, let’s start with the SVP of Claims.
What the SVP of Claims Wants in the Claims Process
The SVP of Claims in a typical P&C firm is responsible for the supervision of all claims-related matters, including analysis, development, and execution of claims strategies. This includes supervision of the multiple Claims VPs and their domains, including a geographical region or office, some regional managers, hundreds of adjusters and other staff, and repair shops and other vendors. The SVP requires efficient, high-level objective reporting and analysis of the VP domain performance, including root causes of friction and implemented improvements.
Note that this example scenario starts by focusing on the “people” dimension of “people, process, and technology”. The SVP starts by focusing on and drilling down into the performance of actors – VPs, regions or offices, adjusters, and shops – rather than focusing first on the different process variants. But it quickly includes “process and technology” and a typical execution analysis addresses all three dimensions.
The SVP Needs Answers to These Questions
The SVP should start measuring and analyzing the Claims organization by asking the following kinds of questions:
What are the facts about the overall activity: What is the overall activity? What volume of claims, cycle times, payouts, expenses, and customer satisfaction are provided by the VPs, adjusters, shops, teams, regions, and claim types?
How do the actors compare in performance: How do VPs, adjusters, shops, and regions compare against each other and against the internal standards for volume, cycle times, payouts, expenses, and customer satisfaction? How do they compare with each other in how many variant paths they must use, rather than a single optimal path? Comparing the actors against each other is benchmarking. Comparing the actors against a standard is conformance.
What’s causing the performance differences and execution gaps: After measuring what’s going on, it’s time for analysis to determine the causes of the differences and gaps. The usual suspects include process non-standardization, initial misassignment based on cause of loss or claim type, mismatch of staff skills or shop adequacy, NIGO (not in good order) claims and rework.
This information is available, but not quickly or in an easy-to-digest format.
Identifying Areas to Improve
The App identifies the course of action providing the greatest impact for process improvement. In our example, it might provide the SVP with insights regarding how the lowest performing offices have two or more of the following execution gaps:
Intake assessments are inconsistent with the corporate guidelines and standards and inadequate or wrong information is initially collected
Assignments to adjusters and shops don’t match the skill level of the adjustor or the appropriateness of the shop because of lack of relevant adjustor and shop data
Claims are reassigned or reworked because of incomplete or incorrect data and document collection
Many activities are manual and paper-based rather than automated and digital
The recommended improvements are the following:
Implement standardized AI-assisted intake and assignment, including intelligent document and data capture, guided e-forms, and workflow that uses updated information about adjusters and shops to assist with assignments
Apply automation and digitization to other specific manual, paper-based steps in the claims process
Robust procedures, guidelines, and training to ensure that all offices conform to company guidelines and standards during intake and other claims processing activities
The next step is to use the solution as a guide to help Implement and automate the recommended improvements. Then, after implementing improvements, the insurance company executives and management can continue to monitor overall performance along with the root causes and implemented improvements, both real-time and over longer periods. When necessary, the App can also make real-time process improvements using machine learning and automation functionality.
The above is a simple example but more generally the Claims Management Execution App will:
Reduce inefficiencies caused by staffing and resource issues, including allocation and training
Reduce claims overpayment and loss adjustment expense.
Reduce long cycle times and NIGO quality issues due to lack of standardization, digitization, and automation.
Reduce rework, redundant processing, and reopened claims.
Improve customer satisfaction, retention, and upsell
How It Works
The Claims Management Execution App has three fundamental capabilities that are leveraged during process improvement initiatives:
The App analyzes data in real-time from source systems. It identifies and visualizes execution gaps — like overpayment, dissatisfaction, and rework — that limit your execution capacity.
The App then identifies root causes of those execution gaps – like lack of standardization, lack of automation, lack of training and guidelines
The App identifies the course of action providing the greatest impact for process improvement – like AI-based capture, RPA, claims self-service, standardized procedures, and training
Implement and automate the recommended improvements
After implementing improvements, continue to monitor overall performance, conformance against critical value metrics, internal and external compliance standards, root cause monitoring, and improvement monitoring
Make real-time process improvements using machine learning and automation functionality
How to Get Started Improving Your Claims Process
The graphic below shows the approach we recommend for analyzing, transforming, and maintaining your insurance claims process.