Insurers and claims professionals specifically will continue to leverage technology to improve claims processes and more efficiently deploy staff in efforts to cut costs and improve the bottom line, Trillium said. But 40.7 percent of respondents said their claims units don’t yet utilize analytics, despite their potential to improve reserve accuracy, shorten cycle times, mitigate loss dollars and lower operational costs, Trillium said. That is a significantly higher level of analytics usage than indicated by Towers Watson's "Property & Casualty Claim Officer Survey," which found nearly 80 percent of insurers are not yet beyond "initiative exploration of claims-related predictive analytics."
“Claims professionals are well aware of the challenges they face in improving their claims processes: reducing costs, enhancing staff performance, and decreasing cycle time,” said Michael Chochreck, insurance solutions principal consultant at Trillium Software. “However, many lack the ability to access and analyze information in free-form text fields needed to make the right decisions at the right times and ensure tangible progress in these areas. It is critical that claims professionals gain insight into the universe of data flowing through their organization and harness this information to more effectively serve their customers and grow their business.”
The main drivers of claims cost increases over the next one-to-three years likely include litigation, rising medical costs and employee turnover, respondents said. An aging workforce and inexperienced replacements also will contribute to the expense, as less-experienced personnel may lead to less-than-optimal claims outcomes; accordingly, 70.4 percent of respondents to the Trillium survey named staff training as a cost-cutting initiative.
Other highlighted trends, pain points and initiatives from the survey include:
• 92.6 percent said improving claims processes is a top initiative to lower operational costs
• 66.7 percent said the top customer issue is a lack of communication
• 55.6 percent said disagreements on insurance claims decisions is a crucial customer issue, which can result from processing issues and less-than-optimal data utilization
• 74 percent of insurers said their claims systems will support operations for less than five years
• 40.7 percent of claims units currently do not utilize analytics, which can be attributed to cost and resources
• 40.7 percent said new software implementation would be a high priority to improve the bottom line.
Communication plays an important role in customer satisfaction, and inexperienced claims professionals exacerbate the customer-service challenge. And in an opinion piece titled “The Strategic Impact of Claims Technologies,” Karlyn Carnahan, principal in the insurance practice at Novarica agreed.
“Claims is a function that relies heavily on the skills of individual claims adjusters and their demeanor with the claimant. And while the goal is to offer a fair settlement and pay the appropriate amount, carriers also need to minimize leakage and fraud,” Carnahan opined. “Delivering that balance in a cost-effective manner-keeping both external-loss costs, such as attorney and expert witness fees, and internal-operating expenses low-can prove difficult without solid technology support, as manual processes lead to increased errors, missed steps and cost much more to deliver than automated processes.”
Trillium found that three-quarters of the most common issues customers have with the claim process are due to poor communications and claimants’ inability to contact a claims handler. According to the survey, just 33 percent of respondents said customer satisfaction will improve by 5 percent or more in the coming year.
The Trillium survey was conducted in Q4 2012, and aggregated information from 30 insurance claims executives, managers and adjusters across all major lines of business, including P&C, life and health insurance in the United States.
This story appeared in Insurance Networking News, a SourceMedia publication.