The Case for Reinventing the Claims Management Process

Claims management is highly inefficient at most insurance companies and self-insured organisations. Work processes are fragmented and paper intensive, systems are numerous and disjointed, and many steps must be performed manually.

In some life companies, death claim payouts are calculated by spreadsheet. Property and casualty companies still pass paper folders around before claims are assigned or payments are processed. This costly system engenders mistakes and delays that can drive away customers, and it can overlook fraudulent activity and compliance issues. With so much at stake, why is claims management often the least efficient process in an insurance organisation?

Overcoming Multiple Systems, Poor Integration

The truth is most insurers don’t have a true claims management system. Many life insurers process death claims with a small staff and rudimentary system, while higher-volume claims for AD&D, DI and Medicare supplements are processed by an entirely different staff and separate systems. Cross training is problematic, and many systems are too old and frail to attempt integration.

On the other hand, P&C claim departments can choose among a variety of expert systems for evaluating bodily injuries, managing litigation, reviewing invoices, detecting fraud, checking for OFAC compliance and assessing negligence. These tools promote consistency and best practices, but how do they impact productivity? Even though they are equipped with better tools, P&C carriers face similar challenges – working with multiple software applications, poor integration and inadequate training to make the most out of technology.

“CSC is in a somewhat unique position because we’re the leading insurance software vendor and the leading provider of business process outsourcing services to insurance companies,” said Tim Kennedy, director of research and development for CSC’s Financial Services Group. “Our BPO employees administer 12 million policies, so our claims management strategy incorporates both our software clients’ feedback and our own internal reengineering initiative.”

Boosting Productivity by 50 Percent

The results of those efforts are two new CSC software products – Claims Accelerator for life and annuity companies and Claims Desktop for P&C insurers – both scheduled for release in 2005. Both employ external rules engines, making it easier and faster to define and modify business rules and calculations. Both are business process management systems that integrate work management and imaging/document management along with process orchestration.

Claims Accelerator is a single, standalone claims management solution for life and annuity insurers that supports death claims, annuity payouts, DI, LTC and Medicare supplement claims. Taking advantage of BPEL, XML and ACORD standards, it will greatly simplify integration between disparate policy administration engines and third parties, such as reinsurers. It will help eliminate paper processing activities while ensuring proper documentation is maintained and procedures are followed. CSC estimates that productivity could be improved by 50 percent or more, depending on an insurer’s product portfolio and level of automation.

“We are reengineering our internal claims processes to leverage this technology, and so far the changes are dramatic,” Kennedy said. “Paper-based processing has been eliminated. The need for claims processors is reduced. The role of the supervisor has greatly changed with a decreased need to manage the routing of work, inspect quality and resolve many types of issues.”

Promoting Industry Best Practices through Automation

Designed for P&C claims professionals, CSC’s Claims Desktop is a Web-based system that will integrate multiple claim functions and applications. From a single screen, adjusters will share data across multiple applications, eliminating the need for redundant entry. Claims professionals will be guided by intelligent task management, which will ensure claims are being investigated, evaluated and resolved within an organisation’s expectations and parameters.

“The Claims Desktop will help ensure industry-defined best practices are being followed across the claims enterprise,” said Frank Heaps, lead consultant for CSC’s P&C claims products. “This data integration will make it easier for companies to maintain and enhance the system, allowing them to introduce new capabilities such as claim profiling, intelligent claims routing and functional collaboration.”