Is it possible to build a house without a hammer and nails? Howabout producing a car without an automated assembly line? Surely itcould be done with a tremendous amount of effort and some prettysubstantial flaws in the end product. The same holds true forour claims organizations, where investigations, negotiationsand settlements can happen, but without the right toolsthere are destined to be flaws.

During a recent meeting with a prominent claimsleader, someone expressed that much of this particularcarrier's success was derived from improved utilization of “specialprograms” and tools. In fact, so much emphasis is placed ontools that they have developed an entire department focused on thistype of research and development.

From the earliest days of claims, a variety of tools have beenused. Initially, this consisted of nothing more than a pen andpaper to document the claims adjuster's investigation. Thencame cameras, Dictaphones and roller tapes. As technology hasadvanced, the tools have played a pivotal role in making adjustersmore efficient with outcomes that are more accurate.

At some levels, however, insurers may balk attools. After all, aren't we paying adjusters to adjustclaims. Of course, that makes perfect sense, just as we payconstruction crews to erect buildings. But having either completethe tasks without a blueprint for success and the proper tools justdoesn't make sense.

Technology As A Catalyst

As we have discussed in in this blog before, success stems fromthree key aspects of the organization; people, processes andtechnology. Tools in and of themselves will not take anorganization to the next level; rather they will improveproductivity of people and optimization ofprocesses. Technology is merely the catalyst to derive theoutcome. Consider ClaimIQ, which requires the full attentionof the adjuster so as to support investigative decisions whileproviding a framework for negotiations.

The premise of this type of claims optimization is to meldcarrier best practices with hands on knowledge and experience whichultimately drive the right outcomes. By modeling the practicesof the most effective and efficient in an organization, thisbehavior can be replicated resulting in calibrated processes andworkflows.

Results are derived from the consistent execution of fundamentals. The biggest challenges facing anyorganization, claims or otherwise, are behaviors that deviate fromthe norm. By bringing everything into alignment, results not onlybecome normalized, but predictable. This is critical in theworld of insurance where predictability is critical to assessmentof risk.

To put this into context, consider the traditional auditmethodology in many industries, including our own. A randomsampling of product in various stages of development is reviewedfor quality, accuracy and defects. To achieve Six Sigma success, there can be no more than four defects permillion opportunities. This is an incredibly high degree ofsuccess, and the reality is that most organizations operatesomewhere between the second and third sigma, which translates into66,000 to 308,000 defects per million opportunities.

When translating defects into process, consider basic errorssuch as not contacting a party to a claim, missing a witness, notobtaining a police report. Now add to this simple metrics suchas missed subrogation or auto physical damage supplementrates. Further compound the challenges to accuracy withimproper liability assessments or poor negotiationskills.

While these types of errors can be found with a traditionalsampling of claims, the ability to isolate trends can be slow andcumbersome. Arguably, a better approach is rooted inleveraging tools. Consider basic metrics such as allowablemedical bills. Reactively, an auditor could pull a file anmanually identify what was billed and owed. Proactively, thissame auditor could cover exponentially more ground with tools thatautomate this entire process. The same holds true for otheraspects of claims, whereby targeted selection based upon claim toolmethodology can produce reports to isolate defects down to theadjuster level.

Back to the hammer can nails analogy. Could a house bebuilt without these tools? Certainly, but much like a house ofcards it would eventually collapse. Rather, by providing thebuilder of a house or a claim, with the necessary tools, a level ofcertainty about quality and outcome will emerge.

What we see throughout the industry is that claims departmentswhich think and act in a manner rooted in consistency andfundamental execution tend to gain a significant competitiveadvantage. This advantage is not limited to claims, as thesesame concepts can be leveraged in all aspects of organizationalimprovement.

Christopher Tidball is a casualty claims consultant withMitchell International and the author of multiple claims processimprovement books, including Re-Adjusted: 20 Essential Rules ToTake Your Claims Organization From Ordinary ToExtraordinary! He has served the claims industry for 25 years,having held multiple adjusting, management and execution roles withinsurance carriers. He may be reached at [email protected].