I Spy: Improving investigations is the key to driving proper claims outcomes

August 4, 2011 at 8:16 am Leave a comment

In response to my recent news article on insurance fraud I have had a number of inquiries as to steps that insurers can take to proactively identify staged accidents.   As discussed in Re-Adjusted: 20 Essential Steps To Take Your Organization From Ordinary To Extraordinary, an effective investigation is the single most important tool an insurer possesses. 

While that paints the answer with a fairly broad brush, it is imperative to understand just how important a well conducted investigation is to bottom line results.   Keep in mind that this not only pertains to fraud, but every aspect of the claim!  Be it a staged accident, inflated medical bills, pre-existing medical conditions or missed subrogation, billions of dollars are overlooked as the result of ineffective investigations. 

What could your organization do with a 5%, 10% or even 20% improvement in indemnity results, expense reduction and/or organizational improvement?  

The proper investigation begins on day one, with the first question asked at the time a claim is reported.  Each and every question posed should be well thought out, with a logical sequence and a staff trained on not following a script, but rather interjecting appropriate follow ups.   This becomes even more important when the claim lands on the adjuster’s desk or an appraiser writes an estimate. 

Key elements of a claim include the who, what, where, when, why and how.    The attention to detail in answering these questions is what will ultimately give an insurer a competitive edge in the marketplace.  Consider the “how” of the loss.   In many instances, it may be a simple statement such as “the insured made a left turn in front of the claimant.”  As a result of such a generic answer, more than 15% of all claims are closed with a missed subrogation opportunity at a cost to the industry of over $15 billion dollars annually!

In this scenario, consider a few questions that that should be answered:

1-      What was the direction of travel of both cars?  What lane were they in?  Were they indicating a change in their direction of travel?

2-      What was the weather like, including the position of the sun?

3-      Who had control of the intersection?  Who had the green light?  Was there a turn arrow?  Was it leading or lagging?

4-      Where was the point of impact?   

5-      What was the speed of travel prior to the impact?

6-      What were the drivers doing prior to impact (on the phone, texting, changing the radio, etc.)?

7-     What were the duties owed by each driver?  What were the duties breached?  What was the degree of breach? 

While these are just a few of the myriad of questions that should be asked, they set the stage for a more robust investigation.   From a staged accident perspective, perpetrators of fraud won’t be able to answer them as this level of detail isn’t in the script that the capper provided to them.   From a subrogation perspective, a claim that is far too often assessed as 100% liability, often becomes one of shared liability, opening up the opportunity of recovering a portion of dollars paid out.  

Often, there is a perception that delving into exhaustive investigations is time consuming and often won’t yield positive results.   The reality is that this level of detail results in a more effective adjusting staff that will yield improved results, lowering costs and providing an environment where customers get the benefit of improved service and lower premiums.  

As a practical matter, taking a good statement and conducting a thorough investigation ultimately can cost an insurer less on a per claim basis.   By employing improved investigation tools, insurers can leverage a bevy of technology that can assist them in rooting out fraud.  This includes both predictive modeling and link analysis.  

The net result is that carriers employing such tools can streamline the traditional claims process with a high level of certainty that claims meeting certain parameters have been redirected.    Carriers with this type of robust approach gain intangibles as well, such as a reputation that may drive organized insurance fraud rings elsewhere. 

Underlying the entire process is the quality of the claims investigation.  By utilizing the best possible candidates, who have a demonstrated proficiency in investigative skills, carriers gain an edge of the rest of the industry.   By tweaking processes to ensure that certain claim characteristics are redirected, increased productivity for the remainder of claims will ensure.   Finally, leveraging technology to serve as the engine will drive results to record levels.

Christopher Tidball is a claims consultant and the author of Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary!  With more than twenty years of insurance claims experience, his innovative tools and techniques are guaranteed to improve workflow, internal processes and bottom line results.  To learn more, please visit www.christidball.com

 

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Entry filed under: Career Optimization, Insurance, Subrogation, Workflow Optimization. Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

He said, she said: who is really at fault for that accident Without quality people, blocking and tackling becomes an impossible task

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Chris Tidball is a claims and revenue management consultant and author of the "20 Essential Rules" series of self and organizational improvement books. You can ask him a question at chris@christidball.com

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