Archive for September, 2013

The Next Frontier in Claims Handling

Welcome to the world of no touch claims handling.   Imagine the scenario of being involved in an accident, snapping photos of the damage with your smart phone, submitting them to an insurance carrier portal and receiving electronic payment within minutes.  This may very well be the future of insurance claims. 

According to NHTSA, there were 5.4 million car crashes in the United States in 2011.  The number of fatalities were 32,885, the lowest in 62 years.  As cars get safer, the number of people killed or injured will continue to decline.  The tradeoff for safety will be increased repair costs. 

This has the potential to result in the way a certain subset of claims are handled, giving rise to low touch or no touch processing.  Could this have negative implications for claims personnel?  To the contrary, it would free up existing staff is freed up to do more meaningful tasks such as digging deeper into personal injury claims or investigating fraud.

So just how would the no touch environment work?  The key to success lies in the triage process whereby predictive analytics, such as that being developed by Mitchell International, can accurately predict outcomes in claims within a specific degree of probability.  Consider the PIP claim being presented by an insured who sought immediate medical care after the accident.  What if a carrier had the ability to know that this would be the first and only bill?  Rather than assigning an adjuster to make contact with the insured, process the payment and place on diary for follow ups, the bill could simply be routed to an automated queue for an electronic payment to the provider.  On the other hand, predictive scoring can help identify those claims with a high probability of exceeding policy limits regardless of claim handling efforts. These claims may also warrant hands free adjudication but with careful monitoring. 

This has the potential to hold true for physical damage claims, as well.  While some accidents will always require certain key investigative steps, others may not.  A significant number of car crashes involve clear liability with no bodily injury.   The no touch approach provides carriers with the ability to create loss reporting apps that can be downloaded to smart phones.   When new policies are issued, instructions are placed on electronic insurance ID cards on what to do after the accident.   This card is simply an icon on the smart phone.  Select it after a fender bender and follow the instructions.  Snap pictures of both cars, obtain the information of the other party and submit the claim.  The carrier may then initiate the claim process, immediately arranging for transportation and a rental car. In a likely future state, these tools will blend the automation based on technology with simplified human interaction. For example, the extent of deformation or damage may best be mined from analysis of the image itself combined with a short verbal description recorded by the claimant on their smartphone.

The carrier will have the ability to leverage a number of technological tools to rule out fraud or pre-existing damage, the photos of the damage can be scanned for metal deformation to recreate the accident and virtual estimatics could generate an instant estimate.  Electronic payment would be sent to the insured bank account of record.  As part of the reporting process, the claimant EBT routing instructions could also be gathered. 

Of course, these types of claims are a subset of all claims, which also will benefit from improvements in technology.  Consider the situation of disputed liability where both parties utilize their own carrier.  While the insured may be the beneficiary of a low or now touch handling process, tools such as Mitchell’s ClaimIQ could be utilized to determine liability and potentially interfaced with applications such as E-Subro Hub, to resolve disputes between carriers.

Moving beyond predictive analytics, consider the implications that further advancements in black box technology may have in determining driver behavior and vehicle motion leading up to, and during the accident.  Having the ability to harness such technology during claims investigations involving situations of shared liability or injury cases could have significant implications on how claims are resolved. 

By capturing information about speed and braking, recognizing metal deformation and principle direction of force and g-forces exerted on vehicle occupants, more accurate injury assessments can be made within a statistically valid degree of probability.   Being able to biomechanically refute certain claims will provide positive outcomes for the premium paying public in general, who today is faced with rising costs even though the majority of motorists very rarely, if ever, make claims.

There are a few certainties in life; death, taxes and change.  Change is really the only constant that we have any control over.   Those who embrace change tend to be the innovators.  Of course, it is the innovators who become industry leaders.  They rapidly gain marketshare from those who hold on to the status quo, which is very pervasive in the financial and insurance industry.  But with each passing day, technology is advancing.  Those who leverage technology to make their people more efficient and their process more robust are virtually guaranteed of gaining a significant competitive edge in the marketplace. 

Christopher Tidball is a casualty claims consultant with Mitchell International and the author of multiple claims process improvement books including Re-Adjusted: 20 Essential Rules To Take Your Claims Organization From Ordinary To Extraordinary.  Keith Peterson is the Vice President of Analytics at Mitchell International. 

September 3, 2013 at 1:00 pm Leave a comment


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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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