Proactive claims handling is crucial to an insurer’s bottom line, according to the latest Towers Watson survey of 35 property/casualty claims officers.
The main operational goals of the U.S. P/C chief claims officers surveyed are loss cost containment and superior customer service, and the key to achieving both is optimal claims handling by engaged, proactive adjusters.
Eighty-nine percent of CCOs ranked loss cost containment as either the primary or secondary claim operational goal, followed by delivering superior customer service at 71 percent.
The value of proactive claim handling was also highlighted with 83 percent of CCOs stating it is the most important driver in the delivery of effective loss containment. The same percentage indicated proactive claim handling is also the primary factor in delivering superior first party claimant customer service.
While 69 percent of CCOs noted that proactive claims handling is the key for delivering superior allocated loss adjustment expense (ALAE) efficiency, 89 percent said effective litigation management is the top consideration for ALAE.
“Claim officers recognize the success of their organization comes down to people first and foremost — and that starts with the claim-handling staff,” said Frank Ramsay, Towers Watson’s North American claim management practice lead. “According to the survey’s findings, CCOs say their claim handlers have extensive technical expertise and experience, and generally are empowered by their supervisors to deliver superior claim results. However, claim organizations also have several competing priorities that take file time away from their claim handlers, which in turn detracts from their highest priority: managing the files they have been assigned.”
The surveyed claims executives reported that claims staff daily core activities are prioritized so that four to six hours are devoted to handling claims files, while one to two hours are allotted for email and other communications.
The CCOs ranked the top five barriers claims handlers face in achieving superior outcomes on individual claims:
- Passive claim handling – 77 percent.
- Ineffective supervision – 60 percent.
- Poor data capture to effectively monitoring performance – 43 percent.
- Core/legacy system limitations/costs – 40 percent.
- Lack of skilled claims handlers – 40 percent.
“Supervisors that empower their claim-handling staff to take charge of their claim inventories can really deliver value and reduce passive claim handling. As the survey results showed, passive claim handling is the top barrier to achieving superior claim outcomes on individual claims. Supervisors should actively work with claim handlers to address and eliminate the factors that enable passive claim handling, such as misplaced priorities and focus, over-reliance on process and disengagement,” said Ramsay.
A valuable takeaway for insurers, according to Towers Watson, is to minimize distractions and competing priorities to maximize the time claims handlers focus on open files. In addition, to circumvent the potentially damaging ramifications of passive claim handling, respondents emphasized the importance of empowering adjusters to settle most of their claim inventory within their own authority.
While larger carriers tend to require more documentation for adjusting reserves and closing files, the majority of CCOs, 86 percent, reported that claim handlers do not need additional permission to settle claims within their authority. Though 74 percent said most of a claim handler’s inventory falls within the handler’s settlement authority, only 23 percent reported that claims handlers can close claims without complete documentation.
The main challenges claim handlers face in delivering superior claim outcomes, according to CCOs, include insufficient understanding of leading indicators and metrics, high caseloads, and lack of sufficient technical expertise.
“More investment is needed to ensure claim handlers have a better understanding of the metrics their companies deem important for managing cases and containing costs. Insurers should also make sure caseloads are reasonable so claim handlers can devote the necessary time and effort needed to actively look at claims rather than provide only perfunctory treatment,” said Ramsay.
It is recommended that insurers consider fostering a team spirit to engage and energize claims handlers while making sure caseloads are reasonable. In addition, insurers should consider reducing unnecessary or redundant documentation, the Towers Watson report stated.
This is the ninth year the survey has been conducted by the international professional services company.