A current case for decentralization: maximizing technology in the claims process.

Appreciating history and how we arrived at where we currently are, has value as we prepare for the future.

Let’s go back just a relatively short time. Technology had not yet evolved to the point that information could be shared. Not long-ago integrated claim systems didn’t exist and all file documents, including notes, were stored in paper files, within a card stock file jacket! When a loss was reported, the claim professional began filling the file with photographs, polaroid pictures that developed right in front of your eyes! Photographs of the loss scene, property, vehicles and anything else that may have had material value to the case. Then police reports were added, along with all the letters that were typed and mailed to interested parties, as well as, all received correspondence. These file jackets may have had sections and holes so that the contents could be bound together, usually in a prescribed orderly fashion for reviewing. All of the notes were written in chronological order, including adjuster activities, summaries, manger directions and authority limits.?

Because the documentation was contained in one location, it was logical that one claim professional maintained control of the file and all of the coverages that applied to that loss. Information was not easily shared, and sending thick, heavy paper files back and forth among several adjusters slowed the process and cost money.?Therefore, having one person handle the ‘file’ start to finish was pretty much the only option. We did see specialties like subrogation become centralized once all of the payments we made and claims settled. But if a claim reopened or a supplement was received, we had to box heavy files around to ensure all the necessary documentation was accessible for review.

The claim professional in that model was responsible for “the file” or “the loss”, including closing all applicable coverages, from first notice of the loss (FNOL) until the injury releases were signed. That meant one person settled 1ST and 3RD property damage claims including total losses and disposing of any salvage, any medical pay coverages that applied, third party liability, and it was not uncommon for that person to be involved in the subrogation efforts.

The advent of the integrated claim systems changed everything! Suddenly, all file documentation was readily available to anyone, anywhere. Information could be passed among several adjusters at once. Specialization became an easy model to sell. Funnel all of one type of work to select few who could become masters at that domain. Repetitive work, repeating the same tasks over and over again would ensure accuracy and efficiencies. In addition, we could more readily manage their output. There were only a few key data points to look at in each specific domain. Therefore, we could build models and measure productivity, establish specific standards, set goals, hold people accountable to expectations constantly strive for shorter and shorter cycle times within each domain.

Claims structures were modified to align with the new centralized models being created. Management levels were developed so that each domain had the proper level of authority and focus. Each separate domain has its own goals and primary focus. Many claims now required a half a dozen or more claim adjusters that the policyholder has to communicate with to resolve separate aspects of the claim. We adapted to the contemporary technology of the day and became very good at working under this model.

An objective view of centralized models reveal that they are primarily designed to expedite moving data sideways from one domain to another. One adjuster assigns something to another who may eventually send it back to the originating adjuster. Each adjuster is tasked with resolving a specific aspect of the claim perhaps not having the proper concern for another’s domain. For example, a total loss adjuster is measured by how quickly they settle the total loss and sell the salvage. They may not be concerned with how the evidence may be related to a casualty claim. Also, as we know competition creates the next level leaders so succeeding in one’s domain is a way to fast-track oneself to higher levels of authority and compensation. Therefore, one domain may focus too much on their specific success, even at the expense of the best final resolution of the claim. Another significant attribute of centralized models is that require highly specific?and arduous processes that outline each step necessary before moving it to another domain. These processes become the central focal point for management as they try to measure the effectiveness of their centralized units. Many of these processes focus so much on the process, they fail to consider file resolution as the ultimate goal.

Technology in our industry has continued to evolve. We now have, not only the ability to share data, but also to ingest data and apply artificial intelligence (AI) tools to help the adjuster make professional claim decisions.

Let me summarize the evolution this way: as I mentioned previously, at one point in time an adjuster had to go out into the field to gather data. The integrated claim systems allowed us to share the data. We have reached a point where just about all of the data we need can be digitally delivered to one place. And not just delivered, analyzed and evaluated with recommended courses of action. Now, consider the skill set of the adjuster who once gathered the data manually and provide them with the current tools that bring the key data elements to them! Technology has allowed us to bring many of our processes full circle.

Economist Thomas Sowell has taught us a profound insight: “There are no solutions, there are only trade-offs; and you try to get the best trade-off you can get, that's all you can hope for.”?To be clear, I am not presenting decentralization as a panacea that will solve all claim management problems! There will always be tradeoffs. But technology can assist with filling in many skill gaps, as well as, aid with experienced based training for claim professionals.

One of the core drivers of the centralized model was that the ‘generalists’ could not possibly keep current on all of the claim coverages and their elements. For example, in the auto claims space, a dedicated auto physical damage adjuster who only estimates vehicle damages will be more effective at managing physical damage severity than an adjuster who also has to be aware of current medical trends. These are steps in the claim resolution process that were previously done manually. Technology driven tools have advanced to the point that they will aid the adjusters with recognizing damages, recommending courses of actions and pointing out anomalies.?

So, let’s see what the automobile claim professional can do while utilizing today’s technology. With vehicle technology advancing so rapidly, it is quite hard to have an adjuster trained in the current repair processes of several manufactures vehicles, some with internal combustion engines (ICE) and some electric vehicles (EVs). The sensors are safety issues and repair procedures are quite specific. Tools from CCC’s suite of DRP solutions, like CCC’s CCC? Focus, in addition to CCC? Open Shop make the adjuster’s role in estimating damages much different. The model of a physical damage adjuster going to a shop, writing an estimate, negotiating with the shop and then paying supplements does not really apply today. Shops, who are ultimately responsible for the safe repair of the vehicle, can write an estimate and have their work audited by an adjuster with the help of AI. The tool will tell the adjuster which estimates they should focus on and why. In addition, the tools provide direction as to what alternatives to the estimate are available.

CCC, as an example, has tools that digitally ingest photos of post-accident vehicle damage. Solutions such as CCC? Estimate - STP and CCC? Smart Estimate then use artificial intelligence (AI) on these photos and apply a carrier’s unique rules and expectations of how estimates should be written based upon the damages. Estimates can automatically pre-populate with predictions for line items such as repair parts or labor hours and the adjuster has the ability to accept the suggestions or make changes to the estimate. Now consider the adjuster who generates a photo request from the vehicle owner having control of the estimate and payment. Several steps in the claims process are eliminated and accuracy is maintained at viable levels. In fact, CCC has a tool that aids the FNOL adjuster in recommending the best method of inspection (MOI) based upon the characteristics of the vehicle and its damages. Additionally, CCC? Safekeep is a digitized, comprehensive subrogation workflow solution, that uses AI to analyze claims data and evidence to help achieve efficiencies and accelerate recoveries.

There are many more tools and companies using the latest technology to aid the adjuster when they may not have the expertise or ability to handle something themselves. Inspection Connection (IC) is a great example of an independent adjuster model using photo-based technology to be more efficient and effective. Inspection Connection’s model has proven to be a very effective way to resolve a physical damage claim when you don’t have staff in the geographic area, or with the necessary expertise. www.ic-claims.com

PartsTrader is another example of an effective use of technology to aid the adjuster with finding parts for the best price. PartsTrader has created a one-stop platform for parts buyers and enables suppliers reach these buyers with competitive pricing. The result is that there is less searching for parts and the bidding processes help maintain a tighter control on expenses.

Automobile salvage disposal companies, like Insurance Auto Auction, have upped their technical game as well. While not a lot has changed in the selling of salvaged vehicles, determining the salvage value has come light years from phone calling around for bids. IAA employs tools that consider the location and the extent of the damages to the salvaged vehicle and using AI can help estimate the expected return. In addition, tolls like IAA’s Inspection Services? tool allows carriers to move vehicles out of storage accruing shops and tow yards and into an IAA location where 40+ high definition/high resolution images are taken within a few hours and electronically delivered back to the adjuster via the estimatic platform of choice, as well as, instantly available on IAA’s website.?Condition reports and full estimates are also available should claims management choose to the next level of photo based estimating (PBE) outsourcing.??Tools in the right hands have proven to save time and money. Imagine if there were less lateral transfers in the process. Even more time and money could be saved by eliminating steps the claim resolution process.

Not only are there tools to help determine if a vehicle is not repairable, but companies like YASSI (Yotta Automated Software Solutions, Inc.) are revolutionizing the way lenders and insurance carriers exchange titles title, lien and registration data! This means one of the biggest pain points when resolving a total loss has been significantly improved. For more information contact: linkedin.com/in/lee-perine

CCC’s?Injury Evaluation Solution ?(IES) augments an?adjuster’s experience and helps them achieve more accurate bill review and settlement outcomes by applying proven AI and biomechanical analysis to injury causation the tool helping carriers improve accuracy, expedite claims processing, identify anomalies and standardize decisions, whether it’s a routine claim or a more complex case.

I have highlighted just a few tools that are now available to an adjuster to help them improve their decision making from FNOL through subrogation. No longer is the expertise limited to a few specialists in a specific claim domain. Actionable information is now available to an adjuster in specific key areas that help them navigate a claim to resolution more effectively.

Just as the interactive claim system changed the process that resulted in decentralization, today’s tools may have reached the point that an adjuster can handle more aspects of a claim thus eliminating the inefficiencies caused by referring work laterally. In addition, owning more aspects of a claim may actually be better suited for today’s work from home environment, provide job enrichment and ultimately more career satisfaction. Perhaps we have evolved to the point that we can go Back to the Future!

Having worked in both environments, I have unique perspective and can help you understand how applying technology with fundamental claims skills can help you achieve your service and severity goals. Please contract me directly for more information.

Robert Cretel

www.dhirubhai.net/in/bob-cretel-0417999

[email protected]

(714) 323-1022