Integrated, Technology Enabled Services Drive Insurance Claims Outsourcing

September 30, 2022

Alan Demers and Stephen Applebaum

Industry Overview: New Challenges

The P&C insurance industry is facing several major challenges including a $6.3 billion net operating loss during the first half of 2022.?According to AM Best, U.S. P&C net income was $31.4 billion, down 17.7% compared with the first six months of 2021. In addition to climate related risks, loss trends, staffing shortages, inflationary medical costs, fraud containment and social inflation trends are top claims challenges in 2022, making for one of the most complex and turbulent times. Medical cost inflation is over 5% on average in 2022 and on top of already decades-long cost increases, especially for emergency services, medications, diagnostics, and surgical procedures.?

Insurers are experiencing pressures from all sides, including labor shortages in which claims are one of the most highly impacted areas. Meanwhile, efforts to automate claims for efficiency and cost reduction are growing across the industry as venture and private capital fueled insurtech innovations shift greater attention toward claims. Claims organizations are facing high turnover rates while losing seasoned and experienced talent as the workforce ages.?This talent drain has a disproportionate impact on more complex claims, such as injury and attorney represented cases. Thus, insurers are prioritizing their focus on meaningful loss cost containment to offset these major headwinds.?

Claims and Meaningful Loss Cost Containment?

With much of the insurtech attention on physical damage virtual inspection and automation of process, injury related claims are often overshadowed. Later in this article we will expand upon how and why multi solution provider outsourcing is being actively adopted by carriers to address these pressures and gain meaningful cost containment. The most effective outsourcing occurs with vendor partners such as?Insight Services Group (ISG) who specialize in providing mitigation solutions to the insurance and legal communities delivered through a single integrated platform. In contrast, single point solutions that address only some of these areas are far less effective and may be counterproductive.?

Claims investigation and evaluation phases for injury losses are critical steps when it comes to final resolution outcomes.?The stakes are high in terms of attorney involvement, lawsuits and unpredictable trials which contribute to higher payouts. Mitigation is crucial for insurance carriers, and this is where having the right information is pivotal for sizing up applicable coverage, damages and during negotiations. Medical records and expert examinations help unravel diagnosis and prognosis.?Add in social media observed claimant behavior and the combination begins to paint a picture around recovery progress and outlook, instrumental in developing both special and general damages. Out-of-pocket costs such as medical and wage loss as well as establishing a projection for pain and suffering or aligning to Workers Compensation models hinges on information that adjusters develop during investigation and evaluation phases. Claim adjusters rely upon their own experience, venue knowledge and a network of vendors to help gather such information and insights in a way that may be explained as gathering puzzle pieces to ultimately visualize the whole picture.?

Vendor Partner Selection

Selecting and managing vendors has always been an important decision for any carrier. Today, vendors are often viewed as partners, especially when it comes to security and privacy management or developing future-forward roadmap solutions.?It’s no longer a buy and supply relationship for many providers and carriers alike. Forging partnerships have become a critically important strategy in business in general and specifically in effective cost containment, making partner selection more critical than ever. Injury claims services including medical, record and clinical management and investigations are leading areas of opportunities for outsourcing.?

During our research for this article, we spoke to a number of top tier carriers who outsource one or more of these services and the one vendor partner name that was most frequently mentioned with high satisfaction rates was?Insight Services Group (ISG) .?We decided to speak with ISG who specialize in the casualty and workers compensation injury claim space. ISG has more than 25 years of experience providing technology-enabled solutions to reduce costs and support claim closure. During the discussion we learned what makes for successful insurer relationships and what separates ISG from all others.

Most importantly, ISG thinks and operates as an integrated business partner not a vendor. Their approach is consultative, and solution centered, taking the time and interest to learn their client’s landscape and tailor their solutions accordingly.?Providing industry expertise, understanding state laws and regulations are table stakes while?ensuring sensitive data privacy and security is paramount, especially when it comes to medical records and sensitive claims data. We also learned of another key differentiator, mitigation of risk and program costs by leveraging integration with multiple claims platform and solutions integrators including Guidewire, Duck Creek, CCC and Shift which provides a huge time savings and efficiency gain for payors. Mobile texting with injured parties also helps compresses claim cycle time.?ISG drives costs out the client’s existing program while maintaining industry leading service and quality levels by letting clients choose from multiple services while remaining in their own claim environment.

ISG is a multi-vertical company providing deep and broad solutions in; Investigations, Independent Medical Examinations, Record Retrieval and Clinical Management as a single claims partner which makes them unique.?But it goes a step further where ISG’s program approach also reduces steps, eliminates hand-offs, and removes inefficiencies in partnership.?In one example, a carrier had multiple steps to order, organize and pay for medical records and ISG reduced the workstreams by 85%.?So, there is a concentration on loss cost containment and loss adjustment expense simultaneously and an equal passion for mitigating losses while creating claim adjustment efficiency.??

As a single source, technology driven service provider, ISG strives to leverage its user-friendly system features such as “Live Chat” to enhance the adjusters service experience.?ISG also offers its clients the ability to pivot from one service to another within their systems environment as the claim evolves. For instance, when a “no show” occurs for an IME (independent medical exam), the client can redirect and select a social media search which might reveal the reason for the missed IME.?The generation of automated reminders are another way ISG seeks to drive efficiencies to reduce missed appointments that are costly and extend the claims cycle.?Open claims have carrying costs and the longer a claim is unresolved equates to higher adjustment expense and generally higher payout amounts. Thus speed, accuracy and information matter. Although ISG’s loss cost containment verticals have been around for a while, automation, reduced steps, and integrated solutions are newer and are unlocking new benefits for carriers.

New Approaches to Claims Management

Today’s claim management is changing quickly.?Technology, integrations, partnerships and vendor marketplaces are popping up everywhere. Incumbent vendors are becoming more sophisticated and capable while new entrants are applying analytics, artificial intelligence new data and other technologies to help modernize the claim process.?Many of the larger carriers have or are going through core policy and claims administration platform transformations to replace long outdated legacy systems while positioning to automate, integrate and accelerate claims modernization agendas. Meanwhile, carriers are outsourcing and leaning on vendor partners to an even higher degree today.

Changing Vendor Partner Marketplace

The vendor space is changing as well.?Venture capital backed consolidation, advances in technology investments and growth due to carrier outsourcing are most pronounced.?Within the injury claim investigation and evaluation space there is consolidation among records management, investigation firms and medical management companies while many remain regional and state specific.?Meanwhile, carriers are increasing their appetite to outsource, automate and provide more tools to adjusters.?This coincides with the aforementioned claim adjuster talent war and acceleration of retirements during the Great Resignation. However, insurers demand efficiency without sacrifice to claims management quality, namely the ability to manage loss costs effectively.?Vendors capable of offering national or multi-regional coverage is a must-have when competing for carrier’s attendant geographic claim footprint. Procurement experts are focused on partnering with firms which match these priorities.

With advances in technology comes the need for tighter controls, security and privacy. Vendors manage an array of private, personal identifiable information and sensitive data when it comes to legal, medical and claim investigation materials.?

The vendor of today must meet stringent SOC compliance, cyber risk protection and business recovery requirements on an ongoing basis in order to compete. When working with new vendors, this stage of compliance can take months of time to review and satisfy.

Claims investigation and evaluation are no longer overlooked areas for technology and outsourcing as the industry modernizes. Partnerships with fully integrated national providers with deep expertise in medical, record and investigation management bolstered by powerful new technologies will be the hallmark of the insurance market leaders of the future.