Murphy’s Law is may well have been
invented for the claims review and processing phase. Here is merely a short list
of the many things that can—and often
do—go wrong, along with the potential impact on the property and casualty
The carrier’s business guidelines regarding parts specified for collision
repair are not followed by claims staff
and repair shop partners for a variety
of reasons. With no way to monitor
whether the appraiser is making the
most cost-effective choice based on
available options, the carrier can’t defend inconsistencies.
Inaccuracies in medical bills, such as
duplicate billing and coding errors, can
result in additional work for adjusters
and overpayment by the carrier, which
in turn may cause policyholders to
reach their limits sooner than was otherwise necessary.
Desk reviewers may waste time reviewing every claim instead of the
estimated 20 percent that actually require their specific attention, resulting a significant cost impact to those
problematic claims, and unnecessary
delays to the straightforward and
If the re-inspection system is not integrated with other core systems, then
the claims staff may spend additional
time rekeying the same data. This time
wasted could have been used facilitating the actual re-inspection.
In the case of liability assessment,
inconsistent evaluation can lead to
overpayment, while failure to conduct any assessment is a missed opportunity to save money. Yet statistics show that most carriers assess
liability on fewer than 5 percent of
claims. In addition, adjusters who
are not properly trained in negotiations lack the skills needed to reach a
A carrier may not be immediately
Best Practices and
alerted to potential fraud and may
pay on a fraudulent claim or overpay
for over-use of medical treatment. The
impact is huge, as evidenced by a 2012
FICO survey of U.S. insurers. FICO
found that 45 percent of respondents
estimated that insurance fraud costs
were 5 to 10 percent of their claims
volume, while 32 percent said the ratio
was as high as 20 percent. The FBI esti-
mates the total cost of insurance fraud
(non-health insurance) exceeds $40
billion per year.
The cost of inconsistent, inaccurate
claims review and processing is inestimable. It factors intangibles, such as lost
productivity, overpayment, liability, fraud
and the intangible price of unsatisfied
customers and negative word-of-mouth.
Fortunately, the application of best practices in compliance, rules engines, and
targeted interventions provide cost-effective, easily implemented solutions.
Armed with these solutions, insurers can
achieve a desirable level of verifiable consistency and measurable cost-savings and
customer satisfaction ratings.
Applying auto-generated rules to manage compliance with business guidelines
and state regulation can help drive efficiency in both bodily injury and physical
damage claims processing.
Products such as Compliance Manager
from Mitchell International allow the in-
surer to consistently and automatically
dictate business rules to staff and indus-
try partners. The program alerts the ap-
praiser to potential issues before an esti-
mate is submitted to the insurer.
At the audit level, it ensures the reviewer can see what parts were available at the time of the estimate—useful
information for managing partners,
training appraisers, and handling subrogation. Closed-file software enables
multiple types of reviews including
partial loss, process, rentals and special
For bodily injury (BI) claims, solutions
like Decision Point go beyond basic bill review practices. Such a product features hundreds of built-in medical edits that look for
specific issues related to bodily injury and
physical damage. This level of complexity
means insurers can drive close analysis of a
bill and automatically invoke rules based on
different states and jurisdiction within the
specific time frame.
Moreover, solutions should systematically review claims for duplicate billing,
fee schedule compliance and benchmarking, as well as reasonableness of charges.
When the adjuster saves time, the insurer
saves money, which can be extended to
the customer in the form of rate breaks.
In addition, built-in expertise saves