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May 13, 2015

Chasing the Right Numbers on Claims

Summary:

Metrics are great, but only if they're the right numbers, based on the right goals, and aren't distorted by the time they reach the daily staff.

Photo Courtesy of Dave Bleasdale

Managing a claims operation is challenging. There are so many moving parts, dynamics and procedures. Information comes gushing in like a fire hose, making it difficult for many companies to effectively assemble and organize it. It’s crucial to help claims divisions focus on the right numbers instead of chasing numbers that have no value.

Most claims leaders know that there are a few factors that affect the majority of claim outcomes. However, many times organizations will mistakenly target metrics “for metrics’ sake,” at the expense of common sense.

Traditionally, a claims supervisor or branch manager will receive metric targets from senior leadership. Unfortunately, the intent of these goals is skewed dramatically by the time they reach front-line personnel. For example, let’s take a company that wants to improve customer service by inspecting vehicle damage the same business day. While this is a noble idea and has the potential to increase customer satisfaction, branch level managers are often forced to abandon rational thinking to meet a specific “inspection metric” or quota. Managers will chase the numbers to obtain an inspection, often having staff appraisers take photos of damaged vehicles over fences or taking shortcuts in an attempt to meet requirements. This often leads to compromised accuracy and raises the question — “Does it really make sense?” It does to the manager who needs to meet goals and protect her job but does it truly increase customer satisfaction? Not necessarily.

Having a goal at the top doesn’t mean that the numbers will retain their true meaning by the time they get to the daily staff. It’s crucial to focus on figures that actually create better claim outcomes and customer experiences.

Here’s another example of how differing goals within a claims organization can skew overall results when managers are forced to manage to the wrong numbers:

Let’s say your insured damages another vehicle and that claimant decides to go through his own carrier for repairs. Now the carrier sends in a subrogation demand that includes excessive rental, overlapping operations, duplicate invoices and mathematical errors. Would it be a good idea to just pay what is being asked without reviewing for accuracy?

Well, for some insurers that don’t have the staffing or the expertise in the subrogation department, quite often an excessive demand like this might just be rubber-stamped. The subrogation department may be overseen by an individual who has been compartmentalized away from day-to-day claims. If this manager’s goals and metrics don’t include accuracy, he may just pay this overinflated demand.

Chasing the wrong numbers can give the misperception that the manager is achieving goals, but the best possible outcome wasn’t achieved.

So what’s the answer?

The key is matching numbers to desirable outcomes that make sense. Eliminate any metrics that provide little value and only serve to create busywork. With the wealth of data that companies are able to gather and analyze, the focus should be on information that has a direct impact on customer retention and quality service.

One must carefully focus on the right numbers to add value and help push the organization forward to achieving that ideal balance of client satisfaction and operational efficiency.

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About the Author

Ernie Bray, chairman and CEO of ACD, has more than 20 years of experience in the insurance and automobile claims industry. Bray is a dynamic force in driving innovation and technology to transform the auto claims industry and connect a highly fragmented business sector.

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