Casualty 2.0 is a claims management blueprint for bringing together technology, data, skill development and process to control loss costs in measurable, strategic ways. It is also a path to building strategies for operating expert casualty organizations.
The property and casualty industry pays out more than an estimated $100 billion a year to resolve personal injury claims. Numerous factors affecting the investigation, evaluation and resolution of these claims have been changing, making them more complex and more expensive. These factors include inflation in medical costs driven by higher pricing, more services and complications in evaluating pain and suffering, driven by multiple injury diagnoses. New laws and legal doctrines create nuances for adjusters and managers to consider. Containing the cost of settlements is not getting easier.
In the midst of this rapidly evolving environment, leaders operate without effective reporting and measurement, with aging and disjointed technology, in the absence of formal training and proven practices. Casualty organizations are falling behind. Casualty 2.0 combines four disciplines that must work together for effective containment of settlement value. These disciplines are data and reporting, technology, process and adjusting skill.
See also: Examining Potential of Peer-to-Peer Insurers
Data and Reporting: Build data for measuring “what” and “why”
Most casualty organizations are confined to very limited and not-so-useful data. Measurement, when it is available, is confined to items like average payment, average cycle time and counts of new and closed claims. These measures are starting points but leave so much unanswered that they are poor guides for improving performance. For example, if average payments have gone down….is that an indication that accuracy has improved? Or that easier cases are settling, leaving the more difficult and expensive cases in inventory?
Peter Drucker, the famous management expert, put it succinctly when he said, “You can’t manage what you can’t measure.” Without measures, the management process is reduced to focus on one case at a time. Strategic insight cannot be developed from this level of information.
In Casualty 2.0, we examine the core data and measures that every company needs to lead.
Technology: Use technology to build and resolve a holistic, integrated case
Technology is the window into data and the mechanism for aligning process. It is also a means to developing skill. Casualty organizations are significantly challenged in using technology this way as they work in a fractured environment of point solutions. They use a combination of core claim systems, document management systems, Word documents or Excel files and other ancillary applications like ISO’s claims indexing. In some cases, medical bill review systems are also used. This mixture tends to generate activity about the parts of a claim without building a picture of the whole claim.
The result is claim information residing in many different applications. The sum of these parts doesn’t add up to the whole. It is not possible to systematically evaluate performance by looking at claims investigation, evaluation and negotiation holistically. For example, what do you pay in settlements for medical bills and why? Pain and suffering? How frequently does liability play a factor? How much variance is there? Which adjusters produce the best results and why?
Not only is it difficult to use the data your adjusters have spent so much time compiling, but the current approach also mandates “processing” activity over “adjusting decisions.” The use of “unstructured” data like claim notes not only harms data insight but also is not useful in managing process.
Casualty 2.0 moves technology from documentation and data collection exercises to supporting judgments in a single, integrated solution. Creating a holistic and integrated view of liability, pain and suffering, medical, etc. isn’t convenient, but it’s necessary to controlling the overall settlement value AND building adjusting expertise.
Process: Work from a core skill set
Casualty organizations look for adjusters who are experienced in casualty handling. Training is seen as beneficial, but most organizations lack the budget to build effective programs. The result is skills that are developed “on the job.”
The lack of structured training makes tenure attractive. But tenure is not a standard of skill. Tenure, in our experience, is far from a guarantee of a good result. Most claims leaders we speak with agree. With tenure comes a mix of adjusting approaches as well as knowledge of uncertain origin, not a consistently reliable claim outcome.
See also: One Foot In Healthcare: Property And Casualty Payer Integration
Some standards for knowledge and skill are needed. For example, in an industry more and more driven by medical inflation, demonstrated knowledge of the process and guidelines for assessing and treating a patient are “must haves.” (Also see our blog
on “Injury Evaluation Tips.") We’ll be writing about the core casualty skill set and how to turn this knowledge into real cost containment.
Adjusting Skills: Implement practices with proven impact on controlling settlement costs
In the thick of multiple applications and demanding productivity expectations, adjusters end up “processing” claims rather than “adjusting” them. Procedures are developed that outline the tasks that should lead to a good solution. Each procedure makes sense in its own right, but they often don’t lead to effective decisions that contain settlement value.
Best practices are not just “logical,” they are practical and measurable. For example, checking ISO for prior
claims and challenging the legitimacy of an injury in low-impact cases are good practices. The practices that convert this information into measurable cost containment are the best practices.
Standards and practices that produce the best results are developed by addressing how judgment should be applied, capturing the use of this judgment and using it to demonstrate, through data, that it produces better results. Standards are not a matter of design, but of demonstration. Casualty 2.0 uses proven practices as best practices.