Transforming Call Centers to Claims Centers

By Larry Wood
Senior Consultant

When I began my claims career in 1973, policyholders reported losses to their agents, who then prepared carbon-copy loss report forms and mailed them to the local claims office. In some cases, an agent might have held onto claims and waited for the company adjuster, who stopped by the office about once a week.

In the branch claims offices, managers reviewed incoming claims before handing them off to an adjuster. If the expected loss fell below a certain threshold, the adjuster went by the agent’s word regarding coverage provided by the policy. Above the threshold, a request for coverage verification was prepared and mailed to the home office, where coverage was checked and the confirmation returned by mail to the branch claims office.

Once the home office had verified coverage, the branch office would create a paper file for each loss and forward it to the adjuster. The adjuster’s first step in handling the claim was to contact the policyholder and other parties involved in the claim.

The purpose in describing this antiquated series of steps is to compare it to today’s claim initiation process. Many, if not most, companies now maintain call centers as the primary point of contact with policyholders and others reporting new claims. Some of these call centers offer toll-free numbers and expanded or round-the-clock availability. Call center representatives collect loss information, explain the claim process, and assign the claim to the appropriate claim handler. Often, computers help collect the facts about the claim, select a claim handler, and move the new claim to the claim handler’s in-basket.

The modern loss-reporting system boasts many advantages over the old. The most significant of these advantages is speed—speed in collecting information from the policyholder, speed in verifying coverage, speed in matching the case with a claim handler. Why does speed matter? Among other reasons, it improves the final claim result as measured by loss costs, loss adjustment expense, and, most importantly, customer satisfaction.

While claims initiation has come a long way since the 1970s, there are still opportunities to provide better and more cost-effective claims service. Many companies are now transforming their call centers into what I characterize as claims centers. A claims center differs from a call center in several significant ways. First, it is staffed with trained and experienced claims handlers. In addition to taking and entering loss information, the handlers triage claims based on guidelines to determine future handling and routing. The claims center keeps the simple, routine claims for processing, and explains and arranges things like appraisal appointments, car rentals, and direct repair options.

What happens to complex claims? Typically, a claims center representative identifies the claims that cannot be handled by the center and then determines who will receive the assignment. Based on the customer’s needs and the nature of the loss, the claim can either be forwarded to an in-basket or directed to the assigned adjuster.

The use of claims centers accomplishes several key objectives of the claims process. For customers, claims centers are a quick, convenient way to report losses. They enable the early triage and segmentation of claims, ensuring a good match of claim characteristics and staff expertise. Staff have the opportunity to explain the claim process, set expectations, and reassure frazzled customers. Centers enable high-volume, routine claims to be handled efficiently. Finally, they reduce or eliminate redundant activities of call center staff and adjusters.

Taking advantage of the features and benefits of the claims center requires some adaptation on the part of managers. While typical call-center workload management and scheduling techniques still apply, the effective management of this kind of operation demands additional tools.

Early experimenters and adopters of the claims center concept have achieved remarkable benefits. Claims centers have been able to resolve more than 25% of personal auto and more than 40% of homeowner claims. The elapsed time from report of the claim to initiation of the claim process was cut in half. Claims centers increase customer satisfaction with no deterioration in the quality of the claim result. An unexpected benefit has been an improved ability to respond to catastrophes that generate a high volume of claims.

Technology provides the opportunity to provide better service at a lower cost. Taking advantage of new technologies with innovative process designs maximizes the possible benefits. The evolution of the claims center is a good example of how a combination of new technology and processes can better meet customer expectations.