An annual personal health check (whether you think you need it or not) is a good discipline that can keep you healthy, help detect and treat problems and provide unexpected benefits. The same principle applies for the health of your claims organization, its processes and infrastructure.

Competitive pressures and challenges to profitability continue to mount for insurers.  The proliferation of new technologies and the overall pace of change in the industry can make it remarkably easy to lose sight of the fundamentals. Insurers must be disciplined about continuously reviewing and improving claims operations, processes and technology to improve claim outcomes, reduce costs and become more efficient. Our experience has shown that an efficient and quality-driven claims operation can save 2% to 4% off an insurer’s combined ratio, with a positive impact to loss costs and LAE.

A comprehensive review and diagnosis of financial, operational and technology issues within the claims operation—not to be confused with the more limited/focused perspective of a claims audit alone—will provide clarity and identify areas of opportunity. We recommend examining every aspect of the claims operation which directly or indirectly impacts financial results, customer experience and claim outcomes.
It is vital to look behind the numbers so that improvement recommendations are relevant, practical, and sufficiently impactful. A few examples of improvement focus include:

  • A comprehensive analysis of claims processes and workflow will typically yield significant improvement in claims cycle time, positively impacting both loss costs and customer satisfaction.
  • Predictive analytics, modeling and textual mining can save millions with early identification of severity losses, fraudulent claims, subrogation opportunities and other claims characteristics which can benefit from early or specific interventions.
  • Mobile technology can improve adjuster productivity, enhance customer service and strengthen competitive differentiation.
  • A comprehensive claims loss cost and expense analysis, along with a reserve redundancy and deficiency analysis, can yield specific actionable recommendations leading to improvement in financial results.

The Nolan approach to claims operational assessment starts with an assessment of the corporate and functional strategies, and includes thorough and detailed analysis and validation, identification of root causes, pertinent recommendations, roadmaps for implementation and metrics for results assessment.

A key element of the Nolan methodology provides a suite of component Views of the claims organization, which allow for segmentation of the review process. Core Views of the claims operations include: Strategy and Strategic Alignment; Quality and Performance Management; Resource Management; Process Workflow; Financial Analysis; Best Practices; Vendor Management; Customer Service; Technology; and Analytics. Our Views are tailored to each organization’s needs and can be further segmented by line of business or by specific claims function such as Litigation Management, Recovery and Fraud Management.

Staff engagement is a critical element in successfully institutionalizing recommendations and improvements. The Nolan methodology includes a collaborative team approach to driving identification and development of the necessary inputs to design a realistic improvement plan that will go beyond the numbers and break down barriers. This approach also promotes acceptance and ownership on the part of managers, supervisors and front-line employees by involving them appropriately in the effort. Lastly, the use of process analysis techniques assures organizational alignment and confirms that business processes and technology needs are properly integrated.

Addressing these fundamentals is of critical importance to every insurer and requires periodic renewal to stay current with industry trends and competitive pressures. A thorough evaluation of your claim operations can improve the health of your organization and lead to objectively measurable improvements in operational and financial performance.