This is the sixth in Viewpoint’s series of guest essays submitted by organizations that are associate members of AAIS. For information on associate membership, contact Rick Maka, director of marketing, at rickm@AAISonline.com, or by calling 800-564-AAIS.
Most insurance organizations have been administering claims virtually the same way for more than two decades. Claim adjusters handle each and every claim - from the small and routine to the large and complex. This is outmoded. With today’s advanced technology, insurers can free adjusters from processing thousands of minor claims and let them focus on the claims that require their expertise.
Technology is revolutionizing claims handling, not just by providing more access to information and easier-to-use applications, but rather by enabling more intelligent and efficient use of human resources. By automating adjudication of routine claims, which comprise the vast majority of all losses, the new generation of rules-based systems can boost customer service, improve operating efficiencies and provide an excellent return on investment. Rules-based systems (also known as expert systems) can perform administrative tasks on behalf of the claims professional in addition to directing the workflow of claims.
Here are some tips on how insurers can take advantage of rules-based systems.
Claims knowledge is embodied
in experts. Automate this knowledge
using rules-based programming.
The intuition and expertise that each claims professional brings to the process is fundamental to claims processing. This process of decisions, validations, and managing exceptions by human experts in various regulatory and organizational contexts is the key stumbling block to achieving major gains in claim processing efficiency.
The typical claims organization is in a continuous loop of training aimed at cultivating new experts to replace others who have left the company, taking their own individual expertise and institutional knowledge with them. Continuity of knowledge and consistent service levels are costly and difficult to maintain but are an essential competitive advantage. Poor claim service is far more costly.
Unlike traditional claim-system development that hard-codes the knowledge of a limited set of individuals at a point in time for a specific set of circumstances, the rules-based approach is dynamic and flexible. It lets the organization capture and deploy the reasoning and intuition that typify the decision-making process of its most able claims professionals.
Using an English language interface, an insurance business analyst can create and modify the rules and logic that are employed by the system without regard to a procedural programming language. The system is brought directly to and is directed by the people, or experts, who know the business.
This results in systems that are continuously retuned to keep pace with the changing demands of the organization and the regulatory environment.
Use expert systems to adjudicate routine claims.
Tune systems to your tolerance and enable
adjusters to manage the exceptions.
Rules-based programming, the technique by which expertise is codified in the form of expert systems embedded in claim-automation applications, allows the transfer of experiential knowledge into computerized knowledge bases.
Embodied in the technology that translates this knowledge base into decisions, the rules-based approach results in systems that can handle the routine processes that make up the majority of claims handling.
While doing so, the system builds in best practices, exception management, regulatory compliance and an efficient, satisfying customer experience. Consistent handling at this level of efficiency leads to natural gains in productivity and lower total cost of claims.
The lowest-hanging fruit are the routine claims that comprise the majority of all those reported. These claims are typically administered by staff handling large case loads because the amount of attention required per claim is low and there is little variation among claims.
Yet, to be truly effective, the insurer needs to not only reduce the cost of handling such claims but to consistently identify and manage the exceptions among them. These objectives are somewhat in conflict and are inefficiently accomplished with audits, supervision or worse, by default.
For rules-based expert systems, these objectives are simply natural applications. Because claim experts know what data imply a potential, if not actual, exception, expert systems can identify, efficiently monitor and raise these exceptions for timely attention.
A critical process common to all claim organizations is the initial call intake and first notice of loss.
It is axiomatic that the total cost of a claim is directly related to early reporting and intervention in the loss.
Interview style systems are now familiar in the industry; however, most are not fully exploited. Decision-tree logic, which guides the representative to ask the caller relevant questions based on earlier responses, is a start.
To take full advantage of the moment, expert systems not only gather information but also act upon it. Most claims at this stage follow familiar paths: an expert system can fill the correct forms and notify the parties automatically and instantly.
Most auto-glass claims, medical-only workers’ compensation claims, auto towing claims and many others can be completely automated after initial input - and claimants can usually do the initial input via a voicemail system or the Web. The savings in costs and manpower can be substantial.
Of equal importance is the ability of an expert system to identify exceptions and route them for timely intervention and management.
For instance, the system could easily identify and escalate any lost-time workers’ compensation claims for adjuster scrutiny. And if there are any indications of possible fraud, the system could flag those as well.
Combining an intelligent call intake process and rules-based processing in the form of an expert system creates the potential for adjudicating the vast majority of claims quickly and with consistently high expertise and quality outcomes.
This translates to improved customer service and, with human intervention focused only on exceptions, leads to great operating efficiencies and the lowest total cost of claim.
Expert systems and rules-based processing aren’t theoretical - they’re already deployed by a number of insurers and TPAs today. And while this technology is already proven in the field, it’s relatively young and will continue to become even more capable.
The winners in claims efficiency and effectiveness will not be those that seek technology for technology’s sake, but rather those that will make their experts’ knowledge more pervasive in the claims organization and beyond. Today’s expert systems let human capital enable technology and technology unleash human capital.
Badri Narasimhan, Vice President of Claims Strategy & Business Development at Insurity, Inc. (a ChoicePoint company) has responsibility for Insurity’s claims software and services operations, plays a significant role in the new product development and market entry, and provides leadership for Claims Decisions®, an Insurity solution for the Property/Casualty claims industry. Narasimhan can be reached at 860-616-7405 or Badri.Narasimhan@insurity.com.
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By Badri Narasimhan
