Insurers can improve their claims service by changing the processing structure. Steve O'Donoghue explains

Insurance company managers are under pressure from two masters. The first is their customers who demand competitive pricing and first class customer service, received in an efficient and timely manner. The second are their investors and senior management who are focused on growth, risk and profit.

In order to satisfy these different demands, it is essential that insurance companies are run efficiently and effectively and have the right structures and processes in place.

However, while there is little doubt that good processes lie at the heart of a well run company, there is still evidence that many in this sector are struggling with resources, labour-based paper processes, as well as time management, best practice and compliance.

One of the major obstacles to implementing robust process management is the fact that so many individuals and departments can be involved in any one claim.

From securing the right paperwork from hospitals in the event of accidents, and liaising with garages over repairs to cars, to the claims assessment process of ascertaining who is at fault and the legal process of signing off the claim, the myriad people who are involved in claims assessment can hinder the ability to structure the process properly.

If different departments, and therefore company data, are not always properly integrated, efficient processing and good customer service will be beyond the reach of many insurance companies.

This problem initially gave rise to the processing approach, where one individual is tasked with the end-to-end monitoring and administration of a claim.

Entire process
On the surface, this makes sense. One multiskilled insurance professional can see the claim through the entire process, ensuring that all steps of the procedure are completed and that, ultimately, the claim is settled.

However, this approach is inefficient, as the insurer needs to ensure that the person handling the claim can deal with all of the various responsibilities within it.

And, using a highly skilled professional to conduct the many steps within the claims procedure can be extremely expensive, as many of these actions are administrative and could be completed by a more junior colleague.

Good process management starts with understanding the processes. All processes are made up of a series of elements. These elements may require different skills, take different lengths of time and have different dependencies, risks and values.

Insurance companies need to structure their processes at an appropriate level of detail to ensure that the most appropriate person is doing each element and to monitor how efficient their processing is.

This enables managers to quickly spot and resolve bottlenecks and also plan for the longer term, based on information gathered from their existing team's activity.

For example, if there is a bottleneck in the claims assessment department, it could be that the company needs to recruit more loss assessors to deal with the workload, thus increasing the efficiency of the process.

This approach presents managers with invaluable information about the performance of their processes and their people. Given the right technology, this insight can be used to modify how work is distributed and how the processes are configured.

A typical claims handling process where good technology can help to underpin efficient processing is shown below. Appropriate activities can run simultaneously to speed up processing. Also, instances where a claim is not moving between stages as anticipated can easily be identified and actioned.

Another key advantage of good process management relates to the flow of information through a business. Controls should be put in place to ensure that a claim can progress only when all of the necessary preceding stages have been completed. This ensures that expensive resources (that is, claims handlers or engineers) do not waste time attempting to process partly completed claims records.

This also speeds up the claims process by issuing reminders where appropriate to chase for missing information, as opposed to sitting back and waiting for third parties to submit.

As well as facilitating the efficient running of an insurance company, good process management is an important component of a company's compliance strategy. By aligning workflow processes to the prevailing compliance guidelines, from the FSA, all staff involved in processing must comply.

In the event that they attempt to work around the compliance process, warnings and escalations will notify managers and team leaders of a breach, hopefully before the breach has a significant business impact. Sound process management - backed up with a good audit trail - will enable companies to demonstrate compliance.

Insurers need to start recognising that good process management helps to reduce the cost of processing and is also a critical component of their compliance strategy. It can improve the standard of customer service, thereby aiding customer retention and will also give managers a chance to identify which processes and which people are working - and which aren't. IT

'Steve O'Donoghue is director at FLOvate, a workflow and document management specialist.