xl claim - insurance claims processing
DESCRIPTION
InsuranceTRANSCRIPT
1. Introduction
1.1 Insurance Industry Insurance is one of the oldest and most wide spread financial services across the globe. In 200, global
insurance premiums exceeded $4 trillion. With the advent of information technology and high speed
communication, the insurance products are being sold almost everywhere in the world. Increasing
affluence, especially in developing countries, and a rising understanding of the need to protect wealth
and human capital has led to significant growth in the insurance industry.
Given the evolving and growing socio-economic conditions worldwide, insurance companies are
increasingly reaching out across borders and are offering more competitive and customized products
than ever before. Over the past ten years, global insurance premiums have risen by more than 50%,
with annual growth rates ranging between 2 and 10%. The majority of insurance comes from developed
nations such as most of Europe, the US, and Japan. In 2007, premiums in North American amounted to
$1,330 billion, while the European Union generated $1,681 billion, and Asia produced $814 billion.
Emerging markets accounted for over 85% of the world’s population but generated only around 10% of
premiums.
1.2 Claims Processing Management Claims and loss handling is the materialized utility of insurance; it is the actual "product" paid for,
though one hopes it will never need to be used. Claims management is the most important client
interaction and business process for the insurance industry. It has huge impact on profitability and
financial health of the organization. Claims expenditure is the biggest cost head for any insurance
provider and is used in most of the business health indicators. With nearly 80 percent of premium
income spent on claims and claims related processing costs, insurers seek ways to streamline processes
while improving customer service. Speedy and hassle free claims settlement is not only desired but is
essential for survival in today’s highly competitive business environment. But, this is restricted by the
requirement of fraud detection to keep premiums competitive. Thus, in managing the claims handling
function, insurers seek to balance the elements of customer satisfaction, administrative handling
expenses, and claims overpayment leakages. As part of this balancing act, fraudulent insurance practices
are a major business risk that must be managed and overcome. Disputes between insurers and insureds
over the validity of claims or claims handling practices occasionally escalate into litigation; see insurance
bad faith.
2. Claims Processes Claims may be filed by insureds directly with the insurer or through brokers or agents. The insurer may
require that the claim be filed on its own proprietary forms, or may accept claims on a standard industry
form such as those produced by ACORD. Insurance company claim departments employ a large number
of claims adjusters supported by a staff of records management and data entry clerks. Incoming claims
are classified based on severity and are assigned to adjusters whose settlement authority varies with
their knowledge and experience. The adjuster undertakes a thorough investigation of each claim, usually
in close cooperation with the insured, determines its reasonable monetary value, and authorizes
payment. Adjusting liability insurance claims is particularly difficult because there is a third party
involved (the plaintiff who is suing the insured) who is under no contractual obligation to cooperate with
the insurer and in fact may regard the insurer as a deep pocket. The adjuster must obtain legal counsel
for the insured (either inside "house" counsel or outside "panel" counsel), monitor litigation that may
take years to complete, and appear in person or over the telephone with settlement authority at a
mandatory settlement conference when requested by the judge.
2.1 Actors in Claims Processes The claim process management will involve many actors from within the insurer’s organization and few
players from outside the organization as well.
Contact center executive: Contact center executive is contact point for the customer and is used when
the loss is reported and claim is registered.
Claims Executive/Adjuster: Claims executive is an insurer employee who investigates and assesses the
claim.
Independent Adjuster: Independent adjuster is a third party adjuster who is not on insurer’s payroll.
Claims management
System
Contact Center Executive
Claimant / Customer
Account Manager
Underwriter Claims Administrator
Adjuster
Independant Adjuster
Broker
Claims Manager: Claims manager is the manager for the claims process and approves/disapproves the
select actions of claims executive.
Underwriter: Underwriter is the representative from the actuarial department who gathers inputs
relevant to his department from claim processes.
Accounts Executive: Accounts executive is the accounts department representative and gathers inputs
for various accounts such as IBNR, loss reserve, claims payment, etc.
Claimant: The claimant is the client who files the claim; he requires status updates and is actively
involved during negotiations.
Broker: He is an intermediary between client and insurance companies.
Operations administrator: Representative of Operations administration department who coordinates
between various actors in claims management process.
2.2 Process Chart For the purpose of this document the insurance claim processes have been sub-grouped in to eleven
groups and have been individually discussed in details in the subsequent chapters. The process chart
below lists in order of occurrence the eleven process sub-groups indicating the involvement of various
actors.
Process Contact center executive
Adjuster Operations Admin
Claimant Broker Accounts Executive
Notice of Loss and Claim Registration
Involved Involved Involved Involved
Claim Validation and Assignment Involved Involved
Investigation and Assessment Involved Involved Involved
Fraud Management Involved Involved
Negotiations Involved Involved
Litigation Management Involved Involved
Settlement of Claim Involved Involved Involved
Salvage Recovery Involved Involved
Subrogation Involved Involved
2.4 Product Hierarchy A hierarchical view of all the prevalent insurance products in property and claims is shown below.
Among these, the popular products from personal line of insurance will be picked up for the proposed
solution; these are indicated by blue color below,
Product Business Unit Life Insurance Property & Casualty Lines Commercial Lines
Whole Life Product Type Group health
Annuity Home Owners Group travel
Term Life Automobiles
Policy Type Marine Hull
Endowment 4 Wheeler Worker’s compensation
2 Wheeler Professional Liability
Heavy Vehicle
Personal Accident
Health Insurance
Travel
Valuable Articles
Yachts
Collector Car Insurance
Consumer credit
GAP Insurance
Extended Insurance
2.5 Organizational Structure
Robert Austin
Claims Manager (USA)
John Rice
Underwriting Manager (USA)
Jane Oscar
Accounts Manager (USA) Cindy Allen
Operations Head (USA)
Chris Conway
Contact Center Executive
(San Jose)
Jim White
Accounts Executive
(California)
Chris Anthony
Claims Executive/Adjuster
(San Jose)
Chris Anthony
Claims Executive/Adjuster
(California)
Celina Dion
Claims Executive/Adjuster
(California)
Jim White
Underwriting Executive
(California)
Auto Insurance
Sub Business Unit
Home Owners Insurance
Sub Business Unit
Peter Zu
4 Wheeler Auto Insurance
Head
Care Insurance Ltd.
Insurer Organization
Property & Casualty
Business Unit
Commercial Insurance
Business Unit
Huang Lu
2 Wheeler Auto Insurance
Head
Life Insurance
Business Unit
Organization
Independent Actors
2.6 Story Board Background
Bill Wong is a well regarded receptionist at Sierra Suites hotel, Santa Clara, California for past 15 years.
Six years ago, he bought a new BMW 525i for his daily conveyance needs. Along with the car he bought
10 year car insurance from Care Insurance Ltd. This insurance plan covers repairs and part replacements
in case of a road accident or natural calamity but not body injury, regular maintenance and repairs. The
annual premium was fixed at USD 1120 according to Mr. Wong’s driving history.
Accident
On May 3, 2009, on his way back from office Mr. Wong lost control of the car on Montague Expressway
and hit the sideway wall. The vehicle was speeding at 50 mph and thus the impact of the hit was
significant. Visibly the vehicle sides were scratched, body was dented. Moreover, the locking system had
gone jammed. But, thankfully Mr. Wong were unharmed and had saved the helpline number of Care
Insurance in his phone book.
First Notice of Loss
He calls the call center of Care Insurance is greeted by Cris Conway on the other side of the phone. Mr.
Conway takes the policy details and loss details from Mr. Wong. He must first check that the policy
holder has a valid policy and that there is appropriate coverage. To report the first notice of loss, Mr.
Conway opens a claims file in Siebel Insurance by navigating to the Claims screen and creating a new
Claims record. He enters the loss date and selects a policy that was effective at the time of the loss. He
then moves to the Loss Description view to capture some details about the damage to the vehicle. The
call center agent then navigates to the Involved Parties view to capture the contact and account
information. He then goes to the Insured Property view to capture more information about the
George Marsh
Independent Adjuster
Victor Alonto
Broker
Bill Wong
Claimant
Rob Bird
Service Provider
(North West)
damaged vehicle and the damage that occurred. Using this information he files an Auto insurance claim
for Mr. Wong.
Assignment and Claim Validation
As soon as the claim is filed in the system, an automatic assignment engine assigns an adjuster Chris
Anthony to this claim and this goes for approval from claims manager Robert Austin. As part of the
evaluation, Mr. Anthony navigates to the ISO Database Search view to check whether the policy holder
has already made a claim for the same vehicle with another insurance company.
Investigation and assessment
The adjuster creates an activities plan based on the appropriate loss code in the Activities Plan view, and
then assigns an activity to George Marsh who appraises the damage. He creates claim elements and
assigns them as necessary to third-party vendors, such as a repair shop to fix the damage, or a glass
vendor to replace the car windshield. Chris Austin leaves his San Jose office for accident scene on
Montague Expressway. After reaching there, Mr. Austin takes required photographs, collects a copy of
Police report and takes statement of Mr. Wong.
Settlement
Completing these initial investigations, Chris gets the car towed away to a Care’s partnering garage. The
garage engineer Mr. Rob Bird reports the required repair and part replacement. Overall replacing Front
light, repainting, body repairs and lock replacing would cost USD 450. Chris the adjuster whose has
reviewed the documents, coverage and other evidences. He found the case to admissible and genuine.
Thus without escalating this to his boss as the loss amount is lower than USD 1000 (his reserve limit), he
approves the repairs. Mr. Bird after receiving the approval goes ahead with the repairs and car is
released to Mr. Wong as good as new, well almost as good.
In due course, the adjuster receives the invoices associated with the claim and creates a record for each
invoice in the Claims screen > Invoices view. In the Claims screen > Invoices view, he clicks the Generate
Payment button to create a payment record for the invoices. He navigates to the Payments view and
clicks the Submit Payment button to make the necessary payment and settle the claim. Mr. Jane Oscar
from accounts is apprised of the amount approved and he updates his accounts for the loss incurred.
2.7 Key Differentiators of this Offering Integration with ISO database
Hailey rule based engine for establishing business rules
Notification to SIU for investigation of claims
Calculation of subrogation possibility with indicator on the UI
In built claims based automated workflows
3. Claims Processing management – Sub Processes
3. 1 First Notice of Loss (FNOL) and Claim registration
3.1.1 Description
The claims management process begins with loss or damage being reported by the policy holder. He
might report this through his broker or directly. An insurer usually provides one or more contact
channels like face to face, telephone helpline, mail, e-mail or online. The notice of loss through any of
the above channels ends in registration of a claim.
3.1.2 Process Chart Process Contact center
executive Claim Adjuster
Operations Admin
Claimant/ Broker
Accounts Executive
Loss report by Claimant Involved
Collate inputs from various sources/channels and log claim Involved
Check for existence of a valid policy with admissible claim Involved
Stop If invalid and inform claimant Involved
Send Claim Acknowledgement Involved
3.1.3 Process Flow
3.1.4 Actors
Claimant
Broker
Contact Center Executive
Operations administrator
3.1.5 Pre-Condition
None
3.1.6 Expected Outcome
A claim will be registered in the system or claimant would be informed of the claim rejection
3.1.7 Business Rules
Check for existence of a valid policy with admissible claim before filing a claim
3.1.8 Requirements covered:
Ability to capture details of the loss incident
Ability to validate the claim against a policy
Ability to generate a unique identifier for every claim
Ability to report claim through different mediums like call centre, email, fax
3.1.9 Important Fields
Field Group Individual Fields
Claim Identification Claim Number
Policy Details Policy Number
Loss Description
Loss Date
Reported By
Location
Involved Parties
Insured Property License Number
Vehicle Identification
Claimant Details Name
Address
Phone No.
3.1.10 Siebel screen flow
1. Navigate to
Claims screen 2. Create a
new Claims
record
3a. Enter Policy #
and check for
policy validity
4a. Drill down
to Loss details
view
3b. Capture
Loss date
User - Contact Center Executive
4b. Navigate to
Loss Description
View
5. Capture details about the
damage to the vehicle and whether there were injuries or Fatalities
6. Navigate to Involved parties view and Capture the contact and account information
User - Contact Center Executive
User - Contact Center Executive
3. 2 Claim Validation & Assignment
3.2.1 Description
Claim is validated for the completion of information required. Valid Claims are assigned to claim
specialist employed by the insurer called adjusters for assessment and investigation. Based on past
experience, capability and availability of a particular adjuster is assigned for the new claim. The adjuster
then divides the claim in to sub tasks and assign part of tasks to third party service providers.
3.2.2 Process Chart Process Contact center
executive Claim Adjuster
Claims Admin
Claims Manager
Accounts Executive
Check the form for irregularities or insufficiency Involved
Segment the claim by nature of policy, location, claim size Involved
Based on availability assign an adjuster with required expertise Involved
Share current information about the claim with adjuster Involved
Assign part of claim process to third party service providers Involved
7. Navigate to the Insured Property view to capture more information about the damaged vehicle and the damage that occurred
User - Contact Center Executive