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1 © Copyright 2012 EMC Corporation. All rights reserved.
P&C Claims Automation Solution A Competitive Advantage
Paragon Solutions, Inc. Mike Cloutier – Vice President Insurance Markets
ACORD Conference May 15-17, 2012
2 © Copyright 2012 EMC Corporation. All rights reserved.
THE COST OF CLAIMS PAYMENTS AND
EXPENSES IS THE SINGLE, LARGEST SPEND
FOR P&C INSURERS, ACCOUNTING FOR
75%-85% OF TOTAL ADMINISTRATIVE COST
3 © Copyright 2012 EMC Corporation. All rights reserved.
Top Claims Investment Drivers
4 © Copyright 2012 EMC Corporation. All rights reserved.
Costs An A.T. Kearney study found that the costs associated with reviewing and settling claims typically
account for up to 65 percent of an insurer’s revenue. Claim handling costs are high because of
process inefficiencies (including manual steps and re-keying) paper use, headcount for expense for
all claim parties and litigation expenses
Quality Many insurers have not re-engineered their claims processes; resulting in continued process gaps,
slow processes and poor customer service quality
Customer Satisfaction The insurance industry continues to score poorly in customer satisfaction surveys. In a recent
survey of companies conducted by Business Week, only two insurance companies were included in
the top 25 companies identified as “The Customer Service Elite” by the publication. [1]
Timing Studies have also shown that customers who receive prompt claims settlements are more likely to
renew with their existing carriers. [2]
[1] Jena McGregor with Frederick F. Jesperson, Megan Tucker and Dean Foust, “Customer Service Champs,” Business Week, 5 March 2007 [2] The American Customer Satisfaction Index, “Scores by Industry: Property & Casualty Insurance,” 2006
Challenges in Claims Processing
5 © Copyright 2012 EMC Corporation. All rights reserved.
Other Departments
Common pain points across claims are costing insurance carriers…
Claims Management Process
… Invest-igation
Determine Coverage
Initiate Claim
Third Party Providers
Financial Management
Consistent industry claims leakage of 8-12% of net premiums written
Limited visibility into trends as well as issues with the accuracy of information contributes to chronic industry reserve deficiencies
Loss Adjustment Expense (LAE) inefficiencies are rationalized as required for severity containment
1. When dealing with 3rd parties…
Inability to measure performance or value
Difficulty in selecting and implementing partnerships
2. When managing liability…
Failure to apply consistent processes to detect fraud and subrogation opportunities
Sub-optimal claim handling procedures drive inconsistencies
3. When processing claims…
Inefficient staffing, processes and organization structure
Wasted effort and time in claim handling
Poor customer service permeates process
4. When dealing with other departments…
Competing incentives from department to department
Poor integration between claims, underwriting, sales and agency
5. When managing financials…
Errors with bills and payments
Unenforced policy limits & deductibles
1
Industry Impact
2
5 4
*Source: CSFB P&C Primer, Feb 2006; Claims Magazine 20070
3
Business Challenges:
Claims’ Common Pain Points & Impacts
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Critical Success Factors in Claims
Superior customer Experience
Improve Customer Satisfaction (higher retention)
Customer driven state of mind
Customer access (ex. website)
Claim communication and facilitation
Quick claims process cycle time
Coverage Determination
Loss Adjustment Expenses
Reduce Operational Expenses Focus on increased throughput and reduced overhead
Performance based on claims throughput productivity
Reduce specialization to balance loads
Loss
Reduce loss costs
Indemnity payments
Eliminate fraud
Reduce claim leakage
Claim Resolution
Triage & Assignment
Investigation
Physical Damage Repair
Medical Management
Litigation Management
Claim Evaluation
Recovery FNOL
7 © Copyright 2012 EMC Corporation. All rights reserved.
Documentum
Speed to Value: Case-Based Solutions
Case-based Solution Examples
Customer Care Contracts
Management New Account
Opening Human
Resources Accounts Payable
Claims Management
Configurable User Interface
Rich Integration Capabilities
Model-driven Configuration
Process & Content Unification
Business Process Management
Compliance Monitoring & Reporting
Customer Communications Intelligent Capture
Content Management & Repository Services
Collaboration
Configurable Dashboards
Role-based Applications
Reference Applications
Case Management
Best Practices
Single platform to rapidly build case-based applications
Solutions up to 50% faster, substantially lower cost
Configuration vs. coding – less resources, complexity & risk
Greater application agility , lower TCO
8 © Copyright 2012 EMC Corporation. All rights reserved.
Digital Claims Processing Customer Example
8
Background
Insurance subsidiary of large US financial institution
Large writer of property and casualty insurance for business, home, and auto
2,800 employees in offices across 32 states
1,100 employees working from home offices
The Challenge
Reduce time, effort, and costs associated with documenting claims
– 18 to 30 days from notification of a loss until claim data completely entered into the system
Claims management system data types included: – 35mm and digital photos, voice depositions, video, claim
forms, police reports, official statements, etc.
Minimize impact on staff, retain data long-term, immediate data recovery
9 © Copyright 2012 EMC Corporation. All rights reserved.
Digital Claims Processing: An Example The Results
9
• With this solution, digital images are sent via the Internet
to headquarters, loaded into the EMC Documentum
repository (running with an EMC Centera content
addressed storage system), and then automatically
linked to the virtual claim file—all within 15 minutes
• $2.5 million annual savings
• Reduced claims processing costs by $250,000 in postal
fees alone for the documentation after a recent disaster
• Speeded workflow and provided better access to
information
10 © Copyright 2012 EMC Corporation. All rights reserved.
Paragon Solutions’ Profile
Paragon is an enterprise information management
solutions company that helps firms leverage information
assets to achieve better business results.
Corporate Facts • National Coverage • Global Clients • NJ Headquarters • Dual-shore Development • CAGR 20+% • Privately owned, 30-year
history
Market domain expertise focusing on client solutions
Solution competencies addressing process
optimization, information management and
information integration.
Advisory consulting and systems integration teams
delivering business value.
Industry-aligned accelerator assets providing rapid
time-to-value and lower total cost of ownership.
A proven delivery track record delivering high value
and return on investment.
11 © Copyright 2012 EMC Corporation. All rights reserved.
Contact Paragon for More Information
Joe Pennino, Solutions Sales Director phone: 516.610.7024; [email protected]
Michael Cloutier, VP Insurance Solutions phone: 908.783.1903; [email protected]
12 © Copyright 2012 EMC Corporation. All rights reserved.