Third Party Administrators: Under Pressure

TPAs are under a lot of pressure. Not only do they have to adjudicate claims in the most cost effective manner, but they have to track more and more data for their clients and turn that data into meaningful, insightful and compliant information.  In fact, compliance, fraud detection, and increasing levels of transparency, are quickly becoming the expected norm for most TPA’s clients. With all of these demands and the real-time delivery pressures, the very notion of a TPA’s role and service offering have steadily been evolving.

For TPAs, it’s a question of managing profit margins, while providing all of these value-added services, remaining flexible and offering sterling customer service to stay afloat.

So if you’re a TPA, how do you stay on top of everything? How can you report to CMS with minimal effort? Provide your clients with on-demand reporting?  Update your reports and dashboards and offer it on mobile devices?  Offer customer service that outshines the competition?  And, make a profit?

Obviously, a system to support you is the first step. Without a reliable platform, you can’t get to the next step or the one after that. A solid comprehensive platform is an essential foundation for creating workflow that is flexible enough to grow with your ever changing business needs. Automate your reporting. Provide your clients with a reporting portal that allows for self-service. Take manual processes that require human intervention and find a business rule or an automated workflow that speeds the work. Use predictive modeling to triage your claims and identify trends. Not only will you channel work to the right person at the right time, but you will educate your less experienced personnel through the inclusion of business rules that will guide them through the life cycle of a claim, teaching them as they go, from first report of injury to final adjudication.

Of course, one size doesn’t fit all. We know that. A smaller TPA may be looking for something a little different than a larger TPA.  Each of your clients may be more or less demanding, with an entirely different level of complexity involved. That is the beauty of automation and business rules. Maybe all you need to do is schedule and email reports on a monthly, quarterly or annual basis. Or, maybe you have to create a client portal and allow your clients access to run their own reports whenever they want.  Minimal output or maximum output can be achieved easily with the right tools, flexible enough for you to configure yourself.  

With the ever changing nature of risk, how can your systems remain the same? With the constant demand for more meaningful data and insight into your operations, how can you rely on manual processes? With an aging adjuster population, you need tools to educate, business rules to validate and workflow to maintain strict control. Keeping your costs in check requires tools that are looking out for your bottom line.  Tools like advanced reporting and analytics. Document management. Business Process Management.  You may be under pressure, but you are not alone.

What you don’t know can hurt you and COST you big time

For those of you in the alternative risk market, it is all about your exposures. Your loss ratios. Your costs.  The ways in which you track your claims. But, are you missing anything? Are there better ways of capturing your data? Of preventing fraud?  Can you score claims so that you know exactly where you stand at any given moment and have a clear sense of the action required?  Are you ready to institute business rules that cover underwriting and claims? You know firsthand how your processes have to be connected in order to effect automation. But, far too often your systems are disparate and data is siloed, clogging up your access to information that can actually tell you where you are right now. Your systems just aren’t talking to each other.

Having an integrated pathway leads to business insights. It can take a formerly detached set of business units and unite them through a common platform and a common set of data.

 Remember all of those spreadsheets?  It’s time to throw them out and rethink how you can:

• Automate  manual processes- there is no need for keeping a series of ever-growing spreadsheets where formulas can break and spread misinformation.

Worried about critical milestones being missed in the process? Why not change your workflow?

• Increase your productivity and empower your users through business process management- workflow that goes beyond your current needs and takes you to greater heights allowing for big picture thinking and preventing important tasks from slipping through the cracks

Claims not getting to the right person at the right time?

• Find efficiencies where you formerly found bottlenecks- see just where the process is being bogged down and find practical ways of directing and triaging claims.

Underwriting saying one thing and Claims another?

• Connect your systems so that one hand knows what the other is up to.

Overwhelmed by the quantity of mail, faxes and files you need to store and save?

• Go paperless- why search for that file or go to the archive when you can click a button and find it attached to the respective  policy or claim?

Want access to your data whenever you want it?

• Use mobility to be present when it is most important- having that data available on an iPad or a smartphone  enables a significant delivery mechanism for informed decisions.

In the end, whether you are a Risk Pool, a Self-Insured entity, a TPA or a Captive- it all boils down to knowing what the data is telling you about your exposures. You need to know that you have proper integration of your core systems and the best reporting possible to address what currently requires attention. It changes every day and you need to know that you’ll be able to respond with the degree of complexity and flexibility required.

Decrease work hours, Increase work done?

Occupational Health & Safety (OH&S) online published a story this week about a large Swedish company that gave employees time off during the work day for mandated exercise. Results included increased productivity and a decrease in calling in sick. Read the full story here.

These results are not surprising. Exercise is energizing and motivating and for the most part, helps people focus on accomplishing the task at hand. Offering time during the workday to exercise could be an important tactic in a company’s overall risk management strategy. Think about it. Exercise time often competes with family time, house hold chores and other obligations that occupy our precious outside of work time. And for most people, having to choose between helping a child with homework or going to the gym, is a no-brainer. Offering exercise time during work hours shows employees that the company cares about their health and well-being. The feel good benefits of exercise experienced by the employee can in turn be put back into producing good results for the company. Taking this one step further, a healthy employee is more likely to recover from illness and injury more quickly, and in the world of workers’ comp, this often means less loss time which translates into lower costs.

With the continued focus on wellness in the workplace, we can anticipate more and more employer sponsored programs that emphasize a healthy work environment. And doesn’t it appear to be a win-win for all? The employee is given the opportunity to maintain a healthy lifestyle, the employer gets a happier and more productive employee which may even lead to a decline in workers’ comp claim frequency. That may sound like a perfect world, but with a little out of the box thinking, as exhibited by the Swedish company in the OH&S story, it may just be achievable!

Occupational Health & Safety. 2011. “Time Off for Work Exercise Linked to Increased Productivity.” Accessed August 17, 2011. http://ohsonline.com/articles/2011/08/17/time-off-for-work-exercise-linked-to-increased-productivity-study.aspx

DAVID and PreCare to provide injury prevention services to workers’ comp market

DAVID and PreCare jointly produced the highly successful webinar, “Reducing the primary cost driver in Workers’ Compensation” earlier this year and have now entered into a partnership to co-market their products and services to Self Insured organizations to help reduce workplace injuries.   A recording of the webinar is available on both companies’ websites or by direct link here DAVID and PreCare Webinar.

PreCare provides onsite solutions that help organizations incorporate prevention measures into their daily processes. These solutions include job coaching, early intervention screening, training classes and equipment intervention with the end goal of reducing injuries in the workplace.

“Despite all of the technological advancements in the past decade, we continue to see workplace injuries rise, with strains and sprains accounting for more than 40% of total injuries. At PreCare, we focus on the cause of the injuries and work with employers to implement solutions to alleviate risk of injury,” stated Stephen Brown, CEO of PreCare, Inc. “DAVID Corporation has a long history of providing software solutions that manage workers’ comp programs, and in working with their clients, understand the need to partner with a company like ours, that focuses on the reduction of injuries in the workplace.”

 ”Our commitment to our clients goes well beyond just providing software that helps them run their businesses more effectively and efficiently. We believe in providing other products and services that add value to our NavRisk suite and help further reduce their overall workers’ comp costs,” stated Alex Aminian, President and CEO of DAVID Corporation. “PreCare’s expertise in injury prevention and wellness services will have a positive impact on our clients’ workers’ comp programs. And by tracking these programs in our NavRisk software solutions, clients will be able to better measure the effectiveness of their risk management and prevention programs.”

DAVID’s NavRisk Software Suite facilitates highly effective underwriting and policy processing, automates administration and management of claims, provides online collaboration between internal and external stakeholders, offers sophisticated loss control and prevention capabilities and provides robust reporting, business intelligence and analysis functionality. NavRisk supports business processes for Self Insured organizations, Third-Party Administrators, Risk Pools, Captives and Carriers.

Contact DAVID at 800-55-DAVID or visit www.davidcorp.com

Contact Pre Care at 866-996-1735 or visit www.precareinc.com

Social Media – Secret Weapon vs. Insurance Fraud?

Our privacy went out the window a long time ago!  After 9/11, the Patriot Act re-wrote what the government could do to keep track of all of us.  No secret there (pun intended).   And then came social media.  What was once the secret domain of the NSA, is now readily available to anyone with a computer or mobile device.  Of course, I am referring to that omnipresent social spyware – Facebook and its abbreviated sidekick – Twitter.

Making this point painfully clear, an article From the Work Comp Roundup blog, entitled “Using Social Media To Fight Workers’ Compensation Fraud”  http://bit.ly/jiz5F6.  Now we already know we can snoop on our co-workers and competitors on LinkedIn.  We might even catch a compromising video on YouTube.  And we certainly know political careers can be un-done with an errant Tweet.   But did we really think we could fight insurance fraud with social media?  Apparently we can…

It is becoming more commonplace for claims investigators to search all the social media sites for evidence of fraud.  What used to take an expensive private investigator, can now be done virtually.  The article advised,

“When the employer questions the validity of the employee’s workers compensation claim a private investigator may be hired to check out the employee’s personal blog, Twitter account, Facebook, My Space, Flickr (photo sharing) or LinkedIn pages. Or, the employer can do it pretty much for free with a little time and effort because the Internet has a wealth of information – yes, on just about everyone, even your employee.  Many investigators perform virtual searches in addition to in-the-field searches, a new way to investigate in the last 25 years, and there are investigative services that specialize in virtual investigations.

 

In addition to searching social networking sites, search by the employee’s name on Google, Yahoo, or Bing. If the name is a common one, add street, city, and state to reduce the number of search returns. If an employee is on one social networking site, look to see if there are links to other social media pages. Nothing is more fun than reading a “tweet” where the employee says something like, “Boy, do I have the workers comp doctor fooled.” Of course a YouTube video of the employee skydiving can also be very entertaining. Flickr commonly has photos of such events, oh so notable are these activities in the employee’s life.”

 

As to the question about whether the employee or claimant’s privacy is being invaded during on-line searches such as these, it appears the courts look less favorably on insurance fraud, than our on-line privacy.  The reasonable argument can be made that, once you post something on the internet, you have exposed that information to the public and lose whatever rights to privacy you may have had.  Think twice before your next post or tweet!

Workers’ Comp Market May Harden First

I have watched the ebb and flow of the P&C insurance market for the last 25 years.  The pricing and loss cycles have been fairly predictable, and correlated closely to world financial markets.  That was then…this is now.  Will we ever see another hard market?  At this point, most of us would just settle for “firm”!

According to global professional services company Towers Watson’s  most recent Commercial Lines Insurance Pricing Survey (CLIPS), commercial insurance prices were relatively flat for the ninth consecutive quarter, and new data confirm the deterioration of loss ratios in accident-year 2010.

According to the report, price reductions continued for many commercial lines. However, after large decreases followed by the relatively flat pricing for the last two years, workers compensation data shows a modest overall price increase in the first quarter of 2011. 

“The increases in workers compensation prices this quarter are larger than we’ve seen in quite some time, and package and general liability are also showing upticks,” said Bruce Fell, director of Towers Watson’s Property & Casualty practice in the Americas. “While the overall story is still one of flat prices, the observed movements, coupled with recent weather-related insurance losses that are expected to firm property prices, could mean more significant increases in the second quarter of 2011″.

Survey data, which compare prices charged on policies underwritten during the first quarter of 2011 to the prices charged for the same coverage during the same quarter in 2010, were contributed by 39 participating insurance companies representing approximately 20% of the commercial insurance market.

Preliminary information through the first quarter indicates single-digit deterioration in 2011 first quarter loss ratios relative to the same period in 2010.

The estimated deterioration for accident-year 2010 over 2009 is 5%.

Aggregate price change indications showed some differentiation by account size, with small price increases for small and mid-market accounts, flat prices in large accounts and price reductions in specialty lines.

What does this all mean?  Hopefully, it is a sign that the ultra-soft market we have endured for the last 7-8 years is hardening.  It remains to be seen how hard things will get, but you can be sure if combined ratios continue to deteriorate and investment income is near zero, the only relief in sight… is rate relief!

The (Altered) State of Workers’ Comp

Just finished looking at a presentation by NCCI’s Chief Actuary, Dennis Mealy  http://lnkd.in/z2Hgj7  It’s got a lot of charts and data, but I can boil it down to a few lines:

“After adjusting to account for some of the unusual elements of the recession and its recovery, NCCI economists revealed the following for the workers’ comp line in 2010:”

• Frequency — up by 3 percent. That compares to a decrease of 5.5 percent in 2009.
• Indemnity claims costs — down 3 percent, following an increase of 0.8 percent in 2009.
• Medical claims costs — up 2 percent, compared to the 5.4 percent increase in 2009. That lags the medical consumer price index for 2010, which was 3.4 percent

The report concluded the following about the key loss drivers:

Frequency

• Economic recovery puts upward pressure on claim frequency
• The depth of the recession distorts some of the statistics used to measure frequency
• Premium audits shifted from positive to negative
• Average hours worked per week shifted from historical average
• Rapid decline in manufacturing and contracting employment
• The estimated impact of these factors reduces the indicated change in frequency from 9% to 3% in 2010

Severity

• Changes in severity are the lowest since the reform days of the 1990s
• 2010 apparently produced an increased number of small lost–time claims that in previous years were likely medical-only claims
• Indicated severity change may not be indicative of underlying cost drivers

So, to sum it all up…the economy decimated payrolls and frequency dropped.  As the economy recovers, payroll will increase, but so too will frequency.  Medical costs will likely rise faster than anticipated, so overall severity will increase as well.  Loss prevention programs and predictive analytics will help the frequency issue, while agressive bill review and case management should help the severity.

Can you do all that with your current systems and processes?

Risk Management-as-a-Service? Everything else seems to be!

There are a number of insurance and risk management technology meetings going on this time of year.  It seems the product headlines are dominated by announcements of new Business Intelligence (analytics), Self-Service Portals and new mobility offerings.  All of these new or enhanced ”widgets” are very cool, but the question on many CIO’s minds is whether it is time for their business to move to the proverbial “cloud”.  Insurance and Risk Management folks are notorious “late adopters”, so while Salesforce.com revolutionized CRM several years ago, the world of insurance processing and management just now seems to be getting serious about looking at the various “as-a-service” offerings.

Great commentary by Peter Allen about how the “As-a-Service” shift in IT could have as much of an impact as the Internet did over a decade ago:

The delivery models for IT and IT-enabled business functions are being transformed in radical ways. The “old world” approaches of complex development, integration and provisioning that were intensive in terms of capital (human and financial), and lacking efficiency in leverage, are being sacrificed at the altar of mobility, big data, ubiquitous networking, cybersecurity, and virtualization.

 The IT industry – in terms of product and services providers – is being reformed in real-time.  Those players that are betrothed to legacy business models, such as staff augmentation, commodity-oriented computing capacity, or consulting-heavy systems deployment, are facing headwinds unlike anything seen before.  Their offerings aren’t nearly as relevant in the “As-a-Service” economy. 

The reasons are rather straightforward.  If you’re in the business of “how” rather than “what,” then your value is marginal and replaceable.  “As-a-Service” is all about “what” the services and business functions entail.

The “As-a-Service” economy will shift spend profiles, technology stacks, and business relationships in ways that are not yet evident.  All we know for sure is that yesterday’s approaches to acquiring, deploying and operating IT are fading fast.

We couldn’t agree more!  But will everything migrate to the cloud?  Most insurance and risk management organizations will continue to struggle with this decision for years to come.  We can only offer options…to host, or not to host…that is the question! 

 

In a World of “Price First”, How Important is Claims Handling?

Many of us see claims handling as a necessary evil, or worse…the proverbial “tail of the dog”. I recently reviewed a report that made a compelling argument that great claims handling can indeed create a competitive advantage for your organization.  The report focused on three key areas: Service – Pricing – Expectations.

Excerpts from the report…

 Intuitively, we know if we improve the quality of our Service then this will enhance our reputation.  In the claims business this means we handle claims:
• Faster
• More Accurately
• Meeting the customer’s expectations

Claimants have a problem – they need it solved so they can get their personal life back on track or their business operating properly again – quickly.  Most will usually be happy with that and little more – as long as they do not get less.  An accurate claim process will cover exactly what is required – with no arguments, no lawyers, no disputes.  If all parties feel that the process has been carried out correctly and satisfactorily then all should be able to agree that a good service has been achieved.  Your reputation gains by each, small, satisfactory fulfilment of the promise you made when the policy was written.

There are number of ways in which you can improve your financial performance within the claims process.  Any financial improvement can be passed on to make your Pricing more attractive.

What constitutes the financial components of a claim?  Indemnity cost, internal loss handling expense, external expenses and finally – mistakes! 

Processing costs may be lessened with better automation and better workflow.  Many claims managers say that one of their biggest problems is that their highly experienced claims handlers are spending inordinate amounts of their time on low-level work; simple claims, administration etc., because they are simply unable to segment the claims quickly and accurately and route them to the right people.  Good systems can make this task automatic and accurate!
 
It is no surprise that expenses may average 5-7+% of the total cost of a claim.  Many think it should be possible to cut those expenses costs by 20-25%.  If you can save 20% of that you will have cut the total claims cost by at least 1%.  With a modern  client-centric claims process built on sound expense and case management, savings can be made without sacrificing quality of service.

As far as mistakes are concerned,  leakage (paying out what should not be paid) is an issue because somewhere along the line your process may be flawed, or you are rushed or understaffed.  You cannot manually check all the policy components and coverages accurately because there is insufficient access to the policy detail.  Fraud can also be included under ‘mistakes’.  It is a mistake to allow fraud to happen, and a mistake not to detect it and follow it up afterwards.  A claims process that is driven by a properly controlled and monitored environment will be far more able to reduce the opportunities for fraud; with detailed recording and tracking it will be far better able to spot fraud or suspicious activities when they do happen.  It is also a mistake not to fully recover everything that should be recovered or to fail to fully recover on reinsurance.  If it is currently too costly or difficult to recover some ‘lost’ costs, then the process or system is again at fault, as automation and controlled follow-up should be integral to the process.

Business intelligence and analytics can be improved, positively affecting financial performance, which can then be passed on to the customer.  Good business intelligence allows claims management to do proper trend analysis, and to understand what is happening on a broader scale while it is happening.  A good early warning system enables preventative action – all processes contributing to greater efficiency and reduced cost.  An accurate analysis of what has happened with claims means that the claims experience is better understood, and claims experience must inform the underwriting decisions, which allow for better rating and therefore better pricing.

This is all about efficiency and financial management within the claims handling process.  It’s also about using business intelligence to close the loop with Underwriting with the relevant claims experience.  Any efficiency gains should be felt by the customer in better Prices – and potentially better Service.

And finally, providing the right assistance and advice throughout the claims process exceeds Expectations.  Claimants want restitution above all, they want things back they way they were before the accident, the fire, the theft, the flood or whatever catastrophe – minor or major – interrupted their lives or their business.  At a time of stress, claimants need help and advice, not just a payment.  With access to expert suppliers, contractors, doctors, lawyers and other service providers the insurer can readily assume the role of trusted advisor.  With expert management embedded within the claims process insurers can control and drive the support their customer is getting during the whole recovery phase.  With support like that the insurer moves from just a service provider to a partner, and in the process, greatly exceeds the expectations of its customers.  “Customer for life” is based on this kind of bond.

So, with emphasis on Service, Pricing and Expectations the claims process can most certainly be relied upon to improve the service proposition and provide real, practical competitive advantage.

How Big Is The “Social Universe”?

Its Friday and I thought I would try to figure out just how big the “social media” world really is.  Well, I found a great graphic from JESS3 that describes “The Geosocial Universe”…a much fancier way to say everyone on the planet who uses a mobile device!

So there are over five billion cell phones out there…no surprise.  It seems everyone over 10 years old has at least one.  But the trends developing in social media use and penetration are staggering:

Some other notable trends in the geosocial universe, courtesy of JESS3:

• Mobile: 5.3 billion mobile devices are used worldwide — that’s 77 percent of the world’s population
• Smartphones: 21.8 percent of all mobile devices are smartphones. Despite what one might think, Apple does not top the list in sales—Nokia does
• Skype: Mobile usage continues to increase thanks to Skype’s wise investment (now Microsoft’s) in apps and its mobile platform
• Facebook: Now tops 629 million registered users with almost 250 million people accessing the site via mobile
• Qzone: China’s version of Facebook, Qzone, is experiencing supernova-like growth with 480 million registered users
• Twitter: Broke the 200 million registered user mark with nearly 40 percent of people tweeting via mobile
• Email: Hotmail still dominates email, but Gmail is gaining fast
• Yelp: Yelp is topping 50 million unique visitors per month. Its move to team up with OpenTable earlier this year will only increase its relevancy
• Foursquare and Gowalla: These geosocial specialists are still growing, but growth seems to be slowing down a bit

So next time you tweet or post those embarrasing photos on FB, remember that 5,000,000,000 people are listening!