Case Study

A model new claims process for a major car insurer

Capacity is up. Losses are down. Customers are happy.

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Who we worked with

A leading auto insurer, with over 2 million policyholders and more than 850 agents, brokers, and car dealerships.

What the company needed

To become more efficient, lower costs, and reduce lead time in its claims management process with an advanced operating model and the right tools.

How we helped

We turned strategy into reality with a target operating model, and applied the best technology available to redesign its automated claims process.

What the company got

The insurer expects to cut expenses by $12.5 million, boost capacity by 20%, and reduce end-to-end cycle time by 12 days.

A leading car insurer’s claims management system was too complex, which made it inefficient. The company needed a new target operating model to boost productivity, delight customers, and eliminate unnecessary claims handling expenses

Challenge

Convert a legacy claims management process into a nimble one

This insurer is a big player. But it still had a siloed and convoluted claims function. Its outdated business model relied on too many different system infrastructures and inefficient processes that resulted in costly redundancies and longer lead times. Key issues included:

  • The claims cycle time could be as long as 84 days. Customers were angry, switchboards lit up, and employees weren’t working at their best
  • Straight-through processing — that is, the speed at which the firm handled transactions — was low, averaging just 23% across branches
  • Outdated metrics meant it wasn’t always clear who was minding the store. Employees rarely resolved claims proactively and communication among staff was poor
  • The company lost revenue — or let it leak out — because some staff made questionable decisions about liability, didn’t flag bad settlements for recovery, and neglected to pursue third parties responsible for losses that the company had paid out to clients
  • A sub-par first notice of loss (FNOL) process caused internal delays, often resulting in a 14-day lag between a customer’s proof-of-loss declaration and recovery

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Solution

Propose fixes for gaps in teamwork, workflow, and technology

First, we explored how people did their work.

  • We analyzed how the team lodged brokerage claims and looked at broker/agent portfolios and dealer portfolios. We also examined its motor assessment process as well as its third-party settlement and bad-claim recover procedures to identify where the problems lay
  • We spoke with employees at various branches to spot challenges and gather primary information
  • We ran a value-stream mapping exercise with key stakeholders, including line-of-business managers, branch managers, and front-desk staff
  • We helped design an operation matrix to address the challenges we identified. The goal was to speed up claims closure by plugging service gaps, centralizing administrative tasks, and realigning roles and responsibilities
  • We helped consolidate the FNOL team. Working with the company, we committed to helping them reduce the baseline time it took to handle claims

We made the most of technology to drive efficiency:

  • We pumped up proactive claims management with an automated workflow that delivered superior customer experience
  • We made structural changes that introduced new policies, such as single file ownership. Customers now deal with one contact person — and one person only. Staff can proactively manage claims, communication among employees is much better, and customers are much happier

We took a hard look at processes and performance measurement:

  • We re-scripted the questions staff asked during FNOL to make sure loss description was accurate. This improved liability decisions and helped flag cases where third-party responsibility was a factor
  • We established rigorous process metrics to improve information access
  • We initiated 30+ quick-hit projects to identify various processes and system issues impacting productivity and data quality. Next, we provided easy-to-implement solutions to improve productivity, shorten cycle time, and reduce non-value-add activities
  • Finally, we introduced a robust framework that linked metrics to business outcomes and gave management an integrated view. This meant leaders could monitor performance and realign resources and activities when required for rapid turnaround.

Business Impact

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Impact

A sleek new claims process that pleases customers and saves money:

  • The insurer anticipates that this revamping will have a $15-million business impact over a three-year period: $2.5 million in reduced loss and leakage, plus $12.5 million in cost benefits
  • The firm is shaving 12 days off end-to-end cycle time
  • Processes are far more efficient and the right technology is in place. The target operating model played out so well that the company now has 20% more capacity

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