Increasing Productivity in Insurance Claim Processing

Situation

An insurance claim processing and management company faced rising competition based on price. The rise in the number of offshore claims processors put significant pressure on the client to lower costs while maintaining the high level of service that defined its niche.

The private equity groups owning the company charged its management to lower costs without decreasing service levels.

The company’s forty-six sites came from both organic growth and acquisitions. They processed property and casualty claims, workers’ compensation claims, and managed care claims.

Within offices, individuals followed varying but similar processes. Little effective supervisory coaching was done, and the few training sessions were classroom-based. Documentation of processes and productivity varied but was usually high level and near-obsolete if it existed at all.

Similarly, across offices, there were basic process similarities, significant latitude occurred among them.

General and Administrative costs consisted mainly of IT, document management, and quality assurance. Expenses had climbed at a rate significantly higher than claims growth. With the adoption of expensive technologies, client leadership had projected G&A staffing to decrease both in real terms and on a per claim basis.


Opportunity

Claims processing productivity measures varied. Managers could not rationally explain why some offices had significantly and consistently higher close or case management rates per claims processor than other offices.

In many offices, staffing levels did not appear to vary as the number of cases managed or closed varied.

General and administrative staff worked with few defined processes and no effective productivity measures.


Approach

A four-phased approach was used with the project starting with quick hits. The next three phases were distributed across geographies and practices.

In the second phase, best practices were developed and implemented within a group of offices. The third phase then repeated in another region with some revisions to previously determined best practices. The process was then repeated in the third region.

Significant effort was devoted to determining reasonably expected productivity for claims processor by type of claim. This allowed for rational capacity planning and workload leveling. Staffing levels were then managed to the plan.

All work was done using teams led by, and consisting mostly of client employees. Consultants added project management skills and analytical expertise as needed.

All teams reported progress weekly in developing process improvements and associated tools. Every second week the team leaders reported results and concerns to the executive group.

Operational Teams consisted of management, individual performers, and consultants from the areas within scope. They mapped current processes and weaknesses. Process improvements were identified and implemented with no change to IT systems. Team members led training and on the floor coaching of supervisors and key personnel.

These teams were supported by Staff Teams for topics including organizational communication, change management, training materials, and metrics.


Results

Weekly metrics maintained by client finance group were used to identify progress and savings objectively. Operational and financial metrics were reviewed weekly by operational management and biweekly by the executive team.

The $12 million annual savings goal was achieved. The project achieved its payback rate of three to one.

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