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Transformers Focus on Tech but Shouldn’t Overlook the Human Element

While I doubt any TV producers will be knocking down an insurance company’s door to pitch a pilot based on claims system transformation, an insurer’s experience when changing how it responds to a loss often resembles what goes on in these reality programs, for better or worse.

August 13, 2012 Photo

There are some very popular reality TV shows on the air that involve transformation. In one such program, contractors gut a home and rebuild it from scratch both inside and out. Other shows aim to radically make over an individual in terms of their wardrobe, hairstyle, weight, or some other physical aspect. In both subsets of this genre, the “after” result is often barely recognizable from what came “before.”

While I doubt any TV producers will be knocking down an insurance company’s door to pitch a pilot based on claims system transformation, an insurer’s experience when changing how it responds to a loss often resembles what goes on in these reality programs, for better or worse.

At a minimum, insurers can learn two important lessons from those having their home or personal appearance substantially changed virtually overnight. One is that their lives likely will be turned upside down during the makeover no matter how good the end result turns out. The other is that an insurer should consider not just the technological aspects of implementing a new claims management system, but the human implications as well.

When insurance company executives decide to launch “claims transformation” projects, the natural tendency is to think first in terms of what must be done to upgrade technology platforms. But, in fact, some of the biggest challenges organizations are likely to face involve equally important people elements that carriers often overlook.

The drivers prompting change may vary from cost management and process inefficiencies to the limitations of a company’s current technology. The problems to be addressed can range from accommodating growth in claims volume to integrating disparate systems following a merger or acquisition to improving basic performance and customer satisfaction.            

However—no matter what pressing reasons an insurer might have to transform its claims management system—to be effective, the transformation process should begin long before any new software or hardware is placed on an employee’s desk (or, more likely, into their hands, thanks to mobile technology).

In addition, when a new system finally goes live, an insurer’s claims transformation is not concluded—in fact, in many respects, it has only just begun.

Relatively speaking, putting new information technology in front of your people may very well be the easiest part of the project to manage. Helping individuals cope with the implications of technological changes in terms of their everyday working lives could turn out to be much more difficult. Spend time understanding how a new system will impact front-line users, such as adjusters, claims managers, and fraud investigators. Try to live in their shoes so you can anticipate the difficulties they might be up against and head off potential problems.

One way to accomplish this is to bring a wide array of end-users directly into both the planning and implementation process. The more mystery you perpetuate about required changes, the more resistance you’re likely to meet when it’s time to implement the new system.

You don’t need to establish a democracy with everyone getting a vote on what should or should not be done. But being transparent up front and conducting a regular dialogue with those most profoundly affected by the transformation allows people to feel they have had a say in the changes and develops some personal ownership of the implementation process.

Keep in mind that going from a system based on pushing paper to a paperless process is more than just a change in procedure. Workflows and skill-set demands might have to be altered, which will make many apprehensive. Try to put minds at ease by emphasizing how the company is not looking to eliminate jobs but is focused on helping claims adjusters and managers become more efficient at what they do, freeing up time to focus on more important tasks.

Carriers should emphasize that people will remain integral to claims management even after a transformation, but what individuals do and how they do it might very well have to change—sometimes dramatically. Career paths could be altered and even accelerated for some to meet emerging talent needs under a new system.

Ultimately, to get claims adjusters and managers to embrace the transformation, the impact or benefit should be stated in terms that resonate with them. How will the change in technology and procedures improve their pending case count? How will their claims quality assessment scores be bolstered? How will morale be raised by providing more stimulating and better-matched work? How will the new tools and technology appeal to a more tech-savvy user?

As you contemplate a claims transformation program, consider what skill sets will be required. Are your current personnel going to be able to assume the new roles you’ve designed? If not, what kind of training will be required to get everyone up to speed? How will the transformation impact recruitment and the retention of your talent pool?

A one-size-fits-all approach during a claims transformation will likely be doomed. Claims organizations and their human resource departments should be in tune with this and tailor training techniques and curricula accordingly.

To help maintain morale, keep the team focused on the positive (remind everyone how the transformed system is designed to be better, faster, easier, cheaper, etc.) while dealing with the inevitable negatives likely to arise along the way (such as the fact that it takes time to adapt to and master new technology and procedures and that unforeseen problems may crop up).

You might also need to redefine your competence model depending on what new roles are established and which new skill sets are required. Each individual’s success in implementing and mastering the new claims system can be built into a carrier’s performance evaluation system to make sure people are rewarded for their ability to adapt, as well as to establish accountability for those who won’t or can’t make the necessary changes to facilitate the transition. Establish clear metrics and set benchmarks for each step of the transformation so individuals and their departments know what’s expected of them and can chart their progress—or lack thereof.

As noted earlier, once you have a new claims system in place, even the best-laid plans can go awry. As you implement your plans, you will learn what you didn’t know going in. So make sure to get regular feedback from those who actually have to use the new system, and be prepared to make adjustments as the project is being implemented.

Be aware that a drop in productivity is not uncommon in the early phases of a claims system transformation and should be expected when implementing new technology and systems. Leadership has to be willing to accept this and see the bigger picture, remaining focused on the longer-term benefits.

There is also a critical need for post-launch support, including auditing and maintenance to ensure that the new system is adopted, users are comfortable in the new environment, and the learning curve is successfully completed.

What’s next once the new system is finally in place and functioning at least somewhat according to plan? The challenge will be to make good use of the new data at your fingertips while effectively deploying the more highly trained, better-equipped personnel at your disposal.

In any case, be aware (and warn your people) that there is no such thing as a “completed” claims transformation. Stability is relative, and adjustments will be required throughout the life of the new claims management system as you learn more about what your software and talent can do in terms of both capabilities and limitations.

Bottom line: Claims transformation is as much about the journey as it is about the destination. You never really “arrive” because change is not only constant, it’s the natural state of affairs if you want to keep your claims management system growing in capacity, efficiency, and effectiveness.

Besides the makeover reality shows, TV also features a bunch of programs that pit contestants against one another in a series of challenges and hardships, forcing them to overcome one obstacle after another not only to survive, but to come out on top. Insurers live that reality every day in this super-competitive market. Those that can endure the rigors of the claims transformation process are more likely to be among not only the survivors but the leaders in their respective markets.  

Sam Friedman is insurance leader with Deloitte Research, part of Deloitte Services LP in the U.S. He has been a CLM Fellow since 2011 and can be reached at samfriedman@deloitte.com.


About The Authors
Sam Friedman

Sam Friedman is insurance research leader with Deloitte’s Center for Financial Services in New York. He has been a Fellow with CLM since 2011, and can be reached at samfriedman@deloitte.com. 

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