The insurance industry has come a long way in improving efficiency in recent years. With the help of advances in communications technology, today's insurance professionals can estimate and settle property loss claims at speeds much faster than in previous generations.
Despite these overall improvements made to the claims journey, insurers continue to face a host of challenges when estimating replacement costs for damaged or destroyed structures. Given the current state of the economy, it is now more important than ever for insurers to exert a high level of control over operating costs. In addition, rising customer expectations and increased focus on retaining policyholders have put additional pressure on carriers to establish more effective and efficient methods for claims handling.
The re-inspection process is an area especially ripe for insurers to make adjustments that buoy loss-estimating standards, control operating costs, increase customer satisfaction rates, and enhance overall services. On the surface, revamping workflow sounds like added work and effort, but new technologies can streamline the process.
Recent analysis of nearly 19,800 re-inspections conducted by insurers between January 2009 and September of 2010 showed that about 92% of such claims were revised. When seasoned employees review estimates written by staff, independent adjusters, and service providers, a company can have a high degree of confidence that it is providing policyholders with estimates that accurately account for all the materials and labor necessary to rebuild a structure after it is damaged in a loss.
In addition to safeguarding estimate quality, re-inspection allows insurers to identify areas that may require additional training. For example, if a carrier notices a number of estimates that include a similar error, it can take steps to give employees more training on correct estimating techniques. Frequently re-inspecting claims-handling processes and fine-tuning training helps insurance carriers continually improve their performance.
Although almost everyone agrees that re-inspections are a powerful tool, they have historically proven to be expensive, cumbersome and disruptive to the standard claims workflow, decreasing productivity and increasing cycle times.
An effective re-inspection program requires a fairly major investment of time and resources. For example, after an adjuster returned a repair estimate for a fire loss that destroyed a kitchen and living room, the carrier flagged the claim, so a re-inspector traveled to the site to verify estimate details and to make sure it didn't have any unnecessary or missing components.
First, the re-inspector re-scoped the loss, confirming each detail and noting any miscalculations. He then reviewed the estimate to make sure repair items were appropriate for the type of work required to restore the property. It turned out that the initial adjuster had overestimated the amount of cabinetry and underestimated the quantity of drywall. The re-inspector documented these exceptions (as well as any other duplicate or missing items), manually recalculated the new estimate total back at the office, and returned the report to company headquarters.
This traditional method is highly effective at verifying estimates or adjusting them to adequately cover losses, but it includes many tasks that must be done manually. This can make the process fairly drawn out and tedious. In fact, documenting and reporting overwrites and underwrites can take hours by itself. Because hours devoted to the process can also adversely affect productivity, many insurers reserve re-inspection for claims that exceed a certain dollar level. Only recently have advances in technology made it possible to streamline many aspects of re-inspection so that insurers can provide this audit process to a broader array of claims.
Streamlining Re-inspection
New methodologies allow insurers to automate many tasks associated with the claims management workflow. From start to finish, these enhancements make it possible to examine assigned claims estimates quickly and reliably. Such innovations include setting rules within re-inspection programs that automatically assign claims based on specific criteria. For example, a carrier can establish a rule that immediately marks claims above a certain dollar value for re-inspection, or the carrier can mandate that one of every five claims returned from a new adjuster should be set aside for review. The system then monitors claims assignment activity and automatically moves claims to the re-inspection folder if they meet these criteria.
Current technology also lets re-inspectors download copies of the original estimate files—including floor plans, photos, and documents—that are completely separate from the standard claims estimating process. This allows re-inspectors to work without disrupting the carrier's standard operating procedures, and provides a higher degree of flexibility because this data can be loaded onto laptops and then accessed at any location during the review to note overpays and underpays.
In the previously mentioned fire loss, for example, exceptions could be entered directly into the re-inspection report to eliminate the need to write that information down and input it into the system later. Upon receiving the adjusted amount of cabinetry and drywall, the system automatically recalculates the estimate total, potentially saving hours of work. The re-inspector can also quickly note the type of exceptions that were made to the original estimate and complete the report much faster than with previous methods.
The Long-Term, Company-Wide Benefits
When an estimate has been thoroughly re-inspected, it is less likely that a carrier will overpay or underpay claims filed by policyholders. This allows the carrier to exercise more control over operating costs and ensure that policyholders receive excellent service. By automating as much of the process as possible, the carrier can also save hours of its re-inspectors' time and increase productivity. Moreover, re-inspecting serves a long-term purpose of providing insurers with valuable insight into areas of their business where services can be improved.
Typically, pinpointing areas for future training requires analyzing thousands of claims and a large time investment. Re-inspection technology expedites that analysis by automatically sorting findings into a variety of reports that provide highly detailed information about errors. For instance, research shows that re-inspected roofing estimates contained the highest number of exceptions compared to all other types of loss reported between January 2009 and September 2010. If a carrier notices that many of its adjusters are returning estimates for hail losses that contain a high number of incorrectly identified shingles, it can refocus future training sessions on resolving that problem. The insurer can also access reports that reveal the percentage of effective and ineffective estimates, rate the performance of individual adjusters, and monitor the productivity of re-inspectors. The ability to view all these aspects in such high detail allows the carrier to continually improve and strengthen its adjusters' skill sets.
By identifying and adopting measures that automate time-consuming, manual tasks, insurers can easily improve the re-inspection journey. Aside from enhancing insurers' ability to handle claims with a high degree of quality, implementing these enhancements offers many other long-term benefits. It enables carriers to reduce operating costs associated with drawn-out re-inspection tasks and helps them safeguard financial stability by verifying that they are paying the appropriate amount to settle structural loss claims. Carriers can also maintain and even increase productivity by preventing re-inspection workflows from disrupting standard claims handling operations. But most important, streamlining the re-inspection process empowers carriers to provide timely, quality services so that their customers will want to continue working with them for years to come.
K. C. Agrelius is Xactware's assistant vice president of XactAnalysis, the real-time claims tracking and reporting subsidiary of Xactware.