This is one of a set of seven interconnected themes or forces that are expected to drive the traditional claims function into a new future of customer-centric, digitally-enabled, value-driven service and efficiency.
Operational management, one of seven interconnected forces transforming the claims function, serves as the foundation of an efficient claims function. Its fundamental role will define how effectively today’s forward-looking insurers can transform claims to deliver new digital capabilities, enhance client centricity and optimize efficiency. Operational management has a critical role in positioning claims teams and insurers to thrive in the 21st century as fully connected, and data driven.
Many insurers currently face a reality check — one requiring them to get ‘back to basics’ to improve operational management. Only with modern operational management in place can the claims function capitalize on the promise of technological advancement and transformation for a new era. In our view, enabling modern operational management will require a holistic view, tying together front, middle and back offices and integrating the organization’s capabilities and systems with its client touchpoints.
It means eliminating traditional boundaries and combining silos in order to anticipate how one change in the insurer’s ecosystem creates a chain reaction across its people, processes and technology.
A new focus on performance and client service
Historically, the claims function has typically focused on the technical resolution of claims — often to the detriment of staff performance and client experience. But as businesses in every sector have discovered, client experience and related employee performance are critical to success in the digital age. Claims teams are no exception when it comes to putting clients at the center of everything they do, and operational management is central to this.
Claims teams are on the front lines of client service and face difficult conversations as clients expect personalized service that’s convenient, efficient, responsive and flexible. Today’s clients expect greater transparency in the claims process, shorter wait times and new self-serve capabilities to tell them what is happening. Claims teams must be equipped to serve clients effectively, while also being encouraged to identify issues within the claims process that need to be escalated or improved to sustain efficiency, productivity and service.
Claims and operational management leaders should ask themselves if their current approach is enabling an accurate, top-down, fully connected view across the claims ecosystem at any given moment. Insurers need to reliably identify, and anticipate, the number of claims emerging over any given period, the number of people needed to log and manage those claims, and the capabilities, resources and processes required to meet client needs quickly and effectively over the claims lifecycle. Having standard processes and best practices in place to ensure such efficiencies begins with operational management.
Shaping modern, problem-solving cultures
Claims teams will feature new skills and modern workplace cultures that continually increase collaboration, streamline processes, optimize services and ensure efficiency. There must be clarity over all standard procedures, with updates and improvements shared consistently.
Creating such a service-based culture requires not only the support, encouragement and upskilling of leaders but also upskilling and cross skilling of claims teams to ensure they possess the capabilities needed to excel in a connected, client-centric, data-based environment. Operational management is crucial to success on this journey.
In our experience, however, insurers are facing roadblocks to modernizing teams and cultures. Sub-functions and claims teams from different lines of business often work in silos that hinder communications and service delivery. A ‘problem-solving, continuous-improvement mentality’ is needed but often missing from today’s typical claims team workflow and culture.
It’s crucial that firms recognize and act on the need for operational management that allows an engaged, seamless and highly collaborative workforce culture, one in which team members feel empowered and valued, and encouraged to raise issues toward operational improvements. In our experience, this is critical in creating a problem-solving culture that will take the claims function to a new level of efficiency, agility and client satisfaction.
Processes and skills for a new era
Claims teams will need to be appropriately skilled to manage complex claims within largely automated claims processes, interpreting and analyzing data with the support of the actuarial team and underwriting. The claims function will focus on analyzing client and marketplace data and trends, while performance management and problem solving will be integral and highly structured.
Operational management will need to ensure that in this future environment, the knowledge base underlying claims processing is not only sustained but continually enhanced so that employees are consistently providing timely and reliable expertise.
Embedding new processes through a structured performance-management program, one featuring appropriate coaching, development and feedback mechanisms, will drive consistency and reliance on best practices throughout the claims function. In this way, staff will know what they need to do in order to succeed amid ongoing change. Opening a two-way channel of consistent communication and feedback among teams and leaders is crucial in our view.
Creating a collaborative, service-centric ecosystem is becoming increasingly important as working remotely goes mainstream. Operational management must maintain a clear view and understanding of people and processes as business models evolve and ensure that appropriate skills and capabilities are in place to meet the changing demands and requirements.
Technology is poised to transform claims
In addition to reshaping teams and cultures to improve skills, drive collaboration, optimize service and maximize productivity, today’s claims function needs to capitalize on the power of digital technology. Digital solutions and smart data use will shift the way claims functions are structured and run. An enterprise that is fully connected: end-to-end across front, middle and back offices is required.
Future-focused insurers are already creating virtual investigation solutions, for example, streamlining the claims journey by enabling clients to share claims details and images via video or email. In some cases, clients with claims are selecting their own suppliers directly — speeding up the process for the clients while reducing the volume of work for the claims team.
Currently, however, many legacy processes remain in place across the entire claims value chain, from first notice of loss (FNOL) to settlement, and inefficient manual tasks typically prevail amid ad-hoc system upgrades and add-ons. This has prompted workarounds to transfer data and share information, increasing error rates and process times. Claims teams end up linking together disjointed systems and interfaces to make the legacy process work, duplicating efforts, introducing inconsistences into the data and wasting valuable resources. Bringing together a focus on enterprise wide architecture and relevant key performance indicators (KPIs) will enable claims handlers to spend their time on value-adding work rather than data transfer.
Future operations management will therefore look different as the claims function continues to evolve. CEOs and CCOs will certainly need to be aware of emerging needs and ensure that they have the right digital infrastructure in place for claims teams to respond with the modern skills and capabilities that will keep operations efficient and competitive.
As insurers invest in automation to streamline claims processes, enhance services and drive new efficiencies, the cost benefits will be significant. Digital capabilities will also free up claims teams to continually enhance client service, as well as enabling new processes to identify fraudulent claims. clients , meanwhile, are sure to embrace new ways to interact and settle claims quickly.
The future of operational management is fully connected
The future has arrived for the insurance claims function and modern operational management will be crucial to future change, competitiveness and success. The journey toward fully connected digital capabilities, smart data use, sustainability and beyond requires a ‘back-to- basics’ approach that delivers the fundamentals of operational management.