Litigation Management - Series 2
The Process for Proper Claims Handling Facilitated by Litigation Management Software.
The Big Three Actions and Big Three Results – If we are going to bring digital transformation to the handling of litigated claims, what are the elements of handling that we are digitally transforming? And what do we mean by “transforming?”
We have conducted a five-year study (more on this later) that confirmed that the process embedded inside of ClaimDeck reduces the big three:
When these are the areas of improvement, it is simple math to calculate the ROI driven to the bottom line – the % improvement times the total spend in the particular area. (Average case life reduction is calculated based on the cost per day to keep a claim open, which our data indicates is about $8 a day on the carrier side.)
So the central three elements of the litigated claims process that ClaimDeck enables are resolution strategy, tasks to implement that strategy, and the related budget. Not a big revelation. And the fact that this is known but not consistently implemented is where digital transformation comes in. The tricky part is how to get a consistent and correct implementation of these three elements across all claims implemented by all participants. ClaimDeck, as tech, helps enable this trick.
The Resolution Strategy – The effective handling of any litigated claim starts with an agreed-upon and current resolution strategy. You might think getting all to adopt the process of having an early and thoughtful resolution strategy would be easy. It is not.
Launching off into doing the things customarily done is easier than taking the time to think about what to do. Thus the old carpenter proverb– “measure twice, saw once.” The default approach is to implement the “cookie-cutter” strategy rather than give thought to what should be done based on the unique demands of the case.
On top of it, there is a failure to get a consensus with the entire claims team. Then there are the additional layers of achieving compliance and regularly reviewing and updating the resolution strategy. Further, the attorney's financial bias against resolving a claim as efficiently as possible comes into play. Finally, attorneys tend to procrastinate and not drive the activity in the case, being more responsive than proactive. Overcoming these impediments is needed to achieve just one component of the big three activities. This reality and historically engrained behaviors tell us that to bring change; we need the assistance a digital transformation can provide.
Tasks to achieve the resolution strategy – A defined and agreed upon resolution strategy triggers the need to identify the tactics to accomplish this strategy. The attorney identifying tasks and the claims professional approving requests enable the implementation of tactics.
Unfortunately, in the current state of claims handling, identifying, approving, and implementing tactics is haphazard and nonuniform. Guidance is through billing guidelines, communication is by unstructured and insecure email, and compliance is determined, at best, by after the fact bill review. These techniques have been tried for over 30 years and have consistently failed to provide improvement.
A good tactics process aligns with the resolution strategy and budget. It identifies the tasks and their stated goal, gives an estimate of cost, gives deadlines, identifies who will do it, and when approval is required, it presents the request to the claims professional. Getting consistency in this process across all claims and all participants requires the assistance of a digital transformation.
*In the 2019 CLM Alliance Market Survey, insurance executives identified these as the most desired qualities currently missing in the litigation process.
Budget reflecting the cost to complete the tasks – The proper handling of a claim includes balancing the duty of defense for the insured, the cost of that defense, and the exposure presented by the claim.
A carrier cannot stay in business with an approach of “millions for defense and not one cent for tribute.” There is a business decision to be made in connection with every claim. A key piece of information for this decision-making is the budget. The resolution strategy and the tactics drive the budget scope, along with anticipated responses to the actions of other parties. A proper budget has the correct rates, the various timekeepers that will work on the file, who will do what, for how long, breaking the information down into individual tasks and activities that are UTBMS coded, and finally, rolls the information up into a summary view of the budget by the phases of the case.
Consideration should be given to multiple budgets to show various levels of activity and longevity the case could take. The depth of thinking required for a detailed budget refines the resolution strategy and the tactics to be deployed.
Regularly disciplined review and adjustment – A new case will be off to a good start by completing the Big Three – resolution strategy, tactics to achieve the resolution strategy, and budget. The promising start will begin to be challenged after 30 to 90 days. Therefore, regularly renewing the process will extend the good start into an excellent complete file handling.
Maintaining a regular review is where the best and best-intentioned claims handlers and attorneys can drop off in performance. It is hard to stay on top of the progress of a file. Tech can enable more than a simple diary system. A tech-enabled system of notifications and alerts customized to the client’s, firm’s, and file’s needs assures that the proper considerations and actions occur throughout the life of the file. The clarity of information, facilitated communication, and automated compliance that a tech product can bring to the litigation process will assist in maintaining quality case handling throughout the life of the case. This quality of case handling will reduce legal and indemnity spend, and average case life.
*courtesy of Gartner - https://www.gartner.com/smarterwithgartner/5-legal-technology-trends-changing-in-house-legal-departments
What else? It is a HUGE accomplishment to achieve the consistent implementation and updating of a claims resolution strategy, tasks to be completed, and budget. That in and of itself will drive improved outcomes. And, can we achieve more if we further tech enable the process? Absolutely. What can MORE look like?
First, it is a workday for the claims professional and the attorney where the tech suggests what attention needs to be given to their cases. It is a day where 80% of their time and effort is applied to the 20% of cases that pose the most significant risk. It is the presentation of detailed and complete information while also being uniform and easily digestible. It brings efficiency to the efforts of the involved parties. It is the facilitation of a uniform and detailed process that is proven to provide results while allowing for case-specific, human judgment-based variation. Thereby providing uniformity and best practices approach across the entire inventory of cases.
Tech-guided and enabled work also facilitates personnel training in a highly technical and heavy turnover environment. Further, it is a complete historical record of activity that enables quality review and ease of personnel transition on the case. Finally, it is extensive data capture of all claims and legal activity to facilitate the development of analytics and market intelligence. You want to start with a proven core process, enable it with tech, and then add to the core with additional high-value features.
Thank you and we look forward to sharing more insights with you next month. If you have any questions, please feel free to reach out to us at info@claim-deck.com
