Insights from The Lab

P&C Insurance Carrier: Data & Process Standardization Boost Claims Efficiency, Reduce Leakage

A regional leader in personal lines property and casualty (P&C) insurance consistently led its peer group in customer experience and service performance. However, both its expense and loss ratios were routinely higher than competitors’ and stubbornly resisted management’s persistent reduction efforts. To this end, the company typically believed that the latest technologies offered the best hope of success. Consequently, their claims management system was state-of-the-art. And an artificial intelligence (AI) enabled app produced damage estimates for tech-savvy policyholders who uploaded photos of their auto damage. When robotic process automation (RPA) arrived on the scene, the insurer had their auditing firm develop an internal Center of Excellence and assigned teams of “citizen developers” to scour claims operations for automation opportunities.

Still, costs continued rising, outstripping the company’s peers. Senior management felt that the “technology card” was played out for now. Benchmarking surveys confirmed their current, industry-leading levels of automation. And their internal RPA teams had discovered and launched only a dozen bots. Management was vaguely familiar with The Lab’s “process-first” standardization-based approach, but they rarely thought about standardization. When they discussed the topic, they quickly convinced themselves that their high levels of automation must surely have already standardized the work. But the more they chatted with frontline employees, the more they realized this conviction was wrong. After speaking with their internal improvement team, they jointly agreed to contact The Lab and explore the standardization topic.

Client Description, Project Scope, Objectives

Based on market share in its largest product category—auto insurance—this insurer is positioned in the top 15 auto carriers within the U.S. market. For the first of several engagements, The Lab’s project scope targeted end-to-end (E2E) auto claims operations beginning after first notice of loss (FNOL) and continuing through subrogation, encompassing 2,600 employees across three locations. Both senior management and the internal improvement team stated that the objective was twofold: reduce claims costs while also testing a new standardization-based approach to analysis,
improvement, and automation “use case” discovery. Although they were deeply frustrated by the lackluster results of their previous “citizen developer” approach to automation discovery for RPA, they developed a newfound appreciation for The Lab’s “process-first” approach. And after reviewing The Lab’s extensive library of P&C standardization templates, they were convinced that massively valuable opportunities remained overlooked.

Phase I, Analysis and Discovery

The end-to-end (E2E) auto claims standardization initiative began with an eight-week Phase I analysis. It documented the business processes from FNOL through final payment and subrogation.

The Lab’s database of claims-processing templates—including industry-standard KPIs, process maps, benchmarks, best practices, automation “use cases” and more—enabled rapid documentation and analysis of more than 85 percent of claims work activities (approximately two minutes each), while only requiring one hour per week of any subject matter expert’s (SME’s) time. The Lab’s patented, template-based approach achieved several analytical goals:

  • Accelerate business-process mapping, which had been historically slow and tedious.
  • Identify applicable automation and standardization improvements from The Lab’s database.
  • Document gaps in existing technology utilization, including features, functionality, and add-ins.
  • Normalize application and system event log data to enable detailed reporting and benchmarking.
  • Prepare business processes for AI-enablement for real-time reporting and decisions.

Coordinating and reconciling the client’s data with The Lab’s templates across three operations centers in the U.S. resulted in E2E maps and improvement opportunity “inventories” that could easily be remotely reviewed, refined, and validated by all employees within the project scope.

This Phase I effort delivered a self-funding business case and work plan that launched an eight-month, Phase II transformation project to implement the most valuable opportunities selected by the senior management team.

Phase I Findings

The Lab’s analysis findings were typical. They revealed stunningly large (from the client’s viewpoint) cost reduction opportunities. Most of the savings were concentrated in reducing claims losses and increasing subrogation recoveries. However, approximately 30 percent of organizational capacity was also available.

Although the analysis documented nearly 200 individual, activity-level improvements, these were almost all related to a single root cause: Inconsistency. Needless variation had been built into the claims organization’s processes over time:

Error rates, claims severity, employee productivity, and subrogation recoveries often varied by orders of magnitude for similar work. However, existing management reports aggregated data up to the department level, allowing these costly variances to hide in plain sight down at the individual employee-level.

The client initially balked at the notion that its business processes could be standardized at “nano-scale.” However, The Lab’s templates enabled a successful pilot demonstration during the Phase I initiative.

Phase II, Implementation

The eight-month, self-funding Phase II implementation effort was able to increase productivity, compress cycle times, improve accuracy, and deliver cost reduction.

Improvement goals were established by area and/or by E2E business process, and the organizations involved could perform the work with any mix of resources they chose: internal resources, The Lab’s resources, or others. The Lab maintains a three-tiered service-offering structure (plus ongoing postimplementation support) to make this as flexible and sustainable as possible for clients:

Post-Implementation Support, Sustainability & Automation

The Lab provided hassle-free post-implementation hourly sustainability support for this client to maintain automations, process standardization, and operational data analytics models implemented during the Phase II engagement. If the client’s team was not up-skilled enough to perform any needed automation updates, they leaned on The Lab for Tier 3-level support. If analytics dashboards required additional views or data connected, The Lab’s team was a simple phone call away.

Improvement Examples, Service and Distribution Standardization

The Lab Makes it Easy

Organization-friendly engagement design

At The Lab, we’ve spent three decades refining every aspect of our transformation engagement model. We’ve made it easy for clients—from the C-Suite to the front line—to understand and manage the initiative:

  • Minimal use of client time: One to two hours each week, maximum.
  • Measurable benefits: Typical 12-month ROI is 3x to 5x.
  • Pre-built templates and tools: Process maps, data models, bots, and more.
  • U.S.-based, remote delivery: Nothing is ever outsourced or offshored.

Designed to reduce risk, increase success

Since 1993, The Lab has led the industry in eliminating risk for our clients. Whether your engagement involves a handful of bots or wall-to-wall transformation, we make
it easy to do business with us:

  • Fixed pricing and clearly defined scope
  • Pre-project feasibility/value assessments at nominal cost
  • Early-out checkpoints and options
  • Money-back guarantees

Book your free demo

The best way to learn about The Lab’s patented Knowledge Work Standardization® approach is to book your free, no-obligation 30-minute screen-sharing demo. And you’ll get all your questions answered by our friendly experts. Simply call (201) 526-1200 or email info@thelabconsulting.com to book your demo today!

Improvements from Start-to-Finish

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