Update the claims process: The level of sophistication needed by handlers to do their jobs has soared. Yet, the telephone, copier and fax machine remain the most commonly used technology tools. (Technology Insight Technology).

Insurers are saddled with multiple challenges. In today's frail economy, they must respond to heightened competition, increased customer expectations and demands to deliver greater shareholder value. Revitalizing the claims function can help address these concerns.

Claims payments and loss adjustments consume nearly 80% of property/casualty insurers' annual revenue. Yet, few carriers have sustained a competitive advantage in claims. Traditional approaches to improving claims performance--reducing claims-handling expenses and loss costs--typically yield short-lived success.

Claims handlers spend nearly half their day on routine administrative tasks that have little impact on the outcome of the claim or on improving customer service. In recent years, the level of sophistication needed by handlers to effectively do their jobs has soared. Yet, the telephone, copier and fax machine remain the most commonly used technology tools.

With technology that enables claims handlers to work more efficiently and accurately, carriers can achieve consistently high-level claims performance. We have found that claim-settlement costs could be cut by up to 15% through innovative technology and human performance initiatives.

For example, Internet-centric component software applications can automate claims-management systems via the Web, thereby permitting claims processing based on industry practices. Reusable components enable insurers to replace existing legacy claim systems and provide new large-scale capabilities without the substantial risks and costs of traditional development solutions.

There are seven key technology innovations required to drive durable operating results in claims:

* Segmenting claims precisely. By capturing accurate information in a more timely manner, software must segment incoming claims more precisely. Supervisors and claims handlers can recognize the difference in claim characteristics up front and re-evaluate the claim as conditions on the loss change. Resources then can be automatically assigned and reassigned--highlighting claims with higher risk, for instance. Proper segmentation allows insurers to increase the percentage of "no-touch claims," which are claims that no longer require the attention of a claims handler.

* Providing timely information. Claims handlers need to have up-to-date information so they can quickly learn about characteristics and exposures for types of injuries and disabilities, prospects of fraud, treatment protocols and disability durations, and the quality of vendors. Delivering this data to a claims handler at the right moment can reduce loss costs.

* Encouraging consistency. Technology should support implementation of high-level performance standards for every claim, regardless of geography, management style, workload fluctuations, staffing shortages, mergers or other restructurings, or any other potential inhibitors of sound business practices.

* Automating routine functions. Process re-engineering alone is insufficient. Technology expedites nearly every transaction--routine letters, document processing, telephone inquiries and other everyday tasks--thereby driving cost out of the process and improving transaction efficiency and customer service. Automation can reduce a typical claims handler's workday by as much as 20%, depending on the carrier.

* Connecting within claims. Resolving a claim requires constant coordination among the desk adjuster, supervisor, field adjuster, assessor and case manager. Technology provides the entire team with instant and simultaneous access to a highly accurate and complete claim file, including improving speed of claims payments and service level.

* Connecting with customers. Integrated systems must create a positive online experience for customers--either the insured or the agent--through the processing of a claim. Automated tools, which are accessed through the Internet, offer a faster, less cumbersome way to document a loss than do paper forms and manual calculations. Opportunities exist even for the customer who doesn't want to report a claim online, such as providing notification that car repairs are complete via a wireless application protocol phone or pager, or buying replacement parts online from trusted suppliers, rather than shopping and submitting receipts.

* Integrating vendors. By linking with vendors, insurers must effectively and efficiently connect to functions and data offered by vendors (e.g., fraud detection, bodily injury evaluation, auto estimating and medical bill repricing).

The claims organization by its very nature is a decision factory with massive volumes of constantly changing data. Carriers need to use more sophisticated and innovative technology to manage the claims function effectively.

David P. Hollander, left is a managing partner and G. Victor Guyan is a partner in Accenture's Claims Solution Group.