The document discusses the challenges in property and casualty (P&C) insurance claims processing, highlighting inefficiencies and high costs that can consume 75%-85% of administrative expenses. It emphasizes the importance of improving customer satisfaction, reducing operational expenses, and addressing claims leakage to enhance overall performance. Additionally, it presents a case study demonstrating how digital claims processing can lead to significant cost savings and faster claims turnaround.

1. P&C Claims Automation Solution
A Competitive Advantage
Paragon Solutions, Inc.
Mike Cloutier – Vice President Insurance Markets
ACORD Conference May 15-17, 2012
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2. THE COST OF CLAIMS PAYMENTS AND
EXPENSES IS THE SINGLE, LARGEST SPEND
FOR P&C INSURERS, ACCOUNTING FOR
75%-85% OF TOTAL ADMINISTRATIVE COST
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3. Top Claims Investment Drivers
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4. Challenges in Claims Processing
 Costs
An A.T. Kearney study found that the costs associated with reviewing and settling claims typically
account for up to 65 percent of an insurer’s revenue. Claim handling costs are high because of
process inefficiencies (including manual steps and re-keying) paper use, headcount for expense for
all claim parties and litigation expenses
 Quality
Many insurers have not re-engineered their claims processes; resulting in continued process gaps,
slow processes and poor customer service quality
 Customer Satisfaction
The insurance industry continues to score poorly in customer satisfaction surveys. In a recent
survey of companies conducted by Business Week, only two insurance companies were included in
the top 25 companies identified as ―The Customer Service Elite‖ by the publication. [1]
 Timing
Studies have also shown that customers who receive prompt claims settlements are more likely to
renew with their existing carriers. [2]
[1] Jena McGregor with Frederick F. Jesperson, Megan Tucker and Dean Foust, “Customer Service Champs,” Business Week, 5 March 2007
[2] The American Customer Satisfaction Index, “Scores by Industry: Property & Casualty Insurance,” 2006
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5. Business Challenges:
Claims’ Common Pain Points & Impacts
Common pain points across claims are costing insurance carriers…
1. When dealing with 3rd parties…
 Inability to measure performance or value
Third Party Providers
 Difficulty in selecting and implementing partnerships
1 2. When managing liability…
 Failure to apply consistent processes to detect fraud and
3 subrogation opportunities
Claims Management Process
 Sub-optimal claim handling procedures drive inconsistencies
Determin2
Initiate
e
Invest-
…
3. When processing claims…
Claim igation  Inefficient staffing, processes and organization structure
Coverage
 Wasted effort and time in claim handling
 Poor customer service permeates process
4. When dealing with other departments…
4 5
Other Financial  Competing incentives from department to department
Departments Management  Poor integration between claims, underwriting, sales and agency
5. When managing financials…
 Errors with bills and payments
 Unenforced policy limits & deductibles
Industry Impact
 Consistent industry claims leakage of 8-12% of net premiums written
 Limited visibility into trends as well as issues with the accuracy of information contributes
to chronic industry reserve deficiencies
 Loss Adjustment Expense (LAE) inefficiencies are rationalized as required for severity
containment *Source: CSFB P&C Primer, Feb 2006; Claims Magazine 20070
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6. Critical Success Factors in Claims
Physical
FNOL Coverage Triage & Medical Litigation Claim Claim
Determination Assignment Investigation Damage Recovery
Management Management Evaluation Resolution
Repair
Improve Customer Satisfaction (higher retention)
 Customer driven state of mind
Superior customer
 Customer access (ex. website)
Experience
 Claim communication and facilitation
 Quick claims process cycle time
Reduce Operational Expenses
Loss Adjustment  Focus on increased throughput and reduced overhead
Expenses  Performance based on claims throughput productivity
 Reduce specialization to balance loads
Reduce loss costs
 Indemnity payments
Loss
 Eliminate fraud
 Reduce claim leakage
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7. Speed to Value: Case-Based Solutions
Case-based Solution Examples
New Account Contracts Human Accounts Claims
Customer Care
Opening Management Resources Payable Management
Process & Rich
Single platform to rapidlyConfigurable Content
Model-driven Configurable Role-based build case-based applications
Integration Reference Best
Configuration User Interface Applications Dashboards Unification Capabilities Applications Practices
Solutions up to 50% faster, substantially lower cost
Case Management
Configuration vs. coding – less resources, complexity & risk
Compliance Monitoring & Reporting
Greater application agility , lower TCO
Intelligent Capture Customer Communications
Business Process Management Collaboration
Content Management & Repository Services
Documentum
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8. Digital Claims Processing Customer Example
Background
Insurance subsidiary of large US financial institution
Large writer of property and casualty insurance for
business, home, and auto
2,800 employees in offices across 32 states
1,100 employees working from home offices
The Challenge
Reduce time, effort, and costs associated with
documenting claims
– 18 to 30 days from notification of a loss until claim data
completely entered into the system
Claims management system data types included:
– 35mm and digital photos, voice depositions, video, claim
forms, police reports, official statements, etc.
Minimize impact on staff, retain data long-term,
immediate data recovery
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9. Digital Claims Processing: An Example
The Results
• With this solution, digital images are sent via the Internet
to headquarters, loaded into the EMC Documentum
repository (running with an EMC Centera content
addressed storage system), and then automatically
linked to the virtual claim file—all within 15 minutes
• $2.5 million annual savings
• Reduced claims processing costs by $250,000 in postal
fees alone for the documentation after a recent disaster
• Speeded workflow and provided better access to
information
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10. Paragon Solutions’ Profile
Paragon is an enterprise information management
solutions company that helps firms leverage information
assets to achieve better business results.
 Market domain expertise focusing on client solutions
 Solution competencies addressing process
optimization, information management and
information integration.
 Advisory consulting and systems integration teams
Corporate Facts delivering business value.
• National Coverage
• Global Clients  Industry-aligned accelerator assets providing rapid
• NJ Headquarters time-to-value and lower total cost of ownership.
• Dual-shore Development
• CAGR 20+%
• Privately owned, 30-year
 A proven delivery track record delivering high value
history and return on investment.
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11. Contact Paragon for More Information
Joe Pennino, Solutions Sales Director
phone: 516.610.7024; jpennino@consultparagon.com
Michael Cloutier, VP Insurance Solutions
phone: 908.783.1903; mcloutier@consultparagon.com
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