IRI Partners Blog

By Jim Porcari

Often times, we are asked to work with claims leaders who manage functional areas, with the goal of helping identify process and quality opportunity areas.

One of the things we find is linear thinking, i.e., a thinking of steps and touches in a process that are viewed as concurrent, moving from one task, to the next, to the next; with timeliness and quality measures for each task.

We are strong advocates of beginning with the end in mind. What is the end state goal? With that as the starting point, look at a process from a viewpoint of first elimination of non-value add (challenge the dogma) steps and touches, second compressing cycle time within the task, then seeing how many tasks can be done concurrently to further compress cycle time and get to the real desired end state – a closed claim, with the right indemnity and expense, that does not normally reopen.

By Jim Porcari

In this post, we will highlight some of what we think are some of the enduring trends in the auto claims space of the P&C market. These include:

• Lower Frequency
• Using new technology in old ways
• Focus on LAE in a vacuum vs. lowest ultimate cost
• Strategic partnerships
• Insurance industry as a fast follower vs., innovator
• Finding people via referrals & “networks”

Some of these enduring trends are exogenous to specific insurers and will take time to play out, but insurers unwilling to look at and plan for the long term, will simply fail faster, accelerating the inevitable (and much needed) consolidation already beginning to occur.

By Jim Porcari

In this post, we will highlight some of what we think are the emerging trends in the auto claims space of the P&C market. These include:

• Mobile – moving from mobile “also”, to mobile first
• BPO – by task vs. functional area, across vs. within
• Strategic partnerships – fewer, but broader
• Collision repair MSO partnerships
• Telematics – underwriting today, claims tomorrow
• Significant demographic shifts – Gen Y, Latino, Urban

And these are just a few of the emerging trends that will impact how you leverage people, capital and technology in the claims arena. Some of these are independent variables, some, like mobile, will have to be integrated across tasks and functional areas.

by Jim Porcari

Every insurance company has oceans of data. Many are drowning in their own data. What they don't have much of is actionable information.

Every company has near term, descriptive data. This is point in time information that provides a metric for a variable at a fixed point in time – new claims, new applications, closed claims, endorsement error rate, etc. Most companies now have insightful data. This is data that provides data over time – new PIF per day over a rolling 12-month period, new claims/day over variable time periods. Trend over time is an important directional indicator.

What few companies have is predictive data. This is getting into the arena of actionable information – information that provides the decision maker (can be at any/many levels of the organization) data/information that allows them to make proactive decisions affecting the going forward business, not just data that they react to after the fact.

Progressive thinking organizations have an overt strategy for using all three kinds of data and leveraging both internal and external data and analytics to provide actionable predictive data that leads to competitive advantage.

by Jim Porcari

I think we can all agree that technology, which is evolving at an ever increasing pace, has dramatically transformed the way financial services companies, including insurers, in many value add ways.

Just look at how the cycle time in auto insurance underwriting has been compressed from days to minutes, the auto damage estimating process has moved from hours to less than a half hour for most estimates. There are many more examples of how insurers are leveraging technology to deliver faster, smarter and more customer focused outputs.

While many of the examples of leveraging technology is the result of insurers and their vendor partners taking a specific process and developing new, technology enabled solutions, the place where insurers still struggle, a LOT, today is in delivering an efficient and effective technology overhaul when replacing an entire core system, say in claims or underwriting.

We have direct experience in several of these core system replacement initiatives. What we see, again and again, is well meaning people working very hard to fit their existing processes and develop the same outputs into the new system. This is the danger of using new technology in old ways.

Compounding this risk, most companies choose a core system, then bring in one of the big outside consulting companies to help develop the business requirements documentation (BRD) to code the system to the individual companies needs. While these intermediaries are great at taking what the current process SME’s articulate about the current process, they don't ask the hard questions about leveraging the technology to improve efficiency and effectiveness. They would have trouble even if asked, because they are not claims of underwriting experts. They have not done the job.

If you want to avoid using new technology in old ways, be sure to have people who have done the job asking hard questions, challenging current dogma and focusing on using new technology in new ways.

by Jim Porcari

I am a firm believer in the operational executive using a balanced scorecard approach to developing strategy and looking at the core performance of a company or operating division.

The key flaw in the execution of using a balanced scorecard as a strategic tool is in the approach to execution. While there are 4 core quadrants to measure and manage (financial, process, people and customer) using this approach, the common execution flaw is beginning with financial first and letting financial drive the other 3 areas. It seems like the natural place for an executive in a financial services firm to begin but results in looking at the enterprise through the wrong lens.

Yes, Insurance is at its foundation a financial enterprise. But, beginning with financial and letting it drive the other three core areas actually limits the financial benefits available to the organization.

If you start with a focus on process, then the focus is on existing steps, touches and cycle time. Looking at processes with an eye towards elimination of steps, touches, duplication and redundancy – all result in financial gain.

If you looked at customer, with an eye towards identification and delivery of customer specific solutions, being delivered in new and value add ways, resulting in financial gain.

If you understood process and customer, then looked at people, with an eye towards who, where, when, what type (part time, full time, contract, vendor partner), would result in a constantly evolving need, mix and cost - resulting in much lower financial cost.

Yes insurance is a financial business, but beginning and ending your review of the businesses results, from a purely financial perspective, drives the wrong conclusions, and poor overall execution of your strategy.

Flashback: 1984 Cleveland, Ohio in a tiny claims office. I’ve had about 4 months of claims experience so I was already the most experienced claim rep in the 3 adjuster office. It was going to be another day of field work and the schedule included writing 3 estimates, completing 2 scene diagrams, a couple of signed statements (yes, we were not allowed to use our recorder until we had 6 months under our belt) and an in person attorney negotiation. While the boss was devouring the Wall Street Journal, I stocked the “adjust box” with crash manuals, film and forms and convinced my teammate to go out on the road with me. Before you knew it we were back in the office with a handful of settled claims and always some interesting claims stories.

Today: 31 years later. That boss, Jim Porcari, that team mate, Carrie Koran and I are back together! Jim is still devouring the Wall Street Journal and keeping everything on track. Carrie continues to provide great insight, perspective and fun to everything we do.

While there are approximately 275 P&C insurance carriers the industry is small and relationships matter. We will never claim to have all the answers but it’s a safe bet that we can provide an expert that can help!