Demystify the claims process: It shouldn’t be a black box
Quality of the customer experience relies on interaction of underwriting and claims
By Patrick K. Nails | Executive Vice President and Chief Claims Officer, Arch Insurance Group Inc. A perception many people hold of an insurance company’s claims department is a somber place that’s the last step in a linear process and which has little to do with the company’s growth. Counterintuitively, an effective claims department is actually an important ally in an insurer’s growth strategy and a crucial partner in the customer experience. When people think of the functions of an insurance company that drive growth, underwriting usually comes quickly to mind. A top-notch underwriting department that’s operating efficiently can bring in a lot of premium, but it will inevitably bog down unless the claims department is equal to the task of processing a higher volume of claims. So, to achieve and sustain growth, the insurer’s underwriting and claims teams need to be closely aligned. For Arch Insurance, the claims department is an important partner for our business unit leaders. We serve as a temperature gauge and validation of how Arch’s insurance products are performing in the marketplace. Interaction and communication between underwriting and claims should occur naturally in a well-run insurer, and they are a competitive differentiator for Arch. Over the last five years, Arch’s Claims department has evolved from the traditional operation to one that focuses on many stakeholders. Historically, the commercial insurance industry has focused almost exclusively on the aspects that revolve around the resolution of the claim. At Arch, we don’t just look at claims from a business unit or product perspective; we also look at them from a customer experience perspective. It’s important to be mindful of the claimant’s situation, while we handle claims for a living, it’s important to remember that many claimants are going through this journey for the first time, so we need to meet them where they are and guide them through the process. A claims operation isn’t just a black box. We need to demystify the process at every turn of the claim. Famed management consultant Peter Drucker once said, “Culture eats strategy for breakfast.” What he meant was that not even the best business strategy can succeed without a culture that empowers employees and makes them want to work together to implement a strategy. At Arch, strategy and culture go hand in hand. We work on building our culture in claims every day. Some hallmarks of our culture are: a “jump in and figure it out” approach to solving problems; highly approachable senior leadership, with our chief executive officer setting the tone; a focus on hiring professionals who are first and last good people, who work well with others; and being more efficient, effective communicators. Frequent communication with the underwriting department sometimes leads us to make changes in how we assign claims resources. Some claims are handled by in-house staff, while others are outsourced to third-party administrators. For example, not long ago one of Arch’s business units provided insight that a TPA was not meeting our standards for customer experience, so we moved that capability in-house. At Arch, our claims department’s evolution is built on the three traditional pillars of the people, process and technology (PPT) framework with an important new fourth pillar – The Customer’s Experience. All of them are critical to supporting what we do every day to deliver great results for our policyholders, our distribution channel partners, and our colleagues. These pillars are: People. Doing the right work at the right level in claims means putting our talent in the right chairs. We strive to assign claims professionals’ skills to claims where those skills are most needed, and they are trusted to make the best decisions for the specific set of circumstances. Process. Every claim is different, but there often is room to increase efficiency in resolving each claim. This is where we try to standardize and streamline our processes. We like to tell our claims team, “Fail small, fail fast, and fail better. Don’t be afraid to come up with different ways to do things.” Not every new approach works, but the options are to course-correct or stop doing it. The end goal is always in mind, and that’s to do the very best job we can with each claim. Technology. Claims departments are at different points in the journey to implement technology that improves efficiency. At Arch, we’re working to integrate predictive analytics and severity indexes so we can anticipate claim complexity and be more responsive. Our technology strategy is to accelerate Arch’s ability to identify early those claims that need more expertise to resolve, and to get the right people on them sooner. Customer experience. It might surprise some people to learn that the “customer” for the claims department can be more than just the person or organization that files the claim. At Arch, when we ask ourselves, “Who is the customer in claims?” the answers might include: the claimant; a third-party claimant, in addition to an Arch policyholder; brokers that advise the claimant or claimants; business unit leaders, who rely on us to share information on types of claims and their impact on policies; and Arch employees. With multiple customers relying on us, our department has made great strides to deliver a great experience through the claims function. Insurance companies in general, and claims departments in particular, have been faced with an enormous amount of change over the past number of years. In the midst of all of this change it is important for claims leaders to remember that we provide a service to a diverse group of customers (i.e., third-party claimants; first party claimants, brokers/agents, business units, and our employees). It is imperative that as we use and implement all of the tools at our disposal, whether it is people, process or technology, with an eye towards providing all of our customers with a satisfying experience. For more information on Arch claims service, please visit www.archinsurance.com. Patrick K. Nails is Executive Vice President and Chief Claims Officer of Arch Insurance Group Inc. Before taking on leadership of the claims department in 2018, he held a number of positions in legal, claims and reinsurance at Arch, including General Counsel. He joined Arch in 2004 after a decade at Kemper Insurance Companies and five years in private practice in Chicago.
It begins with the strategy of a strong culture
Four critical pillars for success
In closing
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