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Internet Claims: Separating The Hype
From The Reality 
By Randy Wheeler
In these uncertain times, many companies are facing more risks
and potential losses from a variety of  factors. Premiums are
increasing across the board, and companies are under intense
pressure to reduce operational costs and improve profitability
in this volatile economy.
To improve performance, all companies managing claims-whether
self-insured employers, public entities, insurance carriers or
third-party administrators-must increase efficiency, identify
and reduce their risks, and improve communication and the sharing
of vital information among all entities involved in the claims
process.
Over the last three years, there has been a lot of hype about
how the Internet can transform claims administration. With the
continued hard market, this is a critical time to distinguish
between Internet hype and actual Internet benefits.
By outlining the current offering of Internet claims technology,
this article will discuss just how close we are to a completely
Internet-based claims process.
Many claims administration systems today promise automation,
real-time information, and the type of connectivity that would
allow companies to access claims and risk information anytime,
from anywhere. But just how much can Internet systems deliver,
and what have been the barriers to implementation? First, it's
important to understand the various types of Internet systems
that are currently available:
Internet-enabled. The insurance industry has traditionally lagged
behind other industries in implementing the technology that would
allow it to significantly automate claims processing, increase
productivity and reduce overhead costs. Many claims systems are
just now becoming available on the Internet, but they are Window-based
or mainframe-based applications that use the Internet for remote
access. For many of these systems, only one or two functions
can be driven over the Internet. For instance, a system may allow
a first report of injury or a form to be submitted via the Internet,
but it does not take complete advantage of the Internet's connectivity
or real-time capabilities for all claims processing functions.
Application Service Providers (ASPs). An ASP model allows companies
to access sophisticated claims systems via the Internet, while
also lowering their costs in software, hardware and IT personnel.
The company essentially outsource the installation, housing,
maintenance and upgrades of the system to the ASP. The typical
barrier to implementation has been that ASP systems are client-server
or mainframe applications modified to run over the Internet,
and therefore require middleware technology installed on individual
workstations or special servers in order to run. These middleware
systems create an additional expense and can sometimes increase
the vulnerability in a company's firewall.
Truly Internet-based/Browser-based. Being truly Internet-based
means that the system is specifically designed for, or is native
to, the Internet. As a result, all claims functionality, not
just limited tasks, is available. In addition, the system does
not require middleware systems to operate. This new generation
of claims technology is commonly referred to as "browser-based," since
the only thing an end user needs to run the claims system is
a browser-which today is a standard pre-packaged feature on most
PCs. But since browser-based systems do not require middleware,
they are more cost-effective, secure, and offer an improved Internet
application model. As a result, more companies are looking to
browser-based technology for their claims solutions. Inefficiency
has been a major source of loss and waste for companies managing
claims. One bad claim can result in thousands, even millions
of dollars in losses. In addition, billions of dollars are lost
due to antiquated paper-based methods that require significant
human resources to manage. The traditional way of increasing
throughput of claims has often been to add more people to the
review process, which does not result in long term operational
efficiency or the implementation of technological best practices.
By automating the claims process via browser-based systems, "paper-pushing "endemic
to the insurance industry can be significantly reduced, routine
transactions can be automated, and information can be shared
for effective decision making. The browser-based applications
provide: connectivity (the system is available from any PC that
has Internet access, and it does not require middleware software);
transparency (information from a variety of sources can be consolidated
in real-time and presented to adjusters and other parties without
system interfaces and downloads), and real-time notification
(a claims manager or risk manager can be automatically informed
of an urgent claim or insurance activity through native Internet
tools like e-mail.
The major impact of the Internet has-been to provide a powerful
weapon to dramatically increase productivity and share information
among employers, insureds, adjusters, supervisors and risk managers.
If all of these parties have timely information, the adjusters
can properly manage claims in the first place, and they can help
control costs and improve outcomes. The quality of the claims
process depends almost entirely on individual reviewers having
the right information to do their jobs effectively, so they can
operate as "knowledge" workers, not mere administrative
staff.
Document or image processing can also increase the volume of
claims handled without increasing overhead. In addition, straight-through
processing significantly cuts the time spent on individual claims,
helping to control costs.
"Paperless" claims management is moving closer to
reality with many companies utilizing scanning, browser-based
claims systems, and sophisticated online reporting and real-time
notification to not only increase efficiency, but also to hone
in on specific risks.
Traditionally, there has been no effective way to share vital
claims and risk information. Since companies lacked the technology
to track, report and access business intelligence, top-level
executives were not always aware of problem areas. Vital pieces
of risk information went unnoticed, and many executives were
forced to essentially "fly blind" when managing future
risks.
Claims and risk professionals today are demanding timely and
accurate information to facilitate improved outcomes, such as
early return-to-work or injury prevention programs. With access
to specific details, they can pinpoint where losses occur and
what can be done to remedy high loss areas.
Browser-based systems are a far-reaching solution, serving as
a real-time connection between critical information silos, consolidating
multiple data sources, and providing exactly the type of access
to information that executive decision-makers need to protect
their assets and improve future performance.
With browser-based technology, abroad array of risk management
notifications and reports are being made available to decision-makers
with the ability to improve performance in high-cost, high-risk
areas.
Browser-based claims administration and risk management systems
can improve the claims process for the benefit of all stakeholders.
Companies that use browser-based technology achieve greater savings,
decrease losses, lower administrative overhead, and reduce overall
claims costs by making the claims process faster, cheaper and
more accurate.
Posted with permission from National Underwriter, Property & Casualty/Risk & Benefits
Management Edition. Copyrighted (c) 2003 by The National Underwriter
Company. All Rights Reserved.
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Kevin Confetti