The introduction of the electronic claims file system has modernised the way the London market handles losses. Jane Bernstein reports on where these advances may lead next.
There is a consensus in terms of modernising claims handling, that the London market has come a long way in a short time, since the introduction of the electronic claims file system. The evidence suggests there have already been some important and tangible benefits achieved through ECF, but there is still work to be done and challenges to overcome, and there is a sense that this is just the beginning of the modernisation process.
Industry bodies are keen to emphasise the improvements achieved in claims handling recently. As a spokesman for the London & International Insurance Brokers' Association emphasises: "The market has made huge strides in claims handling over the past 12 months, and the claims community should take considerable pride in having made a step change in how business is processed."
When asked to identify some of the particular benefits achieved to date, many industry experts point to a reduction in end-to-end settlement times, and the ability to track claims more efficiently. Ian Summers, managing director of e-business and market reform with Aon, emphasises that: "The key benefits for us centre on faster payment of claims and, therefore, better client service."
While John Hobbs, director of market services at the International Underwriting Association, responds: "The main achievement is that we use a lot less paper, making claims payment significantly cheaper and faster to administer so that everyone in the chain wins — risk carriers, brokers and above all our ultimate clients." These types of benefits are supported by some promising facts and figures. According to Mr Hobbs: "By the end of this year 60% of all new claims in the company market will be presented in this way compared to 40% in 2009 — and we aim to reach 100% by the end of 2011."
Kent Chaplin, Lloyd's head of claims, also highlights that, from a customer perspective, claims are being handled more quickly. He adds that there are significant benefits for managers in terms of enhanced management information: "In a paper world, it was hard to measure anything. Now, it's all auditable and traceable. So, we know where a claim may be stuck in a chain. We can chase down queries, and manage capacity and workload more effectively."
A time and motion study carried out on behalf of the ECF user group — and involving extensive carrier and broker contribution earlier this year — showed that, for the average claim, electronic files are dealt with more than twice as quickly as their paper equivalent. Gary Bass, claims consultant with the Lloyd's Market Association, chairman of the ECF user group and the ECF2 market project manager, observes: "This means we are more than twice as productive on the key metric by which our clients judge the service we offer them."
There has certainly been significant market support for ECF and Mr Bass is keen to emphasise the "engagement of claims professionals in every aspect of the implementation". He asserts: "This grass roots involvement with ECF has ensured that the implementation partnership with Xchanging has remained focused on achieving quality outcomes rather than being led solely by timescales. Bearing in mind the short time scale involved, the progress has been remarkable."
Inevitably, however, some areas are slower than others, and there remain some important issues that industry professionals would like to see addressed. There is a view, for example, that the challenge of getting legacy claims onto ECF should be high on the list of priorities.
The issue of binders has also caused some controversy. A Liiba spokesman asserts: "It is extremely disappointing that the ECF for binder project has been put on hold. Binders are the major remaining business class that is out of scope and the vast majority of the 25% of new claims that are not being handled through ECF fall into this category. Until binders are brought within scope it will not be possible to process 100% of claims electronically."
However, Mr Bass responds: "The binder project is still being investigated in terms of a tactical solution. It's a complex problem that requires a lot or appropriate investigation and study, and it is important to get it right."
Wealth of innovation
Paul Evans, consulting services director at software provider Total Objects, recognises that "good progress has been achieved in the past 12 months", but adds: "A number of improvements are still to be released to the market so once these are made available then further process benefits will be realised. The London market has a wealth of innovation but constraints exist when representing the interests of a subscription market, which limits the pace of change."
Mr Bass admits there are always challenges facing any significant change programme through initial implementation through to rollout and mass adoption and observes that: "Over the past few months, the London Market Group and the Associations' Administration Committee have strengthened the governance of market projects, and are working closely with Xchanging to ensure any issues arising are rigorously managed using best practice methods."
Meanwhile, the market is forging ahead with the next stage — the so-called ECF2 — which is effectively about enhancing the systems and processes implemented through ECF. According to Mr Bass, around 80 carrier organisations have been asked if they will implement ECF2 and 65 of these have responded positively so far and implementation is being scheduled for 2011. "No organisation has said it will not implement. It is clear that the demand for ECF2 remains high and the focus of ensuring a quality delivery remains welcome," Mr Bass adds.
One thing that is clear is that the market must retain its focus on personal relationships — and that technology should not be used to the exclusion of personal contact. Paul Sewell, Brit's group chief claims technical officer, points to the danger of communicating only electronically, and emphasises that, in particular, any messages that may be misconstrued should be delivered either over the phone or face-to-face. "As a market, we should not do away with that ability to have a conversation with our client base or with brokers. There may be difficult conversations and we should not hide behind an electronic medium to deliver them," he says.
Peter Dalton, claims director at Cooper Gay, supports this: "We encourage our team members to talk about substantial claims queries. ECF is a useful medium, but is not the only one for discussing claims issues. We try to ensure we still have that personal contact. On a management level, we meet regularly with managing agencies to talk through any outstanding problems and to ensure the quality of our ECF entries."
In fact, one view is that ECF will, ultimately, help brokers and carriers to refine their personal service levels and to target skills and resources more effectively. Mr Summers explains: "ECF has demonstrated to us that generally the day-to-day claims can be remotely agreed. This then allows us to focus personal communication on those claims that really do need it."
Differentiating service levels
Fears that ECF will make companies indistinguishable have been raised but many believe in addition to using ECF, firms can continue to differentiate their service levels and the sophistication of their systems. Richard West, sales director at Fineos, explains this is an area in which other systems can complement ECF. "Where brokers enter claims information into ECF, we can, for example, take that data, add whatever levels of sophistication are required and then feed the response back into ECF in order for the data to continue flowing," he explains.
Clearly, ECF needs to be able to tie-in with other systems. In fact, Katie Doyle, product marketing director for Europe, the Middle East and Africa at Guidewire Software, is enthusiastic about the potential benefits in systems working together. She comments: "ECF2 and insurer's internal systems are completely complimentary in this brave new world, symbiotic even. ECF2 facilitates interoperability between central bureau systems and carriers' internal systems."
Access for third parties will also be important in the future. And Mr Chaplin observes that now — subject to requirements — stakeholders like lawyers can access ECF. "This opens up a whole world of opportunity in managing claims effectively," he observes.
A pilot project led by Markel International and with law firms CMS Cameron McKenna and Reynolds Porter Chamberlain has highlighted some significant benefits for law firms using the ECF system. It found that for law firms, the main advantages centred on dramatically improved efficiency in terms of fee collection as well as the submitting of reports.
Hans Allnutt, associate at Reynolds Porter Chamberlain, asserts: "The ability to monitor fee approvals on real-time basis is a revolution for us, especially for subscription market collections."
While as far as the submitting of reports is concerned, Jonathan Thorpe, a partner at CMS Cameron McKenna, explains: "On the reporting side, this is very much about getting reports directly into the market in the best way possible and also being given direct and immediate access to the live claim file." Regan Gilbert, claims manager at Markel, agrees and adds: "It's very much about centralisation — having all the information you need available in one place. The fact that most of your claim information can be housed in one area and that there is an easy trail is a huge improvement."
Ms Gilbert believes that the next step is 'an education process'. "Our pilot has demonstrated the potential benefits of third party access. We need to ensure that people are given clear guidance and training before they go down this route. Law firms are much more likely to benefit from the system if they approach it with the right guidance and training."
Progress is being made but as implementation of ECF2 gets underway, there are still ongoing issues to address. Mr Summers points, in particular, to the importance of internationalising the service: "ECF isn't home yet. One of the criticisms of London is that we have our own London market processes, which means that brokers and clients around the world have got to learn how to work with London — which is seen as a barrier to entry. What we need to be careful about is that ECF in its ultimate vision is an internationally compliant standard where we really compete on the speed of payment."
There are also some long-standing cultural obstacles to overcome as Mr West explains: "This is a market where, historically, people have been sceptical about modernisation because so many initiatives do come and go. There is a danger that people will take a wait and see approach. The market in general has long suffered from a low take up of IT and claims, in particular, has historically not been prioritised for modernisation."
Resistance to change
But while some resistance to change may persist, there is a general enthusiasm for the ECF initiatives. As Derek Henry, managing director of Capita Commercial Insurance Services, asserts: "ECF is in the vanguard of the charge towards modernisation, evidenced in reduced claim handling times, and should be saluted as such. There is huge appetite for ECF2 and the improvements it will bring." However, he concedes delays in ECF2 are causing frustration and adds: "The sooner it is delivered the better for the market."
The speed with which ECF is taking off indicates there is an appetite for modernisation within claims community and no matter the problems along the way the progress so far should be remembered as Mr Bass concludes: "We should remember that the full scale implementation of ECF only began in 2008. This means that the London market claims process has converted from being paper based to largely electronic in two years. This implementation was done swiftly, efficiently and effectively and the market needs to be applauded for the manner in which it has embraced this change and made it stick."
ECF2 - What to expect
Gary Bass, chairman of the eCF user group and the eCF2 market project manager, explains that eCF2 is made up of a number of products that will "improve the usability and functionality of ECF."
New products and systems that will be introduced through eCF include a document file viewer.mr Bass explains: "This is an innovative product that will essentially put into easily searchable format all of the existing documents currently held within the insurers' market repository.there is a huge volume of documents that need to be loaded onto document file viewer. once they have been loaded, they will become much more easy to use, access and manipulate.this is an innovation borne out of a conversation with the market in terms of what the market wanted to see for an electronic file."
Mr Bass adds new workflow systems are also being introduced: "This is all about the ability to track ongoing work with discipline.the introduction of workflow within ECF is a huge step forwards in the ability for us to manage our business in a far more disciplined way."
Other initiatives may sound smaller but the intention is that they will also make a big difference.these include, for example, the concept of ‘single sign in'. "This is a very simple process that means multiple sign in is not required for different parts of the system. This is, in fact, something of a holy grail even for parts of the retail world.at the moment, you require different passwords for different parts of the system.the efficiencies this would create for users are fantastic,"asserts mr Bass.
Another aspect of the so-called core components to be introduced with eCF2 is the claims agreement screens. He explains: "We've looked at all the screens you would use in the agreement process of a claim and we have tidied them up to ensure they flow in a more precise way for a new technological environment."
He concludes: "it is worth noting that each of these initiatives is worthwhile on its own.When you put them altogether, it really improves the service proposition and the market is extremely excited about getting eCF2 up and running."
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