Claims Expense Control in a Third-Party World

It is evident during times of catastrophic storm response that independent adjuster onboarding is one of the most difficult tasks facing the P&C insurance industry.  New York Times recently reported a major adjuster shortage in Florida following Hurricane Irma. During ordinary claims volume, carriers and IA firms go through a courting process to understand who will serve as the best partners. In times of amplified claims volume, when this courting process is monumentally expedited, how do carriers put the necessary controls in place to adequately understand the true cost of doing business with new partners?

70% of carriers use IA firms during catastrophic response. Meanwhile, 98% of carriers in a recent survey said they lack the controls to proactively manage independent adjuster spend – during regular claims intake volume. Dealing with claims inundation from recent hurricanes Harvey and Irma will result in more than half of all carriers onboarding new IA firms, not to mention the hiring of temp employees to aid with invoicing. We call it “adding people to the problem,” when human error becomes more commonplace as vigilance is sacrificed for efficiency.

Considering IA fee billing is generally a two-week process when the claims process, and carriers and vendors are not under duress, imagine the difficulty in paying vendors and understanding the incurred expenses in a timely fashion during catastrophic conditions?  Under normal carrier and vendor operating conditions, 13% of IA bills remain unpaid for more than 30 days, with re-opens requiring additional time and re-evaluation on the insurers’ end.  As a result, real-time reporting around incurred and paid costs becomes nearly impossible.  For these reasons, nearly 80% of carriers in the survey agree automation would be beneficial in their claims departments, yet less than 30% are using software to assist in invoice reconciliation.

Effectively, nearly all insurance carriers lack the controls to proactively manage IA spend. Most carriers in the survey admitted to not monitoring claims expenses in any detail or the inability to extract data from their current systems with any amount of confidence.  Automation can fix this. BAP™ is the industry solution for service provider invoicing. BAP™ is a SaaS product that enables service providers to auto-populate invoices based on predetermined fee schedule rules programmed into the application. Carriers use BAP™ to validate the expense; reconcile invoices based on contracted fee schedules; allocate and document the cost back to the claim file; automate payment to service providers; and report on service provider spend in real-time. BAP processes invoices within minutes, and without the need to integrate with any other core system. Automating the end-to-end invoicing process enables accuracy, accountability and scalability for both carriers and service providers, with exponential benefits during a catastrophic event.

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