Business Insurance RMIS Article

"High-tech software links up underwriting, claims handling

April 19, 2004

by Meg Fletcher

A sophisticated computer system that integrates underwriting and claims functions is a key factor behind the success of the risk management operations of the Maine Municipal Assn.

The current system, which was purchased about nine years ago from a vendor that subsequently became part of Computer Sciences Corp. in El Segundo, Calif., consists of two programs: PABBLO for underwriting and PACCASSO for claims handling.

Having an integrated software system "is absolutely essential" said Joan Conner, the MMA's director of Risk Management Services. "Otherwise, you spend your time chasing paper. We don't way to pay people to chase paper."

The computer system's technical capabilities reflect Ms. Conner's commitment to using accurate data in all aspects of her risk management program, from pricing through claims management.

The MMA's risk management services unit receives about 1,500 new property/casualty claims and 4,000 new workers compensation claims each year, Ms. Conner estimates.

"This system has become the envy of virtually every insurer and reinsurer that has witnessed a demonstration," said William C. Brouillard, executive vp of The McCarthy Cos. in Wilmington, Mass., a brokerage unit of Hub International Ltd. in Chicago.

Despite the praise, MMA expects to significantly enhance the existing system next month by replacing its claims-handling component.

People are impressed by the PABBLO/PACCASSO system because it is "Windows-based, point-and-click and very intuitive with the end user," said Christina St. Pierre, MMA's director of administration and management information systems in Augusta. It makes the processes of underwriting and claims handling "a lot simpler," she said.

But the most important aspect of the system, users say, is the high level of integration between its two programs, including the ability to toggle between them.

For example, Ms. St. Pierre explained, when a city participating in the MMA's Property and Casualty Pool reports a claim for a truck accident, the claim handler types in the name of the member and line of business. If the system recognizes that entity as a member, it will allow the handler to enter additional information about the driver and vehicle.

With a mouse click, the handler can access a complete list of that city's vehicles by category and can highlight the one involved in the accident. The handler knows that the program covers the vehicle and also can check additional details, such as the vehicle-specific deductible or whether additional insurance was purchased for it-as at least one Maine public entity did for an antique fire truck.

The claims handler can then continue processing the claim, she said, without needing to call the underwriting department to confirm coverage, locate a paper file or flip through schedules searching for coverage information such as deductibles or special circumstances.

"The goal is to reduce the amount of paperwork and the amount of time it takes to process the claim from the time the accident or injury happens," Ms. St. Pierre said.

The risk management unit not only uses the system to handle claims but also to identify claims trends and establish individual member pricing. The system also lets Ms. Conner review specific claims at any time and helps her underwriting staff update exposure information.

The system also allows MMA to reduce paperwork through the use of document imaging and digital photos, which speed up the handling of property damage claims, Ms. St. Pierre said. She estimates that the current system has reduced paperwork by about one-third.

And a new system that MMA expects to begin using next month will cut paperwork by 85% from pre-1995 levels, Ms. St. Pierre said. "It's a huge goal. It's a huge change in the workflow," she said.

Essentially, MMA will retain the PABBLO underwriting component and combine it with a new claims-handling component, because the provider of the current claims-handling component decided to no longer support that program, according to MMA.

The new component, iVOS, was developed by San Ramon, Calif.-based Valley Oak Systems Inc. The Web-based claims administration system allows a user to access payment processing, litigation, correspondence, reporting, form generation and other administrative functions over the Internet, according to the company.

Combining the databases will be "a bit of a challenge, but we can do it," Ms. St. Pierre said. Once online, MMA's combined system is expected to further streamline claims handling and other administrative processes.

MMA expects the $650,000 enhancement to pay for itself within two to three years, Ms. St. Pierre said. Savings will stem mainly from a reduction in processing time, but MMA also expects to reduce its postage, paper and offsite storage costs, she said.

Ms. St. Pierre credits Ms. Conner with encouraging the technological upgrades. Ms. Conner is "very forward-thinking and in tune with technology" and "is very articulate about it" and "can put it together and can sell it," Ms. St. Pierre said.

Despite the enhancements, though, "we'll never replace paper entirely because some people don't have the desire or the ability to file electronically," said Ms. St. Pierre.

"We try to serve them and give them all the advantages they can take of technology, but still hold their hand and do the paperwork and do the whole process, if that's what they need," she said.