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Disability and Life Claims - Hiding Complexity

James Hehir, Product Manager for Disability and Life Claims

Many disability and life insurers (and TPAs for these) manage their claims on a system with CRM/workflow origins. The natural forte of such systems tends to include the likes of creating automatic reminders for the claims analyst, facilitating the recording of claim correspondence, administering and applying authority limits etc.  We find, however, that there can be limitations when it comes to the more complex payment-related calculations, with the result that these must be performed off-system, often manually.

Examples of such calculations include:

  • Calculating the offset to a disability benefit where the claimant is working part-time (i.e. the ‘partial disability’ scenario) and the policy has an ‘earnings indexation’ clause
  • Calculating the overpayment where a taxable disability benefit is impacted by a scenario that renders the claimant overpaid in the current and one or more prior tax years
  • Calculating the statutory interest due on payment of a death benefit (US life claims)

The cost of investing in the claims system to automate such calculations must be weighed against, not just the time expended by the claims department performing such calculations manually over the expected life of the system, but also:

  • Insurer reputation; the calculations are by their nature error-prone, thus the insurer’s reputation for accuracy is at stake
  • At best, the audit trail of the calculation will be contained in a spreadsheet uploaded against the claim
  • Key-person dependency; it can take a number of years’ experience and a certain aptitude for a claims analyst to become proficient at the more complex calculations
  • Training cost
  • Shadow IT; a proliferation of ad hoc spreadsheets to assist with the calculations are a headache from an IT governance perspective
  • The difficulty in rolling out new calculations (e.g. when legislation changes, new policy wordings are introduced etc.)

As part of our investment program in FINEOS Claims for Disability and Life, we strive to offer a best of breed solution for each of the CRM, workflow and automation of calculation pillars mentioned above.  The latest verision of the product, released at the end of 2012, was conceived with the explicit goal of hiding calculation complexity from the claims analyst, in particular for the old chestnut examples listed above.  Key elements to achieving this were having access to experienced claims analysts and tax experts from each of our clients, as well as reliable stats for the volumes of the various business scenarios considered.

For those of you who have toiled over manual disability/life claim payment calculations at some stage in your careers, and thought these calculations were part of the furniture, hope is at hand.  We believe that we have made excellent progress in automating much of this in FINEOS Claims 7.5.  We look forward to getting your feedback on these enhancements!