Surveying the scene at a flood-damaged home, an insurance claims adjuster goes to work, carefully noting the soaked carpets and waterlogged high-definition TV.

With Tablet PC and digital camera in hand, the adjuster snaps photos, enters the policyholder's information, and uploads the data to the back office. Within moments, the claim is resolved. The adjuster either prints out a check for the value of the TV and carpeting, or orders replacements through the insurers' volume-purchasing agreements.

That example is still largely hypothetical, points out Chad Hersh, senior analyst for Celent LLC, a Boston-based research firm. But the outcome is a powerful motivator for the insurance industry: "Guess how happy that homeowner is going to be?" asks Hersh.

Although relative newcomers to mobile computing, insurers are investing heavily in enterprise-wide strategies that will make quick, efficient claims resolution a reality (see chart, “Steady Growth in Insurance IT Spending”). Speedy processing has immediate applications in auto insurance, where claims are typically smaller in value and have fewer variables. Equally important, it has wide-ranging implications in property and casualty. Here, equipping agents with mobile technology can pay big dividends in terms of increased productivity and otherwise reduced costs.

The industry’s embrace of mobile technology is recent but enthusiastic. "In terms of claims management systems, there has been a transformational effort over the last couple of years," says Karen Pauli, senior analyst for the TowerGroup, a Needham, Massachusetts, financial services research firm.

Automated claims administration systems, for example, now allow multiple people to simultaneously review a file. That means members of the special investigation unit as well as the claims manager and the adjuster can all look at and discuss a case file at the same time. This is a huge advance in efficiency for an industry that prior to 9/11 and Sarbanes-Oxley requirements relied on paper files that often ran several inches thick. Previously, files had to be reviewed manually, says Pauli, who worked in the insurance industry for 30 years.

"Claims departments always said claims is a people business," adds Pauli. In fact, incorporating new technologies has enhanced the "people" aspects of claims processing by freeing adjusters to resolve customers' claims more quickly. The change has been dramatic. Claims adjusters are now routinely equipped with cell phones and digital cameras. Many companies are now adding global positioning system (GPS) devices to help adjusters pinpoint locations more efficiently.

The change underscores the evolving role of superior claims processing as a competitive weapon. "It turns out that the quality of the customer experience during the claims process, such as when that pipe breaks or when a car accident occurs, largely determines whether that customer will stay with his or her insurance company,” says Tony Jacob, Microsoft industry marketing director for worldwide financial services. "So the insurance carriers are trying to figure out how to improve the quality of the claims process, and of course speed the settlement process as a way of retaining customers."

IMS Claim Services is using new technology to do just that. The claims-adjusting company routinely handles 500 claims monthly. To better serve the more than 15,000 policyholders that it might help during a disaster, the Bradenton, Florida, company's adjusters use an XML-based property-estimating solution. From the field, adjusters can prepare estimates complete with photos, diagrams, and captioned reports. The system's Microsoft Windows–based interface is already familiar to adjusters and helps reduce the need for training on the software.

The result is a more efficient deployment of adjusters to the sites where IMS's clients need them most.

Enterprise-wide claims solutions like those in use at IMS Claim Services are just beginning to take root. Celent analyst Hersh estimates only 10 percent of insurers employ wireless networking to process claims from the field. Fewer still remotely approve claims while the adjusters are on site, he says. And only a handful support systems that give adjusters the ability to print checks from their cars.

But Hersh predicts that the insurance industry’s increasing investments in core operational changes will produce a surge in technology adoption between 2008 and 2010 (see chart, “Core Operations Comes First”). Improvements will appear as combinations of expanded wireless coverage, advances in upload speeds and security, and the slimming of claims applications to more Web-friendly size.

In addition, recent catastrophes have highlighted technology challenges that are now being addressed and will benefit claims processing. "Hurricane Katrina showed the value and the limitations of mobile technologies," says Microsoft's Jacob. "Claims adjusters working in decimated areas had the mobile technology to fill out forms, take digital photos, and then sync up to the corporate database. The challenge was that cell towers were destroyed and power sources were limited in many areas, so it pointed out the need for better battery life and sync technology. And all of those mobile claims adjusters simply emphasized again the importance of digitally secure information.”

In Lincoln, Nebraska, Farmers Mutual Insurance is realizing the gains from new technology. Using a mobile claims system from Symbility Solutions Inc., adjusters for the home, farm, and automobile insurer now close claims in five days, down from 14. Outfitted with Tablet PCs, portable printers, and car AC adapters, adjusters have boosted their efficiency 50 percent in catastrophic situations. What's more, the need for inspectors to return for a second visit has dropped from 7 percent to less than 2 percent.

With results like these, it's small wonder that insurers are primed for major advancements in claims technology. "With the appropriate collaboration from vendors," says TowerGroup’s Pauli, "the claims people are definitely on board for what technology can do for them."

Karen Pauli is a senior analyst in the insurance practice at TowerGroup. She covers a wide range of topics in property and casualty insurance, specializing in distribution, underwriting, predictive analytics, core systems, and business optimization.

TowerGroup provides research and advisory services on the financial services industry. More information is available at www.towergroup.com.

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