Evidence analysis, claim evaluation and settlement negotiation are three related, but separate, exercises. In a world where adjusters have less time and average severity is rising quickly, claims leaders need to make strategic choices about how to leverage the time they spend resolving bodily injury claims.
Leveraging Casualty Adjuster Time
The primary value of adjusters lies in effecting a good settlement. Adjusters' time is at a premium, though. With limited time, there are tough choices to make if you are going to gain better control of your average severity. Increasingly, this means shifting time away from the evaluation process to negotiation. The latter is what provides the most leverage in containing loss costs, because it is, after all, where the amount that settles the case ultimately is decided. So why do adjusters spend 9 minutes in evaluation for every 1 minute (or less) that they spend in negotiation? And why are negotiation sessions only 5-10 minutes on average?
Reason would suggest that more time spent reviewing medical records and reports should yield lengthier and more productive negotiations because it produces deeper and richer content. The problem, however, is that it doesn’t. Evaluations, by definition, are not meant to establish arguments about a case. Rather, they are designed to establish “factors” that impact value.
Without boring you with details, identifying factors and establishing applicable arguments are very, very different exercises. Factors are interesting for discussing the severity and complexity of a case. They are fundamentally a risk evaluation exercise. Arguments are the key conclusions, supported by specific evidence, that establish the case you are presenting. Without well-supported arguments, your ability to resolve at a reasonable value slips away quickly. See our piece, Kill the Pro’s and Con’s, where we expand on this topic.
The industry doesn’t need another medical review vendor. Adding more material for adjusters to review in the “evaluation” adds more time to this step, but does not produce better results. Industry data on average injury severity show a steep and steady incline over the past decade. While the drivers of this increase have been active for years, casualty organizations have been slow to respond. What is apparent, however, is that traditional tools such as medical bill review, nurse review, pain and suffering valuation tools and the rest are not working. It is also apparent that plaintiff attorneys' use of inflated medical bills and records that exaggerate injury severity will only get worse, not better. The time that adjusters can spend on resolution is limited and needs to be leveraged as effectively as possible. Shifting that time to negotiation will be crucial for those who wish to come out ahead.
The following provides an interesting overview of the challenges faced by the industry and the response needed to build negotiation as a core competency in your organization.