March 22, 2012

Insurers need to provide good claims service while protecting themselves against fraud. Are these antagonistic objectives? George Fay, executive VP responsible for claims strategies and operations at Chicago-based $6 billion P&C insurer CNA thinks not.

In a recent conversation, Fay spoke to Insurance & Technology about the CNA's commitment to providing the highest level of customer service in the industry. Reflecting what he called his "commander's intent," Fay -- a retired U.S. Army major general -- said that the fundamental imperative is to "wow" customers, and the specifics will flow from that.

Giving an example about basic service issues, Fay says that some years ago CNA established the rule that nobody goes home before answering all their customer and producer calls. The company also commits to issue settlement checks within 48 hours of receiving necessary documentation.

Fay's commitment to service is paralleled by his determination to fight fraud — indeed he sees the two as working toward the same goal. As the keynote speaker at Insurance & Technology's 2010 Executive Summit, Fay triggered a conversation that echoed throughout the event with a remark that it was immoral for an insurer to knowingly pay what it considered to be an immoral claim. He reiterated what he called his "adamant" position during our recent talk, after which I asked whether a determined anti-fraud policy might not have a negative impact on customer experience. His response was that good fraud fighting actually improved the customer experience. He added:

The customers we want are the ones that feel as strongly about insurance fraud as we do. If they don't, we don't want them as customers"

Our conversation moved onto other topics but in retrospect I felt slightly dissatisfied by Fay's response. Donald Light, a Palo Alto, Calif.-based senior analyst with Celent seemed sympathetic to my concern about antagonistic objectives when I put the question to him:

An insurer wanting to reduce claims fraud has to walk a fine line between increasing referrals to the SIU and keeping policyholders with legitimate claims happy. The key tools available to do this are BI for tracking SIU referrals and outcomes, and analytics to adjust the fraud score referral trigger points up or down.

How do the providers of such tools make the case themselves? I reached out to a couple of them and got this response from James Ruotolo, principal for Insurance Fraud Solutions in the Global Fraud and Financial Crimes Practice at SAS (Cary, N.C.)

Analytical fraud detection solutions help reduce false positives. With fewer false positives, legitimate customers are less impacted by the nuisance of an unnecessary investigation, resulting in reduced claim cycle times and improved customer satisfaction. In commercial lines, an effective claims anti-fraud program can protect insureds from exposure and premium hikes due to bogus claims.

ABOUT THE AUTHOR
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek ...