Work From Home and Meaningful Connections

April 21, 2021 – Michael Marsh

Article after article indicate that the insurance industry and Third Party Administrator ("TPA") spaces are increasingly moving to the adjuster work from home model. Management is considering a number of financial, employee comfort and employee retention issues. The question that is not being asked, however, is "What is happening to the development of meaningful connections with those making claims?"

Why even ask this question? I for one believe that the human element is of paramount importance in the handling of workers' compensation claims. I've written and given presentations over the past two decades showing documentation that increased, face-to-face interaction levels between injured workers and those adjusters / examiners charged with the administration of their claims leads to significantly lower overall program costs.

The 2020 pandemic caused an emergency need to separate claims professionals from their offices and cubicles. In the name of health and containing the rapidly spreading, dangerous virus, nearly every company with a claims section sent their people home. Those that had existing programs for some claims professionals to work from home ramped up those efforts.  

The impact upon the claims industry from an internal financial standpoint has become readily apparent.  Benefits to the claims organizations appear to be many. These include lower costs for rent, company cars and employment related costs of recruiting new adjusters / examiners. Many have indicated that on a personal level many of these claims professionals, particularly those living in more populated metropolitan areas, are considerably less stressed by removing the commute from home to work and back five days per week. In today's claims world, keeping existing talent is far less expensive than recruiting for new / replacement adjusters / examiners. Happy claims people stay longer and are more productive, right?

A March 9, 2021 article in Digital Insurance (read here) indicates that "Within just a few short weeks in early 2020, many of the country’s insurance companies had sent employees home to work, either 100% virtually or some hybrid of in-house and remote work. Nationwide sent 98% of its employees (28,000 employees) home and accelerated their plans to adopt a hybrid work model. It’s a move that many organizations are saying could become permanent. As the savings and flexibility of moving to remote business models are revealed, companies are looking at establishing digital workspaces for each employee."

Referred to as the "digital shift", many predict that this change in claims departments across the country may be long term. The internal cost savings appear to be valid initially. However, I don't think that is the entire story.

While there are undeniable internal benefits to the claims payer organizations for putting their folks at home, where is the data to show that claims results, actual losses paid, litigation rates and results, and employer / injured worker satisfaction levels will remain the same? Despite some in the industry and a few commentators espousing a "patient/recovering worker advocacy" model of claims handling, it appears to me that the industry is moving further away from actual adjuster to recovering worker engagement. The adjuster / examiner is placed at home with a slick laptop, a camera for a gazillion zoom sessions, hundreds of action plan buttons to push, keyboard recording and in some cases dozens of "client handling instruction manuals" that must be referred to.

You know, each customer has different requirements. Miss on those requirements, the claims professional is judged negatively. Even with a reasonable lost time open claim case load of 100 claims, even the most effective adjuster / examiner can struggle to meet all of the requirements when they are handling multiple employer, group and captive accounts within one pending group of claims. As expected, most claims professionals spend most of their day completing tasks that will make them look better in their supervisor's eyes. One examiner for a large national TPA told me recently that at least 90% of their time was spent handling the mail and the diary. The few minutes left per week were devoted to action planning, reserve evaluations, reports to excess and reinsurance organizations. This person confirmed that it was rare that they answered the telephone, it "is just too much of a distraction" from getting the measured work completed.

Phone calls all to voice mail. What are the industry statistics on the ratio of live answered incoming to those that go to voice mail? Do we have statistics on how many of those messages are calls returned by the claims professional? And what are the analytics for the time between a voice mail is left and a return call is made by the claims person? Is there a single TPA claims handling agreement that reduces the amount paid to the TPA for services if the injured worker satisfaction falls below a certain point? Or if the number of returned calls is below a certain percentage? Or if it takes the professional an average of 7.5 days to return calls?

Can artificial intelligence ("AI") help? To a certain degree, there are some tools existing and being developed that assist the claims professional with critical issues, such as reserving where multiple co-morbid medical conditions exist or when the extent of the injuries / reserves indicate immediate excess or reinsurance reporting.

But can AI help make an worker who was injured on the job, now treating for a significant injury, who cannot ever get their claims adjuster / examiner on the phone to talk about their specific situation feel comfortable with the process? As I have written and spoken about before, maintaining and enhancing the connection between the adjuster / examiner and the recovering worker and their family is one of the primary keys to confident, predictable, non-litigated claims processing. The face to face connection, which we maintain in our office as much as practicable, leads to recovering workers who can face their recovery with confidence and accountability...and not get lost in the emotions of "I can't even talk to those people on the phone". Removing the personal, face to face connection is a step towards more expensive claims. This is exacerbated by moving adjusters / examiners to work exclusively at home, behind the fortress of a computer screen and telephonic voice mail.

The natural consequence of the situation as it is heading is higher ultimate claims costs. The industry might benefit by considering the total cost of the program and not creating an unquestioned silo for internal unallocated costs. There may come a point when insurance purchasing commercial organizations realize that the workers' compensation claims experience is more than simply the premium charge. Some in the self-insured space are already asking those questions. Questions like "how are my employees treated?", "why did so many injured workers go to attorneys for assistance?", and "how often does the adjuster / examiner talk to my employee when he or she is off work recovering from an injury?". At some point, the answers to these questions may determine how much is paid for services provided by the claims organization. As we see recently, the claims industry is motivated by financials...reduced costs with folks working at home. Taking that concept out of the shadows of the unallocated loss cost silo, and including the entire claims cost (including future reserves and IBNR calculations), and exposing it to the daylight of measuring the full cost of a program will provide the needed financial incentive for claims organizations to do better. Better for the recovering workers. Which ultimately is better in many ways for the employers...who are funding this entire industry.

In the April 2021 issue of CLM Magazine, CEO Anne Blume leads with an editorial about "Staying Connected".  She says "Losing the ability to fully engage with each other over the past year has been difficult. I look forward to the day when we can reconnect and enjoy the simple pleasure of a conversation and a smile in person." "As humans, we are wired for these meaningful connections." If the editor of a magazine feels this way, imagine for a moment how a worker who has sustained an injury at work, unable to work during a portion of the recovery and has a significantly reduced take home income must feel when their adjuster won't even take their call or call them back. The industry can do better, and owes it to the workers and employers to do better.

Takeaway: Economics of course drive the insurance and self-insured claims industries. We are in the business of managing costs. However, by managing costs to the exclusion of those that depend upon the workers' compensation system to receive medical care and return to their jobs AND who hire workers and need them to come back to their jobs places the claims industry outside of the grand bargain that was envisioned more than 100 years ago. Exclusive work from home programs, to the exclusion of meaningful connections, is moving the industry in the wrong direction.

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