The flaccid market of the last twelve years seems to be on its way out. Whether we're seeing a new, hard market or a "correcting market" (whatever that is) remains to be seen. Premiums are up. Commissions are up. Some markets are becoming scarce. Though agents and carriers are generally pleased with the change, some risk managers are scrambling. They finally have something to do. They need to make their companies more claims-attractive to mitigate premium increases or to find alternative coverage.
But how do risk managers improve their claims picture? If they've delegated claims tracking to their carrier, it may not be easy to gather the detail they need to go shopping. And without an adequate claims system, they may find it difficult to properly manage incentive-driven loss reduction efforts. What if their agent could help?
On another front, agents are struggling to provide more value to their commercial lines customers (something that can differentiate them from the agency down the block) and discourage existing customers from seeking greener pastures. One strategy some agencies use is to provide their customers with online insurance-related administrative systems. Some agencies offer Internet-hosted benefits administration software. Others provide online certificate services. Lumtron (www.lumtron.com) offers another alternative, Claims Master, a claims management solution. Each is a type of out-facing service.
Claims Master
Claims Master has been in use for three years and in production the last 18 months. It's a brand new system, but is descended from a DOS-based claims management system put to sleep in the mid 90s.
Claims Master fils is a hosted Internet-based application, but not browser-based. How is that? Hosted applications today typically take one of two forms. Older, client/server apps are put online via Citrix (or some variant) with the application running on the server, but the user screen image is duplicated on a PC in the agency. The Windows application doesn't even know it's running on the Internet. The application screens look the same as they would were it running locally in the agency, except perhaps framed by a browser window.
A second strategy, and one that will become increasingly common, is to write the application as a native Internet (HTML) application (rather than Windows), so that it makes use of the capabilities of browsers, HTML, and user Internet expectations. Until recently, with the advent of Microsoft's .NET strategy and development tools, it was difficult and expensive to create browser-based, HTML-display applications that had the richness and usability of Windows applications, but the administrative simplicity of hosted applications.
So Lumtron pursued a third alternative - a hosted application that presents itself on the local PC not via Citrix or HTML in a browser, but in a very thin (fly-weight) client program. The application has the look of a Windows app, but almost all of it is running on the host. Since the local program is so small, its deployment and maintenance can be managed from the server in either a push or pull mode (the server can push a new version out or the user can pull a new version).
For hosting purists (or in the light of .NET), even a small Windows-based client may be suspect because it does mean coping with the Windows' registry and other arcana that can make life difficult for users and a nightmare for support staffs. But it works for Lumtron.
Strategies
Lumtron markets Claims Master to agents, brokers, TPAs, and risk managers. Risk managers use it to manage their claims environment. TPAs use Claims Master as a carrier would. Agents and brokers use Claims Master as part of a claims management offering to key commercial lines customers.
Lumtron makes Claims Master available in two ways. The agency can purchase a license and then pay support and maintenance fees. Or, the agency installs the software on its computers. Lumtron, identifying itself as a solutions provider, not just software vendor, helps with the installation and with deployment out to remote sites.
Claims Master uses Microsoft's SQL Server database product, so agencies installing Claims Master must also purchase SQL Server licenses. For setup and early use environments, Lumtron can make Claims Master available to run on a free, limited-use version of SQL Server.
But some customers don't want to install the software, manage the hardware, or worry about 24x7 uptime for remote users. In those situations, Lumtron will act as an ASP for the agency and rent the application and Lumtron's technical infrastructure.
Some agents that buy/rent Claims Master charge their customers in turn. Others provide the service for free, as a disincentive to leaving the agency value sphere. The agency makes the call. Claims Master license and hosting fees are related, in part, to the number of concurrent users and remote sites.
The product
Lumtron describes Claims Master as a claim monitoring and reporting system. Secure, remote access through the Internet allows entry from geographically remote sites. The software supports all ACORD loss notices (property, liability, auto, worker's comp, and state-specific first notice of injury). Claim status checking provides access to payments, reserves, subrogation, and litigation information.
The software supports elaborate corporate/entity hierarchical structures, allowing claims entry to occur from and be tracked to even small departments within a large organization. Because the data can be subdivided on entry into whatever corporate categories are desired, reporting can also occur at general to very detailed levels. An online OSHA log reporting function is included. A comprehensive, flexible reporting system makes analysis (and then response) as well as forecasting possible.
Motivations
Why would a risk manager want to use Claims Master? If a risk manager now depends on carrier claims runs, but is covered by several different carriers, it might be difficult to get a comprehensive picture of the whole organization or even a piece of it without resorting to consolidating spreadsheets and other time-consuming and clumsy work-arounds. Carrier data collection and reporting structures might not meet the needs of the risk manager. For instance, a risk manager might want to promote an incentive-driven claim reduction program that has a fine-grained focus to mid and low level managers. It's likely a carrier system just won't be able to report at that (or any other arbitrary) level of detail.
Claims Master can impose a sensible and productive workflow onto the claims reporting process. For instance, when a worker's comp claim is entered (somewhere in an organization), it can be automatically routed to HR for the addition of wage/salary information and then on to the agent, who can complete and edit the claim before it flows on to the carrier. In the meantime, the risk manager is automatically notified via e-mail and can access the claim information and take whatever remedial steps suggest themselves.
Agents can do themselves some good by sponsoring or providing the Claims Master service into some of their key accounts. Because claims entry is done self-service, the agency reduces some of its clerical workload. On the other hand, to make the reporting/analysis useful, the agency must keep reserve, payment, and other status changes up to date by doing entry from carrier information sources.
Background
Dan DeSerto, founded Lumtron in 1984 and has a long agency and technology background. Today, Lumtron has three areas of focus: 1) Claims Master, 2) imaging solutions, and 3) network design and installation.
Claims Master is a reasonably mature product, having been in use for a year and a half, with one agency with a 32,000-claim database. Agents who are looking for a competitive edge with some of their key customers could profit from Claims Master, making it available to their customers, who can then do a better job reporting and analyzing claims.
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