P&C Claims Automation Solution

A Competitive Advantage

Paragon Solutions, Inc.

Mike Cloutier Vice President Insurance Markets
ACORD Conference May 15-17, 2012

Copyright 2012 EMC Corporation. All rights reserved.

THE COST OF CLAIMS PAYMENTS AND EXPENSES IS THE SINGLE, LARGEST SPEND FOR P&C INSURERS, ACCOUNTING FOR 75%-85% OF TOTAL ADMINISTRATIVE COST

Copyright 2012 EMC Corporation. All rights reserved.

Top Claims Investment Drivers

Copyright 2012 EMC Corporation. All rights reserved.

Challenges in Claims Processing

Costs
An A.T. Kearney study found that the costs associated with reviewing and settling claims typically account for up to 65 percent of an insurers revenue. Claim handling costs are high because of process inefficiencies (including manual steps and re-keying) paper use, headcount for expense for all claim parties and litigation expenses

Quality
Many insurers have not re-engineered their claims processes; resulting in continued process gaps, slow processes and poor customer service quality

Customer Satisfaction
The insurance industry continues to score poorly in customer satisfaction surveys. In a recent survey of companies conducted by Business Week, only two insurance companies were included in the top 25 companies identified as The Customer Service Elite by the publication. [1]

Timing
Studies have also shown that customers who receive prompt claims settlements are more likely to renew with their existing carriers. [2]
[1] Jena McGregor with Frederick F. Jesperson, Megan Tucker and Dean Foust, Customer Service Champs, Business Week, 5 March 2007 [2] The American Customer Satisfaction Index, Scores by Industry: Property & Casualty Insurance, 2006

Copyright 2012 EMC Corporation. All rights reserved.

Business Challenges: Claims Common Pain Points & Impacts

Common pain points across claims are costing insurance carriers
Third Party Providers

1
Claims Management Process
Initiate Claim Determin2 Investe igation Coverage

4 Other Departments

Financial Management

1. When dealing with 3rd parties Inability to measure performance or value Difficulty in selecting and implementing partnerships 2. When managing liability Failure to apply consistent processes to detect fraud and subrogation opportunities Sub-optimal claim handling procedures drive inconsistencies 3. When processing claims Inefficient staffing, processes and organization structure Wasted effort and time in claim handling Poor customer service permeates process 4. When dealing with other departments Competing incentives from department to department Poor integration between claims, underwriting, sales and agency 5. When managing financials Errors with bills and payments Unenforced policy limits & deductibles

Industry Impact
Consistent industry claims leakage of 8-12% of net premiums written Limited visibility into trends as well as issues with the accuracy of information contributes to chronic industry reserve deficiencies Loss Adjustment Expense (LAE) inefficiencies are rationalized as required for severity containment *Source: CSFB P&C Primer, Feb 2006; Claims Magazine 20070

Copyright 2012 EMC Corporation. All rights reserved.

Critical Success Factors in Claims

FNOL
Coverage Triage & Determination Assignment Investigation

Physical Damage Repair

Medical Management

Litigation Claim Management Evaluation

Claim Resolution

Recovery

Improve Customer Satisfaction (higher retention) Superior customer Experience

Customer driven state of mind Customer access (ex. website) Claim communication and facilitation Quick claims process cycle time

Loss Adjustment Expenses

Reduce Operational Expenses

Focus on increased throughput and reduced overhead Performance based on claims throughput productivity Reduce specialization to balance loads

Reduce loss costs Loss

Indemnity payments Eliminate fraud Reduce claim leakage

Copyright 2012 EMC Corporation. All rights reserved.

Speed to Value: Case-Based Solutions

Case-based Solution Examples
New Account Opening
Customer Care

Contracts Management

Human Resources

Accounts Payable

Claims Management

Process & Rich Model-driven Role-based Reference SingleConfigurable platform to rapidlyConfigurable build case-based applications Content Integration Dashboards Configuration User Interface Applications Unification Capabilities Applications

Best Practices

Solutions up to 50% faster, substantially lower cost Case Management Configuration vs. coding less resources, complexity & risk Monitoring & Reporting Compliance Greater application agility , lower TCO Intelligent Capture Customer Communications Business Process Management Collaboration

Content Management & Repository Services Documentum

Copyright 2012 EMC Corporation. All rights reserved.

Digital Claims Processing Customer Example

Background
Insurance subsidiary of large US financial institution Large writer of property and casualty insurance for business, home, and auto 2,800 employees in offices across 32 states 1,100 employees working from home offices

The Challenge
Reduce time, effort, and costs associated with documenting claims
18 to 30 days from notification of a loss until claim data completely entered into the system

Claims management system data types included:

35mm and digital photos, voice depositions, video, claim forms, police reports, official statements, etc.

Minimize impact on staff, retain data long-term, immediate data recovery

Copyright 2012 EMC Corporation. All rights reserved.

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Digital Claims Processing: An Example

The Results
With this solution, digital images are sent via the Internet to headquarters, loaded into the EMC Documentum repository (running with an EMC Centera content addressed storage system), and then automatically linked to the virtual claim fileall within 15 minutes $2.5 million annual savings Reduced claims processing costs by $250,000 in postal fees alone for the documentation after a recent disaster Speeded workflow and provided better access to information

Copyright 2012 EMC Corporation. All rights reserved.

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Paragon Solutions Profile

Paragon is an enterprise information management solutions company that helps firms leverage information assets to achieve better business results.
Market domain expertise focusing on client solutions Solution competencies addressing process optimization, information management and information integration.
Corporate Facts

Advisory consulting and systems integration teams delivering business value. Industry-aligned accelerator assets providing rapid time-to-value and lower total cost of ownership. A proven delivery track record delivering high value and return on investment.

National Coverage Global Clients NJ Headquarters Dual-shore Development CAGR 20+% Privately owned, 30-year history

Copyright 2012 EMC Corporation. All rights reserved.

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Contact Paragon for More Information

Joe Pennino, Solutions Sales Director
phone: 516.610.7024; jpennino@consultparagon.com

Michael Cloutier, VP Insurance Solutions

phone: 908.783.1903; mcloutier@consultparagon.com

Copyright 2012 EMC Corporation. All rights reserved.

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 Copyright 2012 EMC Corporation. All rights reserved.

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