Supporting Cultural Change Through Technology

2. Supporting Cultural Change Through Technology Session Number 273

3. Case Study #1 – Knightbrook Insurance Group • Assumptions: • Claims Performance is a Core Function of an Insurance Company; • Effective Claims Service Enhances Retention; • Poor Claims Service increases Regulatory and Business Risk. • Initiative: • Provide a Premier Level of Claims Customer Service, without sacrificing Effective Loss Controls.

4. Case Study #1 – Knightbrook Insurance Group • New Leadership • National Search for VP Claims for Knight Insurance Group • Hired Mr. Gordon Pennington, recently of Farmers • New System • Extensive investigation of Claims Systems which would meet our goals • New Values • Customer Service Values • New Processes • Increase effectiveness and efficiency of claims process • New Controls • Regulatory and service oriented metrics to communicate stretches and goals to management and staff

5. Case Study #1 – Knightbrook Insurance Group • Software company diligence; what we looked for: • Platform; modern, web-based • Project Expertise/experience • Someone we trusted and could become part of the “change-team” • A Company that listened • A Partner for the long-term • Selected B2-USA’s EZ*Insure Claims System

6. Case Study #1 – Knightbrook Insurance Group • Issue identified in 4th quarter of 2011 • Increased complaint activity • Claims data provided only at high level • On site audit conducted January 2012 • Audit findings included: • Reserve inadequacy • Regulatory compliance issues • Lack of proactive claim handling resulting in low closure ratio and high severity

7. Case Study #1 – Knightbrook Insurance Group • Audit findings (cont.) included: • Inadequate staffing resulting in high case loads with little to no activity • Inappropriate coverage determination and application • Corrective Action • Complete review of all open pending resulting in a estimated reserve inadequacy of $6 million • On Site presence from 4/2012 to 6/2012 to assist CMR with establishing proper claim handling protocols • Provided best practices and protocols to be established

8. Case Study #1 – Knightbrook Insurance Group • June 2012 Knight assumed handling of all claims • Inventory and overnight shipment of 3400 files • Created a duplicate claims operation (office space, systems, hardware) • Staffed with 25 new employees

9. Case Study #1 – Knightbrook Insurance Group • Impact during 2012 • Severity decreased by $3672 per claim • Average earned premium vs. average total incurred increased by $2100 per policy • Ability to establish stronger underwriting controls and take appropriate rate increase based upon accurate claims data • Pending Reduction • CMR had a 6% closure ratio on loss year 2011 claims • Knight closed 74% of all loss year 2011 pending in 6 months (1300 claims) • Subrogation • Increased from $106,600 collected in three years, to $498,000 collected in one year

10. Please Complete the Session Evaluation Form on the Conference App and Include Your Conference Registration ID# to be  Included in a Drawing for a Free Conference Registration for the 2014 Annual Conference!  NOTE: Your Conference Registration ID# is Located at the Bottom Left Hand Corner of Your Badge.