IASA 86TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW

Supporting Cultural Change Through Technology

Session Number 273

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.

Case Study #1 – Knightbrook Insurance Group

• 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

• 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

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

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

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

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

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

IASA 86TH ANNUAL EDUCATIONAL CONFERENCE & BUSINESS SHOW

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.