Claims Litigation Management Technology Strategies

Boston, MA, USA December 29, 2003

In response to the focus on expenses, an increasing number of property/casualty carriers will look to tools that help them manage claims litigation costs.

The U.S. property and casualty industry spends over US$20 billion annually on defense and cost containment, and a significant portion of that expense is billed to the carriers by external law firms. New tools are emerging to help carriers better manage these costs.

"It has taken time for even basic litigation management tools like electronic invoicing to catch on,"

says senior analyst Craig Weber, author of Celent's latest report, . "But in the current environment, the opportunity to generate expense savings is too compelling to ignore."

Weber notes that only 12 to 15 percent of the top 50 U.S. carriers have claims litigation management systems, which suggests that this will be an area of significant growth over the next 12 to 24 months.

"The good news is that most solutions are offered under an application service provider model, with excellent out-of-the-box functionality," Weber adds. "So carriers can implement them quickly, with minimal internal IT investment, and start generating savings in six months or less."

The report summarizes key functions of claims litigation management systems and identifies prominent vendors. It also outlines the savings potential for various functions (summarized in Table 1) and offers carriers suggestions on how to maximize the value of their programs.

A is available online.

Savings Potential by Area
Functional Area	Description	Typical Savings	Effort to Capture
Invoice Processing
	Reduce manual invoice processing (receipt, data entry, internal handling, adjustment and rejection)	40-50% of handling cost (e.g., clerical staff). Driver is automation and time saved per invoice reviewed.	Low
Implement rule-based review of submitted invoices.	2-5% of total invoiced initially, 8-10% after tuning of rules. Driver is consistent use of rules across high volume of invoices.
Matter Management
	Generate and distribute electronic reports for firms and carrier to monitor performance	Primarily service improvement. While there may be significant direct savings, they are hard to quantify.
Provide collaborative, shared workspace for case documents, notes, schedules, etc.	Depends on carrier and firms	Medium
Business Analytics
		Determine which firms are most effective at handling and resolving various types of cases.	High
Optimize payouts by analyzing data to create best-practice litigation strategies.
Source: Celent analysis

of Celent Communications' Property/Casualty Insurance research service can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.