Claim Notes: Friend or Foe?

The rampant misuse of claim notes across the industry has me concerned.  I wonder whether claims are getting resolved properly. Surely, I have some support among my industry friends, right?

My concern stems from a career-long battle reading so many claim notes and coming away confused and frustrated.  I am not sure where the concept of a claim “note” originated but it seems that adjusters have been abusing the claim note function since the start of electronic claim files.  And why not?  The claim note section is a great place to hide.  When you are working on a claim, you probably need a place to escape….from your manager, from the agent, from the insured, from underwriting, etc.  Just type something in the notes about what you did and what you are going to do next.  Don’t actually make a decision that can be second-guessed.  Recommendations require reasoning which would make you a target.  Reasoning communicates values and priorities that may reveal a defect.  Let’s just keep spending time and energy on open-ended claim notes.

Relevant?  Let the reader figure it out.

Logical?  Well, I’ll makes sense of it all later when I have a free hour and a 32 ounce Big Gulp by my side.

Demonstrates solid file handling? It’s a note, it’s not my recommendation.

Focused on moving the file toward resolution?  Of course, every note has value.

So that we are all on the same page, I am referring to the electronically entered and chronologically time-stamped list of notations and comments regarding various issues and factors involved in handling a property, casualty or work comp claim file.  These notes are typically a sentence or a paragraph authored by someone who is attempting to forward the progress of the handling of a claim file.  They can also be extremely wordy and massively wasteful as far as space and entry time.  Some claim professionals use the trick of “cut and paste” to slap gobs of words into these entries as if to better “document” the file.  Claim notes can be a savior.  When the right activity is properly documented and used to fend off a regulator or a mistaken customer claiming he was “never advised”, they are worth more than gold.  On the other hand, claim notes can be an achilles heel serving as a smoking gun for opposing counsel or a state regulator to use against the insurance company, or TPA adjuster.

In my experience, the industry drives people to use claim notes and document so much of their activity that the repetitive loop actually obstructs the very goals it tries to facilitate.  Excessive claim notes cost time to enter.   Confusing claim notes are simply wasteful not to mention dangerous.  Incomplete or non-substantive claim notes make for poor quality of file handling, slow the process and increase the cost of claim handling.  I would offer the claims staff some better ways to use the claim note tool.   Steer them back to the workflow and three essential areas for investigation and analysis…. Coverage, Liability and Damages.   If the note is pertaining to one of those topics, say so right up front.  Example:  Coverage – Agent called to advise that policy inception date was recorded in error on Dec Page.    The first words in a claim note should be written like a news article heading.  If the subject relates to customer service, compliance with regulations, or something not directly focused on the substantive essence of the claim, state the subject clearly right up front.   Example: Claim administration – File transfer – new adjuster assigned to this matter is John Smith from our bodily injury unit.

Proper use of claim notes have been the subject of dozens of industry presentations because of the double-edged nature of their role in the industry.  Some experts hold that poor claim note practice can be so costly as to wipe out the savings of automation.  Considering the disproportionate amount of energy spent with no “net productivity” gains, staff retraining in this area is critical.  The claim note black hole tends to ratchet up staff counts unnecessarily and can turn your claims department into a law firm as paralyzed files simply ripen into lawsuits.  What does your company do to improve the effectiveness of claim notes?

Whatever you think of claim notes generally and the ways that claims people use them, I hope to inspire readers to re-think their optimal use.

Darren Lossia specializes in claims, insurance coverage and risk management. He is a licensed attorney and claims professional specializing in bringing creative claims solutions to clients seeking efficiency improvements. Darren has a law degree from the University of Michigan, a Master’s degree in Management and a Bachelor’s degree in Economics.