The difference between risk management information systems (RMIS) and claims management systems seems to be a gray area for many people. So what is the difference and how do you determine which system is best suited to fulfill your organization’s needs, or if your organization would benefit from employing both?
The What and Why of RMIS
A simple explanation to define the complex functionality of a RMIS is to use the analogy of not seeing the forest for the trees. With a claims management system the capabilities are focused on providing detailed information on one particular claim, or tree in the forest. In contrast, a RMIS provides the capability to look at a claims operation, or the forest, and analyze its characteristics and patterns as a whole.
The primary function of a RMIS is to help risk managers with the necessary information to best manage a company’s risk. It consolidates data from multiple sources, including historical claims and policy and exposure information, and it compiles the information into one system where reports and queries can be run on all the data at once. The benefit is that it provides the ability to analyze data from a conglomeration of claims, like looking at a forest that is made up of an assortment of trees to determine how it is growing or changing. For the claims operation, the RMIS identifies historical data that can help in forecasting trends. Having access to such trend data enables a risk manager to exercise influence and take action to modify or capitalize on the trend.
The value comes primarily in the form of cost avoidance. If a trend is identified where costs are out of line with expectations, the organization can identify what needs to be done to bring costs back in line and/or improve expectations and avoid future claims costs.
A RMIS system empowers risk managers by putting the answers to complex questions at their fingertips. For example, let’s look at the RMIS of a fictional nationwide convenience store chain. In some states, like Florida, claims are handled by a third party administrator (TPA). In others, the carrier adjusts claims. In the remaining states an in-house adjuster handles claims management. Data from all sources (including the Florida TPA) is combined into a corporate RMIS system. The risk manager runs several standard reports in the system, and notices higher claims and costs in the company’s Florida stores when compared to other states over the last few months. Claims occurring in Florida over the last four months are then queried using onscreen tools for instantly available results.
It becomes immediately obvious on a bar graph-based report that the majority of the Florida claims are due to slip and falls. The risk manager then refines the query to filter only slip and falls, which are then displayed on a pie chart broken down by the day of the week. Remarkably, most of the incidents occurred on Tuesday. Further analysis reveals the time of most accidents to be early in the morning. Armed with this data the risk manager investigates further. A couple of phone calls to Florida locations uncover that delivery of refrigerated goods takes place late Monday night into early Tuesday morning. Condensation from the items drips onto the floors causing early bird customers to cross the drip path and slip. The risk manager corrects the problem by establishing proper procedures for employees to follow, e.g. post-delivery mopping. The framework of the RMIS query is saved and set to run automatically in the future.
