Percepta offers a set of core warranty support solutions, developed in partnership with our clients and designed to streamline claims processing, enhance dealer and customer satisfaction and reduce overall warranty spend. We recognize the current challenges within the warranty arena by analyzing our clients’ existing processes, spending, diagnostics and claims handling and offer bespoke solutions to enhance the efficiency of their core warranty business. Our experience with automotive Clients has spanned over ten years.
Our warranty support solutions are split into three key service groups, any combination of which can be implemented as part of a solution for our prospective business partners.
These include Warranty Process Improvement Controls, designed to target warranty spend, reduce cost and improve the quality of diagnostics, published repair instructions and the implementation of front and back-end warranty controls. We utilize Warranty Quarterbacks (QBs) and a team of specialists in warranty control, targeted claims authoring, and warranty system control to do this effectively.
Our Warranty Support Functions ensure the quality of manual and automated processes such as claims assessing, system controls and dealer facing communications are of a consistently high standard to maintain the client’s business objectives. These include specialists in quality checking and analytics, administration, and communication.
Lastly, our Claims Assessment Specialists deliver fair and consistent claims adjudication in line with dealer-facing published repair and claiming practices while managing client spend reduction objectives.
Managing a Warranty Center of Excellence for a Volume Automotive Brand
In 2005, Percepta began working with a large volume automotive brand to enhance their warranty claims control process and reduce spending.
Our Client’s Challenge
Our client managed its claims processing in the same way for several years, focusing primarily on throughput. Over time, we had not seen any major cost avoidance from its annual warranty budget. They needed a new approach and gave Percepta the contract to develop a more efficient claims process, reduce spending and add value to the customer and dealer experience.
We pride ourselves on our people and utilize staff with many years of warranty experience within the OEM and the dealer network. In addition, our insourcing approach, located on our client’s premises, allows us to interact seamlessly with the OEM and external business partners. Our approach was to change the mindset within the existing warranty team and the dealer network, combined with a total revamp of the claims handling process.
Changing the Mindset of the Team
A study of our client’s current processes highlighted that 80-85% of claims were paid through an automated system, with the remaining 15-20% being audited by an assessing center. Therefore, it was crucial to the success of this assessing center to change the team’s mindset to that of quality rather than focus on the volume of claims processed.
New key performance indicators were negotiated with the client to kick start this process. This would allow for a thorough analysis of the manually adjudicated claims and the eradication of systemic inaccuracies. We instigated various coaching and motivational training techniques to assist the team in understanding and performing to their new objectives, including sharing their positive impact on the overall cost avoidance opportunities.
Making this change was critical for Percepta to deliver a return on investment for our client.
For the remaining 80-85% of claims still processed automatically through the warranty payment system, the natural next step was to conduct a ‘deep dive’ analysis to identify if these would benefit from manually adjudicated to allow further cost savings.
The insight gathered during this process allowed us to identify key opportunities to improve the service being provided. Without losing sight of the quality of service, the team expanded and set about taking a consultative approach to certain claim types based on reported submissions; this, in turn, created a more structured approach and improved ROI.
Development of Targeted Claims Authoring (TCA)
Through our analysis of paid claims, it became evident that there was a requirement for some of the existing system paid claims to be selected for manual review to maximize the saving potential.
This led to the development of the Targeted Claims Authoring (TCA) team, which, in addition to analyzing paid dealer claims, would also develop more detailed work instructions on certain claim types in order to avoid inconsistencies in adjudication. As a result, the assessing center could recruit less technically minded people due to the available work instructions, reducing resourcing costs.
System processed claims identified by the TCA specialists as having a safe opportunity were also subjected to the TCA process, and detailed assessing work instructions were developed for easier manual adjudication. System changes were made to select only those claims adding value. In some cases, these changes resulted in claims being returned for dealer correction along with useful advice on how to avoid error replication. This resulted in a reduction in future manual claims selection.
At the height of the success of these new approaches, we realized annualized savings of circa $30 million.
Warranty System Controls – Introduction of Subject Matter Experts
As we started to make recommendations to change the client’s system parameters, we realized a need to develop a team of Subject Matter Experts (SMEs) to review and perform the recommended changes within the client’s systems.
Some of our more experienced team members were drafted in to assist the existing client incumbent in adopting the new process and maintaining the existing functionality.
Over time, this warranty system controls team became the ‘go-to’ team regarding understanding the limits of the proprietary systems and working out ways to implement controls within these constraints. Our clients consider this team to be pivotal to their business.
Ensuring Long Term Success
To ensure these changes continued to impact the business, we introduced a quality check process to audit the output from the TCA team, a percentage of manually processed claims, and claims paid automatically by the system.
Quality checkers worked closely with the TCA team; quality checkers passed recommendations of specific repair or claim types that required clear work instructions for the claim assessors to maximize cost savings. This ensured a level of consistency across claims assessing and allowed the performance of the assessors to be easily monitored and benchmarked.
Today, a by-product of the quality checking process is that we are able to assist our clients in achieving their internal financial audit requirements.
Bring in the Quarterbacks
As we continued to enhance efficiency with claims processing, it became clear that developing a closer working relationship with our client’s engineering departments would be vital in achieving the project’s overall aim. QBs would play this role, liaising with engineering teams across Europe and deploying cost control solutions to reduce spending further and increase ‘right first-time’ repairs and customer satisfaction.
The positive impact of QBs could be seen across the business, and to ensure their success continued, we created a team of warranty control specialists who would work within a specific engineering functional group. A product concern has been identified. They created the most efficient warranty control or adapted existing controls to address the issue.
In addition, the specialists also implemented changes to improve alternative repair rates, prior approval, targeted claims authoring, and assist diagnostic authors in improving fault mapping resulting in a higher percentage of indictable components and the development of pre-defined repairs (menu pricing).
Supporting the Team
To ensure the continued success of these warranty solutions, we developed a team to deliver support across the business.
An analytics team developed dashboards and standardized reports on the performance of the changes we had implemented, which would allow the client to track the impact we had on warranty spending. To add further value, the analysts also measured dealer performance against various criteria set out in dealer contracts, such as cost per repair and specific dealer repair costs spikes.
An administration team was also on hand to provide support for SharePoint sites, archiving existing content and ensuring compliance with existing and newly developed controls.
Finally, we assumed responsibility for all warranty publications to ensure swift and accurate communications across Europe. Our communications specialist is responsible for authoring warranty documentation and ensuring it is translated into all relevant languages and communicated to all dealers. This included the warranty manual, warranty claims coding manual, warranty news and warranty bulletins, etc.
The Warranty Assessment Centre has saved our client over $230m
We are now considered an intrinsic part of our client’s business and have moved from a directed service provider to a consultative decision-maker and trusted advisor.