A CAPACITY PLANNING-MODEL FOR THE CLAIMS HANDLING PROCESS

This paper develops a model of the claims handling process (CHP), one of the most essential and basic functions of an insurance company. The proposed CHP model captures the relationship between the capacity of the claims handling system, given by the number of claims representatives handling the claims, and the operating characteristics, such as the closing rate of claims and the level of pending claims of the system. As a tool that allows analysis and prediction of the operating characteristics, the CHP model is useful for both capacity planning and operational control of the claims handling process. After introducing a simplified fixed-input model, the paper develops a more general, variable-input CHP model. The solution procedure and the use of the CHP model are then illustrated through a numerical example.