Fantastic claims – Bain & Company Report

Article Synopsis :

75% of all premium flows through the claims function of the typical insurer.  Percentage point improvements in claims processing efficiency therefore flow largely to the bottom line.  But claims are also a moment of truth between carrier and policyholder, and an efficient claims process that alienates customers also damages reputation and brand, and long-term top-line revenue.

An accounting line-item for insurers; the emotional moment of truth for policyholders 

The report “Fantastic claims” by Bain and Company’s Steven Kauderer and Rebecca Tadikonda, highlights the crucial role of claims handling in relationship building and the delivery of high-quality experience to P&C insurance customers.  Market leaders in claims efficiency and customer experience, the report asserts, concentrate their transformational efforts in four areas:

• Earning customers’ loyalty
• Upgrading to smarter digital technologies
• Tuning the adjustment process for efficiency and accuracy of payouts
• Selectively using specialists

Segmentation is key.  With smarter segmentation some carriers find it increasingly attractive to outsource the majority of ‘simple’ claims, while keeping more complex and large-loss claims in-house. Per the report, outsourcing offers several benefits such as:

• Access to global talent, combined with cost savings through labour arbitrage
• Higher productivity by leveraging best-in-class practices and large-scale IT investments
• Flexibility through variable-cost models
• A better experience for commercial customers through more tailored updates, reporting and handling. Third-party administrators tend to have more flexible systems than insurer’s own core systems

Specialization is also key. Specialist expertise, whether in-house or external (contractor), proves valuable in three areas: litigation management, fraud detection and medical management.

For legacy carriers, the bulge of aging claims employees nearing retirement means valuable knowledge will be walking out the door. Capturing and codifying their experience so that junior adjusters can learn more quickly contributes substantially to successful claims management in the future.

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