How to speed up insurance claims processing while reducing cost
For insurance companies, one of the biggest costs is their claims team, and one of the biggest challenges is processing high volumes of claims in a time-efficient manner following disasters such as floods and bushfires, or other surge events. Partnering with an insurance claims outsourcing company can help solve for both pain points, reducing cost thanks to labour arbitrage and/or automation, enabling more people to be hired to process claims faster.
Claims processing services
Many tasks involved in the claims process do not involve customer interaction, and are rules-based, making them strong candidates for outsourcing and automation.
Insurance claims outsourcing companies can provide the same gamut of services as an in-house claims team, including:
- Checking policyholder eligibility and supporting documentation
- Scanning and digitising documents
- Data entry
- Interviewing witnesses
- Communicating with claimants and third parties
- Resolving disputes
- Identifying legal implications
- Negotiating settlements
- Assessing and adjudicating claims
- Tracking payments to claimants and third party providers
- Analysing potential cases of fraud
- Following up claimants with customer satisfaction surveys.
Benefits of claims outsourcing
Many claims management outsourcing companies offer the option of offshore services as this delivers significant cost savings for clients. In developing countries, such as the Philippines, Fiji and India, claims analyst wages are less than half the salaries in Australia and New Zealand. High-end resources such as doctors, nurses are psychologists may also be involved in the claims process, and this talent can also be cost-effectively sourced offshore.
Examples of companies in the ANZ region leveraging offshore BPO partnerships include IAG, Marsh and Tower Insurance.
Ramp up rapidly
One of the differences between insurance companies’ inhouse claims divisions and insurance claims outsourcing companies is that the latter typically has a more elastic workforce. Surge events, like devastating floods, stretch insurance companies to the limit. Outsourced claims management provides rapid ramp-up capability, enabling competent and timely claims management for vulnerable customers at their time of need.
Access advanced technology
Outsourcing companies are increasingly adding value to their historically people-centric services by offering clients a suite of automation, AI and analytics solutions, to enhance the efficiency and quality of the claims process. Reporting platforms also provide clients with full transparency into claims progress.
AI and automation can speed up claims processing times and reduce human error, while analytics can spot trends, anomalies and provide real-time feedback accelerating data-led decision-making by management. Large and specialist outsourcing companies now embed these tools in their offerings and insurance clients reap the benefits.
Increase customer retention
Insurance companies that have a poor track record in approving claims, and approving them in a timely manner, are outed on social media and ratings sites – and unsurprisingly there is a correlation with poor customer acquisition and retention. That’s because for the customer, claims are the moment of truth where the customer decides whether they have made a good decision or not in choosing a particular insurer. Claims outsourcing specialists can help insurers maintain an excellent reputation for claims processing, which enhances customer loyalty (often measured through Net Promoter Score) and the bottom line.
Cost of claims outsourcing
Insurance claims outsourcing companies most often charge per hour, or month (in the thousands of dollars), for every dedicated FTE – or they may charge per claim processed. Set-up or implementation fees typically apply.
Where the insurer asks the BPO to develop bespoke claims bots or AI solutions, pricing is more varied, and hasn’t settled in terms of a standard approach in market.
Different types of insurance claims
Types of insurance vary from commercial/business (eg. marine, cyber, indemnity and liability, worker’s compensation) to personal, such as health insurance, life insurance, home and contents, pet, motor vehicle and income protection insurance, to name a few. Each insurance type requires some specialised claims training, and some claims processing outsourcers will have specific experience in different insurance types. Even if you can’t find an outsource partner with experience in your exact line of insurance claims processing, it’s worth noting that most of the principles and best practices of claims processing in other insurance types are transferrable. Further, you can request that the team leader or manager roles responsible for your account are filled where possible with specialised, experienced resources who may have worked for one of your competitors.
War, cybercrime, natural disasters and health crises are a bubbling cocktail for the insurance sector. Claims is the engine room of insurers, and claims management outsourcing companies are helping insurers maintain cost while ensuring processing capacity in an increasingly volatile environment.
Last reviewed for accuracy: January 9, 2024