CLAIMS HANDLING: FINDING THE EQUILIBRIUM BETWEEN CUSTOMER EXPECTATIONS AND INDEMNITY LEAKAGE

By Simon Penny, Head of Insurance, Business Process Solutions, DST

Effective claims handling is undeniably important to the success of insurers for two reasons. On the customer side, almost nothing is more important than the expedient execution of a claim during what is usually a stressful and emotional time, whilst for insurers, claims are their most significant expense.

Problems in this area are often caused by systems that inhibit, rather than facilitate, efficient claims handling. These inefficiencies can stem from a wide range of sources, most notably the people, processes and customer service.

Simon Penny
Simon Penny

The first stumbling block in the claims handling process is at the initial point of contact when rigid, manual processes can prevent efficient and timely responses to both claims and settlement. From the notification of loss to the settlement, efficient systems must automate tasks, prioritise responses and capture all actions, including those of outside parties, such as lawyers or repair workers, to resolve claims quickly and fairly.

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Another challenge is flexibility; allowing business stake holders to alter processes as necessary to maintain efficiency, without having to wait for help from the IT department. Such a flexible system also requires careful consideration of one other factor that is often overlooked: people. Without sufficient – and regular – training, even the best systems can be poorly operated, harming efficiency.

There is credible evidence that the claims management process across the full spectrum, from customer service to data and technology is in need of some improvement. The Financial Conduct Authority’s (FCA’s) recent thematic review of claims management, published in May this year, identified a significant number of claims where settlement took longer and was more costly than necessary due to poor overall claims management.

Whilst the problem is clear, the solution is multifaceted. Firms will need to devote time and energy totheir processes, systems, people, data and strategies in order to tighten the net. Those which do so can expect to see a significant uptick in their net promoter scores whilst indemnity leakage shrinks to a minimum. Those which don’t give claims management the attention it deserves soon, can expect the issue to be compounded by legacy systems.

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