The insurance industry is rife with buzzwords – digital transformation, touchless claims, telematics, and artificial intelligence are enough to make you dizzy. Technology holds many promises to transform the insurance industry through streamlined processing and predictive modelling, but at times those solutions can feel distant and vague. Let’s focus on something you can tackle right now – claims leakage.
Claims leakage has many definitions, but the simplest one is money lost through claims management inefficiencies. These lost dollars are the result of failures in the claims management process that can be attributed to human or process issues. Process issues like improper or errant payments needlessly drive up the cost of a claim, while human issues such as poor decision making, poor customer service, or slow manual processing create a drag on the organization that ultimately affects the cost per claim.
Many organizations have been forced into remote working environments because of the COVID-19 pandemic. Across the industry, the combination of a decentralized workforce and the rising costs of insurtechs and third-party expenses is putting a lot of pressure on claims teams to keep up with the volume of claims being processed, while staying on top of managing costs. A devastating CAT season, followed by unusual winter storms across the southern US have stretched the capacity for many carriers and adjusters even further.
As we consider the post-pandemic world, and the lessons we have learned from the last 12 months, it is easy to see that many of the changes that were forced on the insurance industry will become de facto business practices. Adjusters will continue to leverage insurtech and third-party providers to deliver accurate loss adjustment using less physical interaction with policyholders. Carriers who have largely automated processes will continue to outpace those with clunky and slow manual processes, as remote work redefines the labour force of the industry and skilled claims specialists are aged into retirement. Technology will further be relied upon to maximize the limited claims experience within organizations so skilled professionals have more time to mentor and coach colleagues.
When it comes to inefficient claims processes there is good news. Many of the human and process related issues can be solved simply by implementing a software solution like BAP by VIP Software™. BAP is a comprehensive invoice and claims expense management system that can reduce your cost per claim from 4-10% simply by automating your invoice process. BAP will audit vendor invoices against fee schedules, allocate expenses directly to claim files, automate payments for straight-through-processing, and eliminate human manual input. Cleaning up your claims expense process is akin to picking the low hanging fruit on the claims leakage tree, in order to further reduce claims leakage and get to industry leading practices, we will have to look beyond just process automation.
The difficulty of assessing claims leakage is that many of the systems for processing claims expenses are siloed. Gaining a unified view across your claims expenses is a challenging and intensive manual process of pulling data from systems that don’t interact with each other. As adjusters lean more heavily into remote adjustment and limited interaction with policyholders, expenses rise for insurtech and third-party service providers. With a workforce that is already stretched thin by the pandemic, where does an organization find the time or resources to go digging for the business-critical data that will further prevent claim leakage?
Enter Mimia by VIP Software™. Mimia accumulates expense data for claims files from cradle to grave, allowing organizations a complete view of all expenses related to a claim file.
Anonymized industry data allows you to benchmark your expenses across industry trends with granular control, allowing for a region-by-region analysis of claims expenses with valuable insight to amplify your ability to optimize and manage LAE and indemnity. A unified view of your claims expense data is the only way to achieve best practices and negotiate better rates with vendors and service providers.
To Learn More about BAP or Mimia contact email@example.com