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2010-12-03
‘Big Picture’ With Claim Management

Bolstering Insurer Profitability, Customer Satisfaction

See the 'Big Picture' With Global Claim Management

BY Paul Tuhy and Nicole Michaels, www.claimsmag.com

This article has been edited for length. Read the full article here

It is easy for insurers to overlook the central role that claims play in their businesses. The claim is the actual "product" that customers pay for when they buy insurance policies. Insurance companies talk about their expertise, their customer service, and their financial strength, but it is only when a customer suffers a loss and files a claim that the insurer has a real opportunity to deliver on its promise to the customer.

While swift and efficient claim management has a tremendous impact on insurers' own profitability, it is also one of the keys to heightening the overall customer experience and customer loyalty. In theory, there is no reason as to why insurers should not be using the most efficient, state-of-the-art technology to help contain costs, make the most of staff resources, track claims on a global basis, and improve internal efficiencies to enhance customer service.

An Overwhelming Legacy

In practice, however, claim-management systems, especially for multi-national insurers, have not meshed together as easily as other business operations. The single greatest impediment to improved claim handling continues to be existing computer systems or legacy systems. Claim management was one of the first insurance processes to be computerized and, unfortunately, many early claim-handling systems are still in operation.

Insurers' claim management functions — organized by product lines and often further defined by geography — often form separate silos supporting each individual product line. This organizational tendency presents numerous problems, as each product line provides its own input on claim management issues. The "big picture" of customer satisfaction and overall profitability gets lost in a thicket of different and often competing requirements dictated by individual business units.

Weighing Costs, Benefits

Insurers' mandates to manage expenses wisely and operate more efficiently, as well as the potential competitive advantage to be gained from effective claim service, have combined to create a compelling case for investment in more robust global claim systems.

Legacy systems built on now obsolete programming cannot readily meet current reporting and data needs. The more timely (and accurate) information provided by a global claim platform helps companies comply with these regulatory requirements while allowing insurers to track and adjust their own cost containment efforts.

One final benefit of a global claim platform is better risk management. A global platform yields real-time information to help insurers track the actual claim experience, allowing carriers to evaluate the aggregate risk facing any one company, geographic region, or product line.

Most importantly, an effective global claim system allows insurers to improve customer service by delivering on their promise to pay legitimate claims, and to do so quickly, accurately, and cost-effectively.

Paul Tuhy is head of Global Claims for XL Insurance. Tuhy may be reached at paul.tuhy@xlgroup.com.

Nicole Michaels is a senior executive in charge of Accenture's insurance technology initiatives in North America. Michaels may be reached at accentureclaims@accenture.com.