The insurance industry like all other service-oriented sectors depends a lot on customer service and credibility for business growth and development. An iota of deviation can have disastrous consequences for the company. A person who ensures his life does so on good faith and understanding that premium paid over time is in very safe hands and that any claims made by him if he is alive or nominees if otherwise will be expeditiously settled without any problems. For insurance companies, it is a major issue as policies mature after decades and even then claims and counterclaims can arise from the beneficiaries leading to costly litigation. This is one reason why more and more insurance firms are opting to outsource insurance claims processing to agencies that have the necessary infrastructure and trained manpower to tackle this job well.
What would you gain by outsourcing insurance claims processing –
Time to focus on primary business activities – Claims processing is considered to be a back office task. It does not fall under the ambit of core activities which primarily consists of selling policies and structuring new schemes to offer a range of alternatives to customers. Claims arise often decades after a policy has been sold and hence there is no point in tying up huge investments for maintenance of old accounts. Outsourcing this function results in the spare time that can be devoted exclusively for business growth and development.
An increase in total productivity – Productivity is taken to be an indicator of a company’s ability to get the best out of employees in terms of measurable performance parameters. These mainly rest on total sales in the current year and the incremental business over last year. Reaching business targets is another criterion. By diverting trained and qualified manpower away from the mundane, complex and tedious task of claim processing, the focus will be more on increasing sales thereby enhancing productivity.
An increase in market share – This is not a direct impact of the decision to outsource insurance claims processing but is nevertheless crucial. By outsourcing, there is no need to invest heavily in infrastructure, state of the art hardware and software and trained personnel. This capital savings can be used to structure policies and schemes with highly competitive prices. Backed by dedicated insurance retailers and wholesalers this pricing strategy is bound to increase market share for the insurance company.
Now that it is established that outsourcing of claims processing has vital inherent benefits for the overall insurance business, it is time to understand how it streamlines the full claims processing functions and eases the workload of the parent company –
Quick claim eligibility evaluation – Top claims outsourcing agencies have the required systems in place to deal with claims processing. The complexity of it can be judged from the fact that a claim is normally placed after the lapse of a very long period from the purchase of the policy. Verifying old records meticulously especially the history of premium paid before sanctioning a claim is itself a daunting task, multiply that by the hundreds of claims presented for payment every month and the true magnitude comes to the fore. Just outsourcing this one task is guaranteed to take a huge load off your shoulders freeing you up for more productive activities.
Quick settlement of claims – There is no doubt that the reliability and integrity of an insurance company depend on the speed of settlement of claims. This is the promise that was in-built and obvious when the policy was sold and any deviation can impact the credibility of the company and impede business growth and development. By deciding to outsource insurance claims processing this aspect is fully covered. These agencies have skilled and trained resources that can quickly trace back to old records, verify their genuineness, evaluate the legitimacy of the claimants, process the claims and facilitate quick disbursal. An insurance company will not have any stake in this – the whole process will be comprehensively taken care of. Just imagine the load it would otherwise put on the insurance company.
Accuracy in claim disbursal – After the claim is settled experts and auditors carry out a thorough due –diligence check to make sure that the amount paid is correct in all respects and that disbursal has been made to the actual claimant. The insurance company thereby is not put at a loss and is also insulated from any future litigation.
These are some of the reasons why outsourcing of insurance claims processing is so important in the insurance sector today.