For insurance companies to succeed, claims management effectively is essential. Their margins are affected directly via a lower or higher loss ratio. To control leakage of claims, it is significant to control the costs of claims.
Simply put, leakage of claims covers amounts that are paid against claims that could have been avoided.
Give below are a few examples:
– Paying for losses that the policy did not cover, such as not making deductions that were due and paying more than the amount due.
– Paying without investigating properly and not removing or reducing the loss cost.
Typical claims in motor insurance concern one of these:
– The insured vehicle getting damaged accidentally
– When another vehicle is involved, a claim involving a third party
In the former case, leakage of claims could be on account of reasons such as:
– Not deducting the amount due or paying more than necessary
– Not allowing for improvement, e.g., when an old component damaged in an accident is replaced with a new one.
– Not being able to contain costs of repair, e.g., overestimating the damage to be repaired.
In the latter case, leakage of claims is constituted by somewhat more complicated procedures as many parties related to the claims have to be dealt with. The claim’s value or liability may have to be determined through discussions with other companies dealing with insurance.
Partnering with a provider who is a specialist could prove worthy in such a case. While dealing with motor insurance claims, business process outsourcing can prove useful in 3 areas. These are as follows:
Follow-up: Insurance claims leakage can be prevented through consistently following up while trying to get back damages caused through liquidation. The best results are produced by sticking to the process and persistently following up. In such a situation, an insurer can hardly beat the service offered by outsourced providers or the cost at which they can get the work done.
Discussion: The process of discussions with the insurance company, once it is found out as to which party is at fault, can go on for a long time. The costs of the process are directly proportional to its length. A settlement can be reached faster through outsourcing the major portions of the process. The costs can be minimized and claims settled quickly or the expenditure recovered quickly.
A collection of Proof: Proof has to be collected carefully so that the incident can be analyzed deeply and the party which has committed the offense identified. Case law has to be considered and any sketches or statements of witnesses looked at. An informed decision regarding the liability can be made by claims manager on the basis of a summary of the accident prepared by looking at relevant information by the organization the work is outsourced to. This can help reduce leakage.
Claims management services can, therefore, help increase profits through the reduction in costs of the processing of claims.