Claims management: Moment of truth

As with any service, it is rare that one size fits all. This raises the question as to whether there is an ideal scenario for servicing insurance claims — to which the answer is simply 'yes'. But, as all insurer needs are similar, yet different, what is ideal for one is far from perfect for another, for many different reasons.

When an insurer hands over a claim, they have no further involvement. Put simply, they want the claim to be quickly and satisfactorily resolved, and their customer to be happy. The challenges for the claims handlers, however, are many and varied — having the appropriate skill-sets is as important as access to robust data to deliver a first-class service, even in times of surge.

Claims for the policyholder are the 'moment of truth' and the time to deliver on the promise. As representatives of the insurer, the claims management company is often the only point of contact between the policyholder and the insurer. That means dealing with people in every frame of mind from happy and grateful to angry and suspicious. It is the claims manager's responsibility to deliver on the insurer's brand promise — a fact the insurers recognise only too well.

Locked in a constant battle of regulation and customer satisfaction versus cost, many are sidetracked by cost and life-cycle. But what exactly does life-cycle mean? Most insurers see a link between the length of the claim and the cost, and are always looking at ways to drive this down. But is the length of claim measured from the date the claim is received by the insurer or the date that it is eventually passed to the claims handler?

For the customer, the duration of a claim starts from the moment they report the incident to their insurer — invariably the date on which the incident occurred. But, as every claims handler will tell you, the date they receive the claim to investigate can sometimes be weeks — or even months — after the event.

For the most part, insurers do not focus on the whole cost of a claim, although some do. Some insurers are driven by procurement, while others are driven by claims operations and the technical ability of their underwriters to understand the total cost of claim. Inevitably, procurement looks at handling costs; operations worry about claim costs.

Balanced view
What is actually required is something that balances both points of view. In truth, the claims handling element — as a factor of cost — is insignificant compared to the overall cost of the claim.

Agility and the ability to respond to insurer needs are crucial, as is expertise. It is widely accepted that most service providers can and do offer a 'full service menu'. Of course, not every insurer wants the full service, but they do want to be able to choose, and most clients will choose differently. They expect choice and they expect quality. Whichever way they opt to manage a claim, they expect it to be dealt with properly.

Within this 'menu' is invariably the choice of a repair network. Repair networks have, for many insurers, become the norm as part of the overall customer offering. And insurers, sometimes following bad experiences, are demanding insurance expertise in this area to help control indemnity spend.

It is not unfair to say that if you don't have an insurance background, you are unlikely to fully understand the importance of controlling indemnity spend and more than one insurer has fallen into that trap over the past few years. Unlike some 'pure' repair offerings, insurers need every claim to be validated and managed by an insurance expert, be they field or desk-based.

As they work through rules and regulations, customer satisfaction and cost cutting, insurers will have to work closely with their chosen partners, although the partner must never lose sight of the fact they are a supplier — and suppliers can be changed.

There are many different models out there, from full outsource to pure overflow requirements, all meeting expectations at some level. If there is genuine partnership with a total understanding of the insurer need, a true strategic approach can be developed — jointly — with the risks and rewards shared openly and transparently.

Working together and achieving common objectives are what is important, rather than being seen merely as a 'sole supplier'.

Kevin Wood is chief technical officer at Merlin Claims