Outsourcing has traditionally been seen as a way to reduce costs but, as James Grant explains, it also has the added benefits of initiating change and making service improvements
Most UK businesses and insurers have, at long last, woken up to the potential benefits of outsourcing. Placing a specialist function with specialist providers that are experts in this field is a sensible idea but the decision to outsource continues to be frequently governed by pure financial reasons. As such, more insurers are beginning to understand that to make full use of the outsourcing process, it is vital not to see it merely as a device to cut costs but as a way to initiate change and improve the insurance business process.
All too often, outsourcing relationships are poorly managed. This is especially common in the handling of property claims when a lack of integration between parties often has a negative impact on customer service, costs and processes. While not necessarily the fault of either insurance companies or suppliers individually, it is a fault of the manner in which the parties communicate. In short, they fail to grasp each other's priorities or appreciate what the other party can and cannot do.
Unfortunately, some outsourcers tend to be rather short-sighted when it comes to considering the potential for collaboration between the many different partners they work with. Take an escape of water claim in a building as an example: this may involve fire and flood restoration, then once this part of the job has been completed, the follow-on will generally require plastering and redecoration.
Typically, when the first part of the job is complete it does not always get passed on promptly to the next supplier; rather, it remains in an administrative limbo instead of being passed on swiftly to the building repair network to complete the job. Often, it takes a policyholder's chase-up call to prompt further action, which is why there are usually several calls for each household claim handled by insurers.
With this potentially reputation-damaging scenario in mind there is clearly a need for aggregation and orchestration of a multi-partner environment. The objective should be to harness the combined capabilities of various partners into a cohesive whole, working to meet clients' goals.
Traditionally, the use of multiple vendors has caused problems with integration and transparency that leaves the claims teams of brokers and insurers blind to the progress of claims. There are, however, straightforward changes the industry as a whole can implement to overcome these problems.
Integration of all supplier services to improve communication should be the first collective goal and many suppliers are willing to work together to ensure a service is provided to their clients' customers. Some examples of this are evident in today's claims environment but there is scope to better utilise web technology in order to link systems. In addition, it is possible to reduce the number of 'hand-offs' through effective client management, with customer satisfaction increased as a result. This has the added benefit of reducing the necessity for suppliers to refer back to insurers after each key stage in a claim, as they can communicate more simply and efficiently.
Simplification will also reduce cycle times, improve customer satisfaction and increase production. As in all areas of business, additional service requirements creep in to a relationship over time. Each one is a small change that caters for some specific need. Often, after one or two years, these multiple small changes can burden suppliers beyond their ability and add unnecessary complexity to their task. As part of every supplier relationship, clients and suppliers should regularly review the end-to-end process - especially the customer touch points - strip out the tasks that do not add value and automate any that do.
Providing the transparency and access required to allow insurers and brokers to better manage customer relationships and audit more easily should be a priority for all parties. Fortunately, the advent of the internet has brought about innovative products that effectively introduce integration and transparency, and greatly enhance claims handling.
The flexibility of these web systems means that data can be distributed between each member of the supply chain electronically, sharing information to update the next firm in the chain and to keep insurers informed. As a result, everyone involved in the claims process is linked and can track the claim's progress, including policyholders, loss adjusters and specialist suppliers, such as restoration companies.
This transparent approach does, however, present challenges as these systems can also allow customers to see any hold-ups. Therefore, all parties either have to make sure that their processes are in order before exposing them to customers or take the riskier route of giving open access and letting transparency drive the improvement of service standards.
In whichever form it takes, and regardless of the technology, utilised supplier integration can help provide a better customer service, reduce costs, increase profitability, reduce workloads and simplify compliance. The consolidation of the traditional methods of claims handling needs to be achieved to allow suppliers to work together and enjoy the advantages of each method, while eradicating most of the disadvantages.
James Grant is the managing director for Multiassistance.
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