Along with stiff competition issues, the insurance sector also grapples with stringent government restrictions and customer satisfaction issues. Managing claims properly is a critical business operation in the industry, in which clients demand superior and faster service. By being skimpy with this practice, insurers can lose reputation and clients in the long run. If their clients escalate this issue, they could also end up losing revenue fighting legal battles.
Insurers that want to stay away from trouble need to invest in claims management for their businesses. In this post, we discuss how claims management impacts different parts of the insurance industry.
The claims management process ends when the insurer settles the claim. However, there are many steps in the process that precedes this final step. In the initial process, the customer files a claim with all the necessary data with the insurance provider. Subsequently, the processes determine how much merit the claim has, and how much the company will pay.
While customers expect the companies to pay as fast as possible, it’s often difficult to match up to this speed without having a proper claims management process in place. However, companies cannot risk losing customer satisfaction because it’s a critical competitive edge available in the market.
The biggest reason why insurance companies may have a bad reputation is that they process slowly. When 46 percent of customers use life insurance, they expect faster service. So, by reducing the settlement time, companies can easily decrease their customer complaints and enhance service significantly.
Through capable claims management systems, they can fasten the entire process and reduce costs to a large extent. To take its capabilities even further, small businesses can use automation with these processes to reduce their costs even more.
A report states that insurance providers lost $6.25 billion to fraud in India. Insurance companies lose a lot of money when they pay fraud claims. As a consequence, underwriting rules change and customers pay for these losses through higher premiums. If a customer discovers this fact about their insurer, they’re bound to feel cheated and may find a different service provider altogether.
So, it’s critical for businesses to examine their claims thoroughly before releasing the payment. Wipro states that specific tools that check the payment history and trends can reduce this risk significantly for most insurance companies. When an individual appears to file a lot of claims, it could be seen as a red flag by these tools. While customers demand quicker pay, insurers cannot pay too quickly without verifying the claim.
These losses disproportionately affect small businesses and can cause them to shut down a significant part of their business. So, the claims management process needs to be efficient enough to screen out fraud claims and fast enough to pacify the genuine users.
Insurers need to track costs throughout the claims management process to decide how much of the customer’s premium will handle these administrative tasks. Generally, it takes more money for the insurers to process delayed claims. So, when these claims are delayed, they lose revenue. For every business type, automation can reduce an insurer’s operation costs tremendously.
For example, IT and automation help reduce the cost of investigating claims manually to a large extent. They also enhance efficiency, reduce errors, detect frauds earlier, decrease the processing time, and boost profitability for insurers. Running a small business is tough even in a favorable business climate. The claims management process also helps in creating programs that prevent claims before they happen and thus, avoid future claims.
In most claim disputes, the insurance company eventually pays the customer if they find the claim to be legitimate by verifying evidence. While quick settling may help them avoid litigation charges, they need to perform vital liability assessments to swiftly resolve the queries. Insurance providers often evade litigation to reduce their cost of settling claims.
Legally proving that a person misrepresents data in single cases is extremely difficult and expensive for businesses. Here again, large companies may be able to survive these charges but small businesses won’t.
In 2017, the insurance industry contributed to 3.1 percent of the GDP. Additionally, in 2018, it also employed 2.7 million people as a part of its workforce. So, its prospects look extremely bright for the coming years. With such high competition, retaining customers and attracting new customers is a huge challenge for all insurers. A critical differentiating factor that makes clients favor some service providers over the others is customer service. Serving the customer well should be the ultimate goal for all insurance businesses. So, enhance your customer experience by implementing claims management processes and benefit from long-term client loyalty.