Insurance Claims Management: Problems & Modern Solutions

Insurance is one of those few sectors experiencing a series of disruptions caused by several factors (such as technology, frequently changing customer expectations and demands, etc.), especially after the COVID-19 outbreak in 2020. In short, today’s insurance customer expects to have a fast and outstanding service experience. 

Amid the global pandemic, insurers have realized the central role effective claims management plays in improving customer experience (CX) by ensuring reasonable and quick settlements. Moreover, CX directly influences customer satisfaction, which further increases retention rates. Consequently, the more customers an insurer retains, the more the renewal rates. 

Where Do Things Go Wrong Most Often?

Effective claims management requires speed and accuracy during the entire process. But since it is a complicated process that consumes a lot of time, it can take days or weeks for a company to pay the total settlement amount usually provided to policyholders in parts. 

The modern claims process is even more complex. Carriers and companies are still coping with digital disruption, data is increasing exponentially, and fraudulent activities are on the rise. Considering all such factors, insurers need to build a strong strategy for improving claims handling. This can help save additional costs and time spent on customer retention (with hopes toward renewals). 

However, the road to excellent insurance claims management is not as easy as it sounds, as insurers deal with new obstacles every day. Let’s discuss some challenges many insurers usually face regarding claims. 

Common Claims Management Challenges

1. Growing Customer Expectations are Difficult to Handle

Insurance customer expectations are growing fast. Their product- or service-buying habits, even other than insurance, also affect what they expect from insurers. Since an insured would file a claim only once in several years, insurers should make sure they are able to take care of the claimant’s situation, emotions, and claim payment processing; all at once. This has often turned out to be a big challenge for many insurers. 

2. Rapid Adoption of Technology is Increasing Competition

The insurance sector had been slow in embracing technology. But when the coronavirus first struck the world, and many other businesses started investing heavily in technology to minimize business disruption, insurance businesses did not want to lag. 

In this already highly competitive industry, carriers, companies, and agencies are continuously embracing insurtech to gain a competitive advantage. And insurers who could not catch up are now dealing with constantly increasing market competition. 

Other core technology challenges are; 

• Evaluating insurtech vendors
• Determining the best possible ways to make a worthful investment in tech-tools 
• Finding solutions that would work best all while considering complex process issues and integration requirements 

3. The Evolving Need for Talented Professionals

The insurance sector is currently experiencing a shortage of talent. A significant portion of the skilled workforce includes employees who have retired or are close to their retirement. Adding to this challenge are the struggles to attract and recruit new employees, which usually become expensive as it involves hiring and training costs. 

4. Division of the Claims Process into Multiple Steps

A claimant’s application goes through various departments for approval before the final settlement amount is processed. This is important as these are standard insurance business rules that each insurer must follow. However, having multiple decision points can increase the number of tasks employees need to manage. 

Additionally, it might also be confusing or inconvenient for customers to reach out to different teams and people, spending a lot of their time while all they badly need is a settlement. 

A delayed claim is the worst nightmare a claimant can have, leading to dissatisfaction, and they might also move to another insurer – a big reason to consider improving claims management. 

Also Read: Tips from Experts to Overcome Insurance Claims Management Challenges

Meeting the Challenges – Modern Solutions for Insurance Businesses

1. Insurtech

Today, many companies across insurance industries utilize technology to improve operations, especially in areas like policy issuance, claims processing, renewals, etc. Even a tiny transformation such as using robotic process automation (RPA) can impact the overall performance.

For example, RPA can enhance claims management as customers can simply fill out applications without physically visiting their insurer’s office. This application can then be reviewed by staff and processed further for approvals, and finally, the settlement amount can also be automatically processed while saving a lot of time. 

2. Business Process Management (BPM) Services

Although insurance businesses are running short on resources and finding it challenging to attract new employees (as discussed above), new-era solutions are available. Business process management services are a savior for those dealing with staff-shortage problems or lacking expertise in utilizing modern technology, software, and tools. 

An insurance BPM firm will also offer various solutions, including efficient insurance claims management services. Such firms can be considered a viable option for insurers looking to gain a competitive edge over their industry peers. 

While leveraging RPA and BPM solutions has several benefits, we will discuss some important ones in this writing piece. 

Benefits of Leveraging Modern, Effective Insurance Business Solutions

1. Eliminate Fraudulent Claims

Many insurance companies will get fraud claim applications; however, having an effective process for claims handling ensures the identification of such cases before they are settled.  

In addition, analysts can perform authenticity assessments of reports and materials supporting claims. Thus, by utilizing a combination of technology and human intelligence, insurers can detect and avoid fraud claim cases.  

2. Rest Assured about Data Security

A customer requesting an update on their claim application can get annoyed if a representative fails to access customer information due to data theft or loss. This makes it necessary to have a shield of protection against data security threats. 

When it comes to managing claims effectively, a lot depends upon how the insurer store, use, and protect customer and company data. Multi-factor authentication and similar verification mechanisms are essential to implement, ensuring access to data is granted responsibly. 

3. Minimize Claims Management Costs

Selecting a reliable insurance BPM solutions provider for claims management services or other back-office functions can turn out to be significantly cost-effective. Why? Because first, this eliminates the need to hire additional staff, pay for perks and benefits other than salary and other onboarding and training costs. Second, remote service firms usually offer quality services at reasonable prices, helping insurance business owners save enough of their capital.  

Finally, the best thing about this solution is the level of flexibility it offers in staff scaling; get more or cut back remote professionals on-demand as per your unique requirements. 

4. Provide Better Customer Experience

Delegating repetitive and tedious tasks (claims handling, renewals, commissions management, etc.) to an insurance services firm, insurers can redeploy in-house resources to other customer-focused aspects that improve customer experience. 

In this competitive industry, customer satisfaction plays a crucial role in helping the insurer get and stay ahead of its competition. By increasing customer satisfaction levels, insurers can foster customer loyalty and positive product/service reviews. 

For insurers, these modern business solutions can do wonders. This is why they are increasingly embracing technology and BPM solutions, enabling their staff to perform better and become more productive. Running an insurance company or agency? You might be looking to improve claims management or other back-end operations to enhance the overall functionality. If it is so, Cogneesol can help. 

We are a renowned insurance business process management firm that provides efficient, cost-effective claims management services and other excellent back-office solutions. So give your business the power to build a loyal customer base, take our assistance to reach your goals. 

To learn more about our services, reach us at +1 646-688-2821 or send an email at [email protected].