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Reasons to Rely on Outsourcing Claims Administration
The very foundation of an insurance company primarily rests on two pillars – devising new schemes to bring in more business and claims administration, which is a promise made to customers while selling policies in the first place. Why is claims administration so important?
Insurance policies have long term validity often decades. Any purchase made now by a customer implies that he or she is having faith in the company to pay out the claim without any problems to the insured on maturity or to nominees in the event of any other eventuality. This is an onerous responsibility on the insurance companies to perform as guaranteed.
Why should insurance companies rely on Outsourcing Claims Administration?
To focus on core activities –
While it is true that claims processing is one of the primary tasks of an insurance company, it does not fall within the ambit of core activities which consist of chalking out new schemes and selling them. These contribute primarily to business growth and profitability.
The other back-office functions such as data processing, payroll administration, commission management, and claims administration should be outsourced so that the focus on insurance selling as a core activity is not lost.
To increase overall productivity –
A company’s productivity levels are judged by the number of employees designated to carry out tasks that fall within the main objectives of a company and not merely to sustain it.
In the insurance sector, the key focus should be on devising and selling policies and other work needed to prop this up should be outsourced. As an example, outsourcing claims administration can free up much-required resources such as manpower and eliminate the need to invest in infrastructure development. Productivity is given a boost by channelizing resources to the core activity.
To have a competitive edge –
By outsourcing claims administration, there is a high level of cost-cutting. Investment is not required for hiring specialized manpower and state of the art systems required for running intricate and often very complicated claims administration.
The savings can be incorporated into pricing new schemes and the benefits passed on to customers. Insurance companies that do this gain a very definite edge in the highly competitive world of the insurance business and grow exponentially.
For fast adjudication and settlement –
There cannot be two opinions that the reputation of an insurance company rests greatly on its ability to settle claims quickly and efficiently. Considering that the volume of claims submitted run into hundreds of thousands, taking up this activity in-house will leave no room for insurance companies to concentrate on core activities.
By outsourcing claims administration, this aspect is taken care. Companies to which claims are outsourced have the infrastructure in place to quickly adjudicate and settle claims, however old the policy or complex the claim might be.
These are the very basic reasons why an insurance company should always prefer outsourcing claims administration to retain its competitive edge and be ahead of the rest of the pack.
These are the very basic reasons why an insurance company should always prefer outsourcing claims administration to retain its competitive edge and be ahead of the rest of the pack. You may also consider outsourcing claims administration services to Cogneesol – a leading insurance BPO company, delivering excellent services to insurance companies across the world. To get more information about us, email us at [email protected] or call us at +1 646-688-2821.
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