Survey Finds Claims Process Improvement Eyed as Top Initiative to Lower Costs

Nearly 93 percent of survey respondents cite insurance claims process improvement is top initiative to lower operational costs; and approximately 75 percent of claims systems expected to be upgraded or replaced within five years, according to a new survey by Trillium Software, a business of Harte-Hanks, Inc.

Among the key data points is an overwhelming focus by insurance claims professionals on lowering costs through claims process and system improvements. The research also shows the key role that communication plays in insurance customer satisfaction.

Conducted in the fourth quarter of 2012, the survey aggregated information from approximately 30 insurance claims executives, managers and adjusters across all major lines of business including property/casualty, life and health insurance in the United States to identify the major trends, pain points and initiatives for the industry in 2013 and beyond.

Highlights include:

• 92.6 percent of respondents indicated insurance claims process improvement is a top initiative for their organization to lower operational costs,

• 66.7 percent of respondents cite lack of communication on the insurance claims process as the top customer issue,

• 55.6 percent note disagreements on insurance claims decisions as a key customer issue, which can result from insurance claims process issues and less-than-optimal data utilization,

• 74 percent of insurers believe their claims systems will support their operations for less than five years,

• 40.7 percent of claims units surveyed do not currently utilize analytics, which can be attributed to cost and resources,

• 40.7 percent noted new software implementation would also be a high priority in order to improve the bottom line.

Impact of Rising Costs

According to survey findings, claims professionals – and insurers in general – will continue to emphasize bottom line improvements and cost mitigation by leveraging technology, improving claims processes and efficiently deploying staff.

Claims process improvement is the top initiative to lower operational costs followed by staff training, software implementation and staff reorganization. Many view increased litigation, rising medical costs and employee turnover as the main drivers of cost increases for processing claims over the next one to three years.

An aging workforce will also be a contributing expense factor as new, inexperienced personnel are brought on board as replacements. Less experienced personnel may lead to less than optimal claims outcomes for insurers, which could be a key factor in 70.4 percent of respondents noting that staff training will be a top initiative to help cut costs.

Upgrades Expected for Claims Technology

Despite the opportunity to lower operational costs, improve reserve accuracy, shorten cycle time and mitigate loss dollars, 40.7 percent of claims units surveyed do not currently utilize analytics. Insurers are also evaluating the life expectancy of their existing claims systems. When asked how much longer their present claims systems would support their operations, nearly three quarters of claims professionals indicated that their system would be able to support them for less than five years.

Solving the Customer Experience Problem

Dealing with inexperienced claims professionals will exacerbate the customer service challenges for insurers. The survey found that three of the four most common issues customers have with the claim process center is on poor communications citing an overall lack of communication and inability to contact a claims handler. Despite a focus in this area by insurers, only 33 percent of respondents believe that customer satisfaction will improve by more than 5 percent in the coming year.

“Claims professionals are well aware of the challenges they face in improving their claims processes, reducing costs, enhancing staff performance, and decreasing cycle time. However, many lack the ability to access and analyze information in free-form text fields that is needed to make the right decisions at the right times and ensure tangible progress in these areas,” said Michael Chochreck, insurance solutions principal consultant at Trillium Software. “It is critical that claims professionals gain insight into the universe of data flowing through their organization, and harness this information to more effectively serve their customers and grow their business.”

Source: Trillium Software