Insurance Supply Chain Management – where’s the hidden gold? (Part one)
Welcome to our three part blog which covers the results found in our recent insurance supply chain survey. Our full report is 25 pages long so we’ve decided to share our findings and insights in three separate digestible chunks.
Part one: What methods of communication are driving the insurance claims supply chain?
“No industry can afford to ignore the digital environment which is driving supply chain processes to become faster, more effective, cost efficient and profitable.” Says Dr Sinéad Roden, Senior Lecturer in Operations & Supply Management, CASS Business School, City University, London.
At ediTRACK, we agree entirely as we provide web-based software to the insurance and retail industries to help them benefit from supply chain visibility. We know, that there are numerous benefits in operating a visible and collaborative supply chain, but we wanted to understand where the real ‘hidden gold’ might be for insurers and their suppliers when it comes to operating a more slick supply chain set-up.
We also wanted to gauge how advanced the industry was in using technology to achieve visibility within their supply chains. So, we carried out research to examine how well insurers and their suppliers were working together to resolve customer claims. We wanted to pinpoint where the hazards might be with regards to sharing claims information between their extended supply chains.
We wanted to see where changes could be made to improve customer service through the use of supply chain technology, and where existing processes could be causing all parties to suffer extra costs- this hits the bottom line as insurance is one of the most competitive markets there is today.
Finding: Three main methods of communication are being used
There were three main methods of communication at play when it came to managing the claims supply chain:
- Insurer portals
- Supplier portals
- Traditional technologies
There are advantages and disadvantages to each of these methods:
Traditional technologies such as phone, fax and email can have the advantage of being quick and have a negligible technology investment, but they struggle to provide any meaningful claim performance information. So, the claim can become disjointed with information silos due to crucial claims information and status updates being held in disparate systems, such as an excel spreadsheet, email system or notepad on the Claims handlers desk!
It’s true that sometimes a meaningful one to one conversation between the insurer and supplier is needed in order to move a claim forward, but claims leakage is more likely to occur when a transparent communication process is not in place. When there is no way of tracking outcomes of conversations over the phone, the business may be missing key information on which to base informed management decisions.
Supplier portals allow the supplier to get the information they require and suppliers also bear the costs for running and updating the portal. The instruction is sent to the supplier, either as an email, (with or without an attachment), or manually entered into the supplier portal. Insurers can then logon to see the current status of a claim and customers could potentially do the same if given access.
However, problems can occur for the insurer due to the fact that the supplier controls the portal. The portal only manages a slice of the insurer’s claims, meaning the insurer must logon to other ‘different’ systems to see other claims. Another potential problem is that if the relationship ends, then the historical claim fulfilment data, useful for informing future business decisions, can be lost to the insurer.
Insurer portals are being used where insurers have invested in developing their own portals for sending out claims instructions to their suppliers. The set-up of portals can range from the insurer providing supplier access to limited information from the back-end claims management platform – to dedicated portals, such as Milan that track progress and monitor supplier performance.
The advantages here are that the Insurer can use a single platform to manage many suppliers and they can view the claim status for all their suppliers in one place.
Disadvantages could be that the development and maintenance costs are typically borne by the insurer and now it is the suppliers who need to logon or communicate with many different systems.
Key finding: A standard process for managing ad-hoc claims requests was virtually non existent!
When a claim is first raised the distribution of initial claims instructions to suppliers seems to be fairly well catered for through a combination of insurer and supplier portals, as well as the use of traditional technologies such as phone and email. However, when it came to the on-going claim status updates, technology solutions were less well developed and a standard process for managing and tracking ad-hoc requests was virtually non existent. Therefore claims visibility at this point was totally inadequate and could be leaving the claim vulnerable to bad business decisions in addition to a likelihood of lower standards of customer service because of the claim process fragmentation.
If insurers and suppliers integrate – what are some of the benefits to be seen?
Having automated and real-time sharing of accurate information between the insurer and their suppliers is paramount to providing a positive claims experience for all parties involved.
Having a quicker, well designed and transparent claims settlement process is beneficial for everyone as it provides:
- A positive claims experience for the claimant
- Greater visibility and collaboration
- A transparent process
- Quicker claims settlements
- Reduced fraud
- Less frictional costs
- The ability to ‘manage issues by exception’.
A visible collaborative process is an enabler that puts the right information in the right people’s hands at the right time. Furthermore, with the improved management of suppliers, reductions can be made to claims settlement time, loopholes and opportunities to commit fraud and to the frictional costs of processing the claim. Not least, it can significantly improve the end customers’ satisfaction with the claim process and settlement.
A further benefit of an integrated process is ‘exception management’. These ‘exceptions’ manifest themselves in delays and the need for further communications asking for additional information or guidance. This can lead to the customer getting frustrated if they are not rectified to their satisfaction.
Being able to manage the exceptions in this way allow all parties to concentrate on the ‘real’ issues and bring about successful outcomes, or at the very least substantially improve the situation.
To be continued…
…Next time, we’ll share part two of our insurance supply chain management report and blog with “Common frustrations and desires for insurers and their suppliers”.
If you would like to read the full report, please contact us and we’ll send you a copy today!