Insurance Supply Chain Management – where’s the hidden gold? (Part Two)
Welcome to the second of 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 two: Common frustrations and desires for insurers and suppliers
As part of our survey we asked insurers and suppliers about where they thought improvements could be made with regards to working together in a more efficient way. We asked what pitfalls there might be when it came to sharing claims information across their supply chains and this highlighted some common frustrations and desires for both parties…
Insurers felt that inefficient communications could be directly to blame for rising costs!
Good business communication starts with the information. It needs to be imparted in a simple and easily understood way.
More than 20% of insurer respondents believed that inefficient ways of interacting with suppliers during the claims process could be directly to blame for their rising settlement costs. The biggest cost occurred as a result of having to make multiple phone calls and / or sending countless emails to obtain status updates and authorisations. These observations point to the fact that the quality of the content in the communications needs to be as complete and ‘undistorted’ as possible. A distortion field effect is very easy to generate once you move away from good business communication. Not being straightforward in your talking or writing, being vague about dates and data, mixing up names and addresses. All or any of these can help to create a distortion field around your communication. The conversation needs to be presented by each party in a simple, reliable and valid way.
Insurers and suppliers felt that automating the claims instruction process, including sharing of status updates would reduce operational costs and improve the service for the claimant.
Automation reduces and in some cases removes the tendency to embellish the original communication. It helps to keep the communication at a simple and easily understood level. Automated processes also help in removing those mundane and ‘forgettable’ jobs. For example, imagine you have to keep all participants up to date on the current status by sending handcrafted emails or receiving telephone enquiries. Doing this for one claim may be ok. It may even be ok for ten. How about 100, 200 or 300? Automation frees the claim handler to get on with the more productive aspects of the claim.
Both insurers and suppliers felt that implementing industry messaging standards across end-to-end supply chain processes could be a large contributor to helping reduce existing frictional costs in the process. Some respondents also talked about the need for a single messaging platform for exchanging the messages between both parties.
Both parties expressed a desire for their partner to exhibit forward thinking, be IT literate and innovative in their approach to the claims supply chain.
Advancements in managing ongoing claim status updates lag behind the instruction process
The responses to our survey showed that only 40% of respondents used traditional technologies such as phone, fax and email for the initial claims instruction, but this rose to 85% when it came to managing the ongoing claims status.
This shows that the management and tracking of the claims instruction process is more advanced and the use of portals more prevalent than in the tracking and management of ad-hoc and on-going status updates.
Instead of using more advanced portals, claims handlers are opting to call or email suppliers for claims status updates which indicate that there could be a lack of trust in the quality of the data or the system in place.
It may also indicate that insurers are avoiding having to logon to several different supplier portals as it’s just too complex and time consuming to navigate through multiple disparate systems.
Insurers say the renewal of claims admin systems can be painful but are essential!
Insurers talked about how they saw new or recent implementations of more flexible claims administration systems as a necessary evil. They can often cause of a period of painful change for the business in the short term but are considered a necessary step forward in the long term.
Claims admin systems need more focus on external supply chains to give insurers more control
Some insurers expressed that most claims admin systems will help to improve the internal claims process, however most do not include the required functionality to get the best out of the external claims supply chain and this was due to two main factors:
- There is not enough focus on external supply chains
- There is a narrow focus on improving internal efficiencies
For example, if an insurers system does not help with supplier management and collaboration, then reliance is solely on the suppliers to provide the management information required to monitor Service Level Agreements, so an insurer is not in full control of when and how claims data gets viewed.
Insurer portals that are in place have a positive impact on suppliers
Where suppliers are already using insurer portals for claims instruction receipt and claim management, the biggest impact reported is a significant reduction in the days it takes from instruction to completion.
This was followed by a reduction in the number of times that the supplier has to contact the insurer for additional information or clarification and therefore an overall reduction in claims processing time.
As it was reported that the admin time per claim also reduced where an insurer portal is in place, this again helps by taking out cost from the claim process due to a more streamlined, collaborative approach.
To be continued…
…Next time, we’ll share the final part of our insurance supply chain management report and blog with
“The moment of Truth – Claims Perfection or Resolution?”.
If you would like to read the full report, please contact us and we’ll send you a copy today!