For those in the insurance industry, claims leakage is an all-too-common challenge. It quite literally means the difference between what an insurer does spend to settle a claim, vs. what they should spend.

Significant claims leakage can have long-lasting side effects, including impacting business productivity and damaging customer experience. Claims leakage can often be as a result from inefficient processes which can ultimately impact every party involved in the claims handling process. However, a common misconception is that it’s when an insurer is simply underpaying claimants. This, of course, is not the case.

When addressing claims leakage, the process is around insurers controlling their outlay to only be the amount of money they’re contractually obligated to pay. For insurers, it’s important to find the right balance between the time and cost of thoroughly investigating a claim vs. the impact to the end-customer.

That’s why it’s so important for insurers to remain vigilant and be aware of exactly how leakage can happen, but the problem is that often, it’s not until after the claim has been settled, that the extent of the leakage is clear.

Human Error Can Impact Leakage

Many modern claims processes can involve some level of human error when it comes to leakage. This is typically in the first notification of loss (FNOL), which is the initial report made to the insurer in the event of any theft, loss or damage – the first step of the claims handling process. However, human error can really happen at any point, even through to final settlement.

It really does deepened on the complexity of the claim itself – sometimes investigations take a handful of people, others may involve other parties or departments. Mistakes can always happen; information can be misunderstood, or a number could be inputted so a system wrong, but what may seem like “minor” accidents at the early stage, can escalate as the claim progresses.

And that’s arguably one of the most important things if you ask any insurer – having that complete visibility.

With claims being handled by different teams or parties at different stages, it’s so important that all information is documented clearly and visibly for everyone involved. The handover process is imperative, as it can be difficult to see the process of the claim as a whole and where blocks lie.  

It’s this lack of visibility that can not only slow the entire process down, but also over-complicate it too. A logistical nightmare for the insurer, but all-the-more frustrating to the end customer.

Claims Management Software

Investing in the right claims management software can play a huge part in overcoming this lack of visibility for the claims process, and as the industry has moved ever closer in adopting digital workflows, it’s not uncommon to see insurers switch to cloud based platforms to manage data. This is the moment when FNOL can advance, becoming ENOL (electronic notification of loss).

Not only can an online solution help to cut that room for human error, but they can also help insurers monitor the claim in real-time, leaving less room for the costs to accrue. A recent article from InsurTech World even stated that “digital interaction with customers is now more important than ever before”, and that policy holders expect “a constant stream of real-time updates”.
However, a good claims management solution only works if the users are confident in using it.

Thorough system management training is an absolute must when it comes to implementing new software. Often, it’s introduced to streamline processes by moving them from manual to digital, so there needs to be complete user buy-in to make the most out of the investment.

This might just seem like a given, but many insurers know that when it comes to making their priorities list, internal training can typically fall at the bottom.

The problem with this, however, is that when people who use and understand the software leave the business, proper handovers don’t always take place and new recruits aren’t always trained to the same standards. As a result, the vicious circle continues, and errors can start to crop back up again, leaving more and more room for claims leakage to occur.

Technology: The Leakage Saviour

Ultimately, reducing claims leakage is so important because it can happen for so many different reasons. Even in 2022, it’s not uncommon for very complex claims to accrue leakage; sometimes it just can’t be avoided.

Investing in the right technology solutions is a great way for insurers to keep claims leakage to a minimum, but it comes with one more very important avenue.

Technology. Experience. Passion

By working with ECSG, you’ll be supported by our wealth of experience working with and setting up claim’s programs for MGA’s and UK Insurers.

We’re specialists in technical claims handling, and our dedication to deliver bespoke claims solutions is born of the belief that, through collaboration and honesty, everyone, regardless of fault, should have access to market leading services and be treated fairly and respectfully.

Our people and processes come together to improve both claims spend and experience, and we pride ourselves on using the most appropriate technology, along with our professional motor claims handling platform, to achieve the fastest and most accurate resolution.

For us, it’s all about delivering the best customer experience. That’s why we work hand in hand with underwriters to ensure that only completely valid claims are paid.

This makes us adept at leakage reduction, be to turn what’s generally known as a cost centre, into an income centre.

To find out more about our professional motor claims handling platform, reach out today.