Digital and Analytics is the next thing in insurance companies. Digital insurance procedures have helped organisations and insurance firms to boost productivity and profitability. Alleviating claims leakage is one of the key factors that helps insurers grow in a profitable path. With the power of business analytics, claims leakages are resolved easily.
As per the popular trends, the Industry benchmark for claims leakage is about 3%. But organisations have noticed a leakage of up to 25% due to poor claims management and handling.
Reducing Business Claims Leakages in Insurance
When a claim is settled for more than what it actually deserves, leads to claims leakage. During the audits, these claim leakages are needed to be settled. A skilled person is needed to identify the root causes of claims leakage. Many companies provide skilled people to offer solutions who will find the root cause for claims leakage and improve productivity.
However It is not always possible to find the main cause through auditing, as auditing may cause human errors. Such errors are inevitable. Digital analytics in business insurance will help find the real cause for claims leakages with effective solutions to it.
What business analytics can do?
Digital analytics can detect the fraudulent activities by the customer such as duplicate identity proofs, repeated submissions, fraud billings, claims in regular intervals to get back the premium paid so far, fake information about losing expensive things, possessing double insurance etc.
Digital analytics reduces insurers’ petty tasks of submission procedures thus, enabling them to focus more on customer satisfaction when it comes to claim settlement. It reduces the time required to settle a claim, to the satisfaction of both the insurer and the insured.
Few more benefits of Digital analytics in business insurance
- Decreases customer churn rate
- Lowers the company’s cost of risk
- Enhances proactive management and claim handling.
- Reduces over reliance on manual handling and human error
- Minimizes inconsistencies from suboptimal business processes
- Eliminates the inability to access critical information across disparate systems
The impact on claims metrics will be very high with automation and AI to proactively address the early warning signs of claims leakage.
Business Leakages in Insurance is much more than just fraud. It refers to any instance where the insurer end up paying more than what was appropriate or necessary under the terms of a policy.
How to Reduce Business Leakages in Insurance?
Read on to know how insurers can leverage process digitalization and AI to proactively tackle the early warning signs of claims leakages in Insurance.
Detecting and preventing early claims leakage is topmost duty for every insurer and with help of the proper technology and process automation, insurers can reduce the following:
- over dependence on manpower handling
- unpredictability from suboptimal business processes
- inability to gain critical information from disparate systems
Claims Leakage arises because of claims management inefficiencies which ultimately result due to failures in existing processes.
In simple words, it’s basically the difference between what you have spent and what you should have spent on a claim.
The cause can be from:
- Inefficient claim processing
- Improper payments,
- human error such as poor decision-making,
- poor customer service, or
Stopping the leaks
- Acquire better control over claims leakage by improving productivity, customer satisfaction and profitability.
- Digital technologies are empowering consumers with superior choices and enabling to aggregate marketplaces based on price benefits.
- Reducing costs must be a priority for insurers.
- Most insurers know that claims leakage which is the difference between what you should spent on claims and the amount you end up paying – is a key area for potential savings.
- While claims leakage is a complex issue, the process to improve the leakage is relatively clear-cut. In many cases it can lead to savings between 5 and 10 per cent.
What causes Business leakage in Insurance?
The increased pressure to provide the right customer experience with the right claims cost often makes it difficult for insurers to make right consistent and appropriate decisions.
When the insured end up paying more than they needed to pay, the overpayment directly affects claims expense. Reducing insurance claim leakage firstly requires an appreciation of its underlying causes.