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Let’s evaluate 3 different communication approaches used to manage insurance claims

October 6, 2016
Posted by Gareth King

insurance supply chain
The insurance supply chain is heavily reliant on effective communications between supply chain partners and their customers. Insurance SCM technology is transforming service delivery by improving communications at every point during the claims fulfilment process. The rapid pace of innovation means improvements are being delivered more quickly and regularly with every technology development.

As things stand, the communication channels currently used by the insurance industry when dealing with a claim can be broken into three main categories, each with its own strengths and weaknesses which we will explore in more detail.

  1. Insurer portals

Designed to help insurers retain as much control of their supply chain as possible, insurer portals centralise communication and associated processes into a single platform. Insurance SCM technology platforms send out claims instructions to suppliers and suppliers update the status directly into the system. They can also be used to guide the back-end claims management process to provide a uniform way of working.

The insurer portal is often favoured by insurers because they retain control and can easily oversee all claims data. Using real time dashboards and powerful analytical tools, managers can get instant insight into the progress of claims, and the performance of every supplier. They can also quickly identify claims that will require immediate manual intervention, and see those that are automatically progressing through the claims process.

The data collected can be fed back into an organisations Big Data program too. This additional information helps to uncover new insights that can be applied to creating more efficient processes and removing claims leakage. This advanced level of control and flexibility can come at a cost to the insurer and it’s important the portal can be flexible to evolve with changing business needs. However, process efficiency gains as a result of the investment can help improve customer service, reduce leakage and the overall cost per claim.

The insurer portal may be less popular with suppliers who need to develop interfaces from their own insurance SCM technology platforms. That or they must maintain a long list of logins for every platform operated by their clients. The administrative overheads can add to the supplier’s own running costs, but again if it improves the quality of instruction information they receive and automates related tasks, it can contribute to quicker claims fulfilment and supplier payments.

  1. Supplier portals

Under the supplier portal model, suppliers such as managing agents maintain the insurance SCM technology, and insurers have the responsibility of interfacing with them. At the appropriate point in the insurance supply chain process, insurers can logon or send an automatic feed with their instructions to the supplier portal.

The supplier bears all costs for developing and maintaining the portal technology. The flip side is a loss of centralised visibility of claims status for insurers – instead they must log into each supplier portal individually. In the event that the supplier relationship ends, they will also lose access to the historical claims fulfilment data. For insurers running (or planning) a Big Data project, this loss of data will severely limit their analytics capabilities.

Insurers need to balance the savings made from outsourcing insurance supply chain management technology against the value of owning and mining historical claims fulfilment data. As this data can help to inform future strategic decisions and having an in-house portal can reduce the administrative time and resource needed as a result of the requirement to integrate or login and learn different systems.

  1. Traditional technologies

Channels like phone, fax and email remain popular with suppliers and insurers because they are quick, convenient and require minimal training and investment. These short term savings mask some major problems and hidden costs however.

Insurance supply chain success relies on total visibility of the status of every claim with every supplier. Traditional technologies are disjointed and heavily reliant on manual data capture processes. This means that information is frequently unavailable, out of date, or stored in silos that prevent easy data sharing. Which makes it near impossible to gain real-time insights into processes and claims status.

Manual data entry also greatly increases the risk of errors and inaccuracies being captured. Poor quality data has a knock-on effect on the quality of decisions made using that information – potentially a significant risk to the insurer’s business if they can’t update their customers in a timely fashion. A claims is often the moment of truth for a policy holder and how they are handled can determine future customer loyalty.

The reality is that insurance SCM technology reduces reliance on traditional channels, as insurers work to better control the insurance supply chain. And if they are to extract maximum value from claims management data, they will also need to be able to control that information. Those insurers who invest in building their own portals are most likely to realise the greatest benefits – unless the next development of insurance SCM technology reveals a new fourth channel.

If you want to learn more about how to effectively manage the insurance supply chain and how you can achieve claims excellence read our recent blog here.

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Gareth King – Senior Insurance Product Manager, Adjuno
Gareth is an expert in supply chain management software and has worked in the industry for over 14 years, specialising in the retail and insurance sectors. He currently manages the insurance product portfolio and future roadmap for Adjuno, who are a leading supplier of web-based supply chain software. Gareth’s knowledge and hands on experience has guaranteed the successful implementation of supply chain solutions to clients including Marks & Spencer, New Look, Randall & Quilter, AXA and Zurich Insurance.