This is one of a set of seven interconnected themes or forces that are expected to drive the traditional claims function into a new future of customer-centric, digitally-enabled, value-driven service and efficiency.
While the claims function is a strategic and significant asset for today’s insurance organizations, the level of insight and impact that claims can bring to the wider organization is typically underutilized. The claims supply chain is a critical component of the end-to-end claims journey whose costs can represent as much as 80 percent of total indemnity spend. The journey into the future will require strategic initiatives that transform the traditional claims function to improve end-to-end performance, efficiency and value.
The traditional claims landscape — characterized by manual and opaque processes among claims handlers, supply-chain partners and policyholders — is poised to give way to new capabilities. Insurers are seizing the opportunity for progress, redesigning claims supply chains to exploit game-changing digital technology, align supplier and insurer values, increase collaboration and agility, enhance client centricity and optimize business efficiency.
An automated, streamlined, secure claims ecosystem can help enable faster, more cost effective, handling of claims while delivering a better client experience. In our view, strategic supply-chain evolution requires:
The power of digital gains a sharp new focus
A common pain point in claims is the opaque nature of supply-chain activity. Traditionally, each party — client, broker, insurer and supplier — possesses a separate view and record of each claim. Clients often don’t know where the claim sits, what will happen next and when — making communications a leading cause of client complaints. Brokers, meanwhile, can also endure timewasting efforts to track claims status updates or manage clients’ claims-service delays. For insurers, the lack of fast, accurate and reliable visibility into the claims lifecycle and supplier actions can result in delays, higher costs, damaged insurer-supplier relationships and client dissatisfaction.
Fortunately, digital technology is unlocking new capabilities for a single timely view of each claim, with secure access provided across the spectrum of clients, suppliers and insurers. Digital solutions are giving insurers a new window into the claims journey and its efficient management, including improved workflow, the use of data and analytics to track claims, and updates to clients during the claims lifecycle.
In our view, transformational change must be executed with a holistic view, tying together an end-to-end across claims , and integrating the organization’s capabilities and systems with its client touchpoints. It means crossing boundaries, tearing down walls, combining silos in order have a single digital record available for everyone without the need for a specific technology.
Maximizing the value of relationships
Many insurers traditionally depend on their procurement teams to organize and manage suppliers to the claims function. While common practice, this reduces visibility into the supply chain’s end-to-end performance and efficiency. When coupled with broader complexities involving diverse geographies, services or product offerings, disjointed and inefficient approaches impair the insurer’s ability to maximize the value of key relationships.
Insurers are starting to address this in two ways. Firstly, by rationalizing supplier numbers so as to focus on trusted suppliers possessing relevant scale and expertise to meet today’s ever-evolving needs. These suppliers can be integrated into modern digital claims platforms that reduce friction and improve the flow of data and information. We see many claims functions having integrated supplier instruction and invoicing functionality, but with further development required on integration that can help to enhance client experience and supplier performance management. Clients are more often than not left to call claims functions for updates on their repairs or the suppliers service without any automated notifications to provide these updates. It’s also commonplace for suppliers to be left to mark their own homework with claims functions having no data to assess performance against agreed SLAs and KPIs.
Secondly, insurers are establishing ‘strategic partnership’ teams that are responsible for top-tier suppliers. These teams focus on deepening relationships with suppliers and coordinating end-to-end services in ways that maximize the value of each partnership moving beyond a contract approach to a joint continuous improvement mindset.
Many insurers could need to develop a more precise, end-to-end view of their entire evolving supply chain and how each supplier is interacting with a claim at any given moment. This requires insurers to pivot their thinking, adopting a horizontal view throughout the claims organization and operating more collaboratively to improve claims outcomes. This will speed service, improve the client experience, reduce costs and optimize efficiency overall.
Keeping a clear view of the environment
Insurers are increasing their focus on sustainability in response to public expectations and exploring how to enhance the claims function’s role in enabling a more sustainable future. There are, for example, obvious environmental impacts to consider and manage in areas such as materials sourced during claims to repair vehicles, homes and commercial buildings. Insurers will also be expected, where feasible, to establish local ‘micro’ supply chains that quickly and efficiently connect clients to local businesses and communities.
Insurers are also increasingly considering, the potential for reputational harm that unethical or illegal supplier practices could have on them. Questionable supplier behaviors and practices can reflect directly onto the insurer and harm the organization’s reputation in the marketplace. Insurers are therefore looking to deepen their understanding of how their suppliers work and their commitment to upholding ethical practices, ESG policies and more.
Consideration is also being given to proactively supporting and enabling suppliers in ways that will enhance service and the overall strength of relationships. For example, are insurers focusing simply on securing preferable rates — or are they looking to ensure that suppliers they work with are paid fairly and providing appropriate services? Deeper and more-informed partnerships are the order of the day and critical to future success.
Insurers who become known for looking after their supply chain partners and building relationships in line with their brand and reputation will likely feel the benefits of early competitive advantage among today’s informed and values-driven clients.