August 4, 2010 by Allan Buitendag and Jeff Anderson
“Claims transformation” is a buzzword around the industry today. To the broker who is working on the front line and dealing with everyday issues regarding the management of clients, claims processes might seem like a back-burner issue. However, with many carriers focused on transforming the claims process, these issues are becoming central to policy management and could, in fact, become the source of many broker concerns in the days to come. For example, let’s examine the rationale for transforming the claims process:
What is a claims transformation?
Simply put, a claims transformation is an insurance company changing how it processes and pays claims.
Why are insurance companies transforming their claims operations?
Insurers need to better manage their expenses and losses. Plain and simple, it’s a bottom-line strategy. Systems and processes that were created in the 1980s or earlier are not taking advantage of the advances in technology and management science that have occurred over the past 20 years. More insurers are realizing that the cost of incurring a claims transformation is more than offset by the benefits of better claims management.
What does it mean to me, the broker?
Transformation means change. It’s critical that brokers, who are the first line of contact to the policyholder, manage their clients’ expectations. Promises by the insurer of a claims transformation being “invisible to the client” are likely overstated. There will be differences, so be informed and be aware. Best-case scenario: a surprised client could generate a lot of calls to your office. Worst-case scenario: they could move the business to another broker.
Here are a few key points to remember if any of your carriers are undertaking a claims transformation.
Finally, insurance companies are undertaking claims transformations to manage their claims costs and expense costs. In theory, better control of costs will lead to more manageable renewal increases passed on to the policyholder. If your primary carrier is not improving the way they manage claims, how will they stay competitive with the carriers who are?
Allan Buitendag is the Canadian Insurance Operations Leader at PwC and Jeff Anderson is the Vice President of PwC Advisory Services
© Copyright 2010 Rogers Publishing Ltd. This article first appeared in the May 2010 edition of Canadian Insurance Top Broker magazine.
This story was originally published by Canadian Insurance Top Broker.