How Insurers Can Reduce the Cost of Claims During Crisis

Scott serves as Director, Operations Advisory at ReSource Pro

When a catastrophe strikes, insurers need to act fast to retain customers and avoid litigation. With hurricane season in swing, it’s a good time for carriers to evaluate their preparedness for an unexpected uptick in claims as well as consider new solutions to claims processing. Below, we will explore three strategies insurers can use to handle claims quickly and accurately while minimizing costs.

1. Leverage offshore teams for non-core claims activities

When claims spike and staff are limited, many insurers turn to a third-party administrator (TPA) for support. But while this solution can increase the speed of claims processing, it won’t necessarily reduce the cost. Many TPAs use licensed staff to conduct the entire claims process, resulting in a greater fee to the carrier.

A more efficient, cost-effective solution is to turn over all non-core, non-licensed claims activities to an offshore team of professionals who can complete them even faster, leaving only the adjustment process to the carrier.

2. Launch or refine your quality management system

When a claims surge hits unexpectedly, it may be necessary for staff to reprioritize tasks and work longer hours. This could lead to an increased risk of errors and employee burnout, resulting in costly rework and potentially even litigation and reputational damage .

To avoid this, insurance companies must ensure employees are receiving the right training and development, leveraging effective, stress-tested processes, and maintaining consistent work quality. Establishing a quality management system can help your organization accomplish these goals.

3. Build an effective business continuity plan

Are you prepared in the event your organization experiences a disruption at the same time a catastrophe impacts your customers? In one example from recent years, severe flooding caused by Hurricane Harvey prevented several Texas-based insurance agencies from operating for weeks. ReSource Pro stepped in to field claimants’ calls, enabling the agencies to provide uninterrupted service.

This scenario may be uncommon, but carriers must prepare a robust business continuity plan that will enable them to operate effectively if capacity becomes limited.

Case study: Boosting claims quality in 60 days

A sudden increase in claims activity can prove challenging, even for experienced claims handling teams. That was the difficulty faced by James River Insurance Company, an A.M. Best A (Excellent) rated excess and surplus lines insurance carrier, after it acquired a fast-growing national account.

Although claims volumes were initially low, after three months, James River saw claims increase 100x. In response, the company began hiring 50 new staff per month but still faced issues keeping up. James River then partnered with ReSource Pro to determine a new approach.

A dedicated ReSource Pro team assumed responsibility for claims setup and manual payments, freeing up James River adjusters to focus on claim investigation, then defined and launched a new QA process in one week. Within 60 days, ReSource Pro reduced the claims processing error rate from 3% to 0.03%, a 100x improvement.



Find out more about how we can support your insurance organization’s claims processing by visiting our Claims Handling page. Or contact us directly.