How to Reduce Claims Processing Costs - Part Three
This is my third article in a series that focuses on how insurers can improve their claims processing activities while reducing costs and helping to drive continuous process improvement. My previous columns discussed how you can assess your current claims processing costs and how, once you’ve benchmarked your costs, you can begin streamlining your claims processing. In this installment, I address when you might want to explore the offshore option for processing your claims.
You may have already taken the first step in centralizing your operations and are therefore ready to continue your journey toward being a best-in-class claims processing organization. This advancement along your roadmap is more straightforward and quicker to implement than previous centralization activities. The keys to its success include well-documented procedures and knowledge transfer.
Whether your organization is large enough to own offshore facilities or partner with a leading outsource vendor with offshore operations, the transition could be relatively painless when managed by an experienced implementation team. Initial priorities involve reviewing current policies, procedures and work instructions to ensure that no important steps are missed. Subsequent activities involve transferring current onsite experience and organizational knowledge to offshore resources, which can involve a variety of methods. Depending on the scale and complexity of activities to be transitioned, offshore resources may shadow onsite employee activities for days/weeks while also reviewing procedure documentation. Alternatively, remote screen share sessions may be scheduled for several hours each day until a comfort level is obtained by offshore operations. Finally, if such activities as straight data entry or legacy system lookup are required, simply sharing existing procedure manuals is frequently sufficient.
The following points outline some of the key advantages of offshoring low complexity tasks involved in your current claims processing operation:
- Competitive labor rates (potentially as low as one third of current employee rates)
- Reduction/elimination of higher, tenured employee wages
- Scalability and flexibility supported by multiple shift operations, which is useful for overnight processing to ensure work is available the following day for onsite claims examiners/knowledge workers
- Reduction of onsite real estate potentially leading to savings or repurposing space
- Cost avoidance of IT hardware
- Robust business continuity and disaster recovery systems
- Transactional pricing models
- Quick return on investment
I will end this installment by briefly addressing issues around data security and confidentiality. Offshore operations are not for everyone as some still have reservations around the security and confidentiality of data that apparently goes offsite. Actually, in many cases documents never leave the United States; rather, offshore connectivity is often described as looking through a window into your operation. Tasks are performed by operators in a way that is similar to using a screen share session. Additionally, many offshore facilities have triple-tiered data entry systems with the latest in physical and technical security. Strict policy and procedures are in place, which are audited frequently by outside authorities to obtain and maintain industry recognized certifications or standards. SSAE-16 SOC 2/3 is one of the leading audit standards that any offshore service provider should possess as a minimum. I also recommend visiting the offshore facilities of any service vendor you may be considering for future operations.
Why consider offshoring to the Philippines?
The benefits of offshoring can be significant. Following is one example, based on our experience servicing clients via our Philippines Business Processing Center:
- English is widely spoken
- College-educated employees lead to a highly skilled labor force
- Time zones are not an issue as a Philippine operation can work while your business is closed
- Overnight processing in the Philippines can help reduce processing turn-around-time
- Cost effective workforce – pay less for more
- Shared service environment that allows for scalability at short notice
In my next article in this series, I’ll spotlight how automation is a key element in containing costs. In the meantime, feel free to visit the Insurance Services page of our website for more valuable information in the form of case histories, white papers, research reports and more.
By James Allen, Director, BPO, Canon Business Process Services
Insurance Industry Insights
February 3, 2017