Articles

How to Reduce Claims Processing Costs: Part Two

By James Allen, Director, BPO, Canon Business Process Services
Insurance Industry Insights
January 24, 2017

This is the second article in a series that highlights how insurers can streamline their claims processing activities while containing costs and helping to ensure continuous process improvement. My previous column focused on how you can assess your current claims processing costs. In this installment, I discuss how, once you have benchmarked your costs and know which areas to focus on, you can begin to plan your approach to streamlining your claims processing. Below is a maturity model that you can compare your current status and help determine the next steps for your organization in reducing your operational costs and maturing your claims operations.

Centralize and Standardize To Start the Journey

In interpreting the above chart we can see how centralizing or regionalizing claims processing operations can take your organization from a level one to level two or three on the maturity model. Level three provides the additional benefits that outsourcing brings to an operation:

  • Contract based Service Level Agreements (SLAs)
  • Best practices developed across numerous Insurance operations
  • Industry benchmarking
  • Enhanced procedural documentation and knowledge transfer
  • Consolidation of hardware and software systems
  • Reduction in operational costs due to labor cost reductions initially driven by consolidation and then by market rates
  • Labor scalability for peak volumes
  • Overall reduction in the unit processing cost of a claim

 No matter whether you keep your claims operations in-house or decide to outsource, the first step in reducing your unit processing cost-per-claim is to centralize or regionalize. My next article will spotlight when you might want to explore the offshore option for processing your claims.

 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.

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