Discover how to unlock unprecedented speed, accuracy, cost savings, and customer satisfaction.
The traditional claims processing journey—from first notice of loss (FNOL) to assessment and settlement—is time-consuming and complex, involving disparate systems, cumbersome paperwork, and considerable manual intervention.
As an insurance adjuster (IA), you’ve probably experienced its negative impacts firsthand— errors, delays, high costs, low customer satisfaction, and even regulatory trouble. These suboptimal outcomes hinder profitable growth in the digital age.
Today, forward-thinking IAs leveraging modern technology for efficiency and effectiveness increase customer satisfaction by 20% and reduce operation costs by 30% (McKinsey). They also improve fraud prevention by 18%.
Joining these front-runners is paramount for anyone seeking to stay competitive.
Here’s all you need to know about achieving efficiency and effectiveness in claims processing:
Claims processing efficiency in a nutshell
Claims processing efficiency leverages cutting-edge technologies to minimize resource use. It streamlines the evaluation and approval or denial of claims, making IAs faster, leaner, and more competitive.
Key factors contributing to efficiency include:
- Seamless system integration: Interoperability between your claims management system (CMS) and other critical systems and tools, improves data accessibility and breaks silos. This means that instead of spinning your wheels trying to track down crucial information, you can focus on what matters most—processing claims.
- Automation: Automating routine data entry, document verification, and fraud detection tasks using artificial intelligence and machine learning reduces processing time and frees employees to focus on critical business objectives.
- Standardization: Standardized claims processing procedures and guidelines ensure consistency, fewer errors and reworks, and less time spent on decision-making.
To gauge your firm’s efficiency, consider how these metrics stack up against industry averages:
- Average claims processing time: How long does it take to process a claim from FNOL to close?
- Daily claims processing capacity: How much can the company handle without compromising quality or overwhelming employees?
- Average processing costs: What does it cost your firm on average to process a claim?
A fast, automated claims process with few errors improves capacity and resolution time while keeping costs low. It makes the firm more efficient.
Therefore, it’s crucial to immediately evolve capabilities if existing systems, technology, and workflows aren’t meeting objectives efficiently.
Expertise from a reliable digital transformation partner like Susco can help.
Learn more: Efficiency through modernization
Effectiveness in the context of claims processing
Effectiveness is how well IAs meet claims processing goals. Here, the focus is on accuracy, customer satisfaction, and regulation compliance.
- Accuracy: Claims are evaluated correctly, and claimants receive fair compensation.
- Customer satisfaction: The claims process is smooth, transparent, and straightforward, leaving customers feeling valued and supported.
- Compliance with regulations and standards: The IA operates within the legal framework to safeguard its reputation and avoid penalties and fines.
Insights about claims processing effectiveness can be gleaned from these metrics:
- Claim approval accuracy rate: What percentage of claims are settled without underpayments, overpayments, or other errors on the first review?
- Customer satisfaction scores: How well does the claims process meet customer needs? Would they recommend the company? Are there areas that need improvement?
- Compliance audit results: Do audits consistently show no major violations of prevailing regulations?
Generally, you should aim for high accuracy rates, positive customer reviews, and audit results to ensure consistency, reliability, and claims processing quality.
Get faster and leaner with efficiency
Efficiency in claims processing allows IAs to transform from the inside out. It drives faster turnaround times, cuts costs, and better utilizes resources. These benefits completely change the game.
Let’s break it down:
- Faster turnaround times: When claims are processed efficiently, the gap between FNOL and resolution can be reduced from weeks to days, allowing IAs to handle more claims. This creates a win-win—customers get a better overall experience, and firms set themselves apart from competitors struggling with longer processing times.
- Cost savings: Efficiency directly impacts the bottom line by reducing labor and operational expenses. These cost savings can be redirected to drive growth and profitability in other business areas.
- Improved resource utilization: Efficiency creates synergy between people, processes, and technology, optimizing resource use across the claims cycle. This leads to higher worker and organizational productivity.
Increase accuracy and build reputation with effectiveness
Just like efficiency, effectiveness brings a lot to the claims processing table. Key advantages include the following:
- Higher accuracy: The benefit of processing claims correctly the first time is twofold. To start, claimants receive fair compensation, and there are fewer disputes. This significantly trims the time, effort, and money expended on reworks. Second, IAs reduce their risk exposure by capturing fraudulent claims early.
- Enhanced customer trust and loyalty: Consistent, smooth, and hassle-free claims processing establishes trust and loyalty with the carriers and insureds, providing a strong, reliable customer base to support expansion.
- Compliance and regulatory adherence: Effective claims processing establishes robust checks and balances to catch and address potential violations proactively. This keeps you in good standing with regulatory bodies, helping prevent fines, penalties, license revocation, business closure, and other adverse effects of non-compliance.
Ultimately, effectiveness leads to better outcomes for customers, employees, and the firm. And that’s the true mark of success.
Efficiency and effectiveness: two sides of the same coin
At first glance, efficiency and effectiveness often seem like competing claims processing goals. Tradeoffs are common because one focuses on speed and cost savings while the other prioritizes accuracy and thoroughness. However, these seemingly conflicting factors are two sides of the same coin.
Therefore, pursuing efficiency and effectiveness in parallel is crucial to optimize outcomes.
If claims are processed faster and at a lower cost while compromising accuracy, then potential savings could be lost in rework. Similarly, pursuing effectiveness at the expense of efficiency can slow down resolution, increase costs, and frustrate customers.
Balancing claims processing efficiency and effectiveness can be challenging, and you may need expert help on the road ahead.
Strike the balance with Susco Solutions
As we’ve discussed, efficiency and effectiveness in claims processing unlock unprecedented speed, accuracy, cost savings, and customer satisfaction. However, a solid strategy that integrates people, processes, and modern technology is needed for the best results.
Susco provides custom technology solutions that directly and comprehensively address the complexities large IA enterprises face. We also have a SaaS option for up-and-coming high-growth IA firms seeking to elevate their performance.
Our solutions keep you agile as technology and customer expectations evolve. Get started with a tailored assessment and navigate the future with more confidence.