An Insight into the Hidden Cost of Claims Management
Claims management is a core function of business in industries as diverse as travel, banking, hospitality and property finance. Claims management companies (CMCs) make an entire business out of the process.
Yet a surprising number of organisations cling on to outdated systems that consume unnecessary time and resources — costing the business money — and deliver an unsatisfactory experience for the customer.
In this blog, we’ll take a closer look at some of the claims management pitfalls many companies fall into and provide some practical tips on how to improve the efficiency of your claims management process.
Claims Management Mistakes that Cost Your Business Money
You might be thinking, “our system works, so why change it?” Successful businesses are those in which the leadership continually evaluates processes and systems to identify new efficiency measures that will cut unnecessary spend, improve customer service and maximise profit.
Your system may “work” in that the job gets done, but is it taking longer than it should? Are the associated costs more than you’d like them to be? Check out the list of hidden costs below and consider whether there are improvements and savings to be made.
- Relying on Manual Data Entry
An organisation must collect a significant amount of customer data to process a claim effectively. Relying on employees to manually enter client details and upload documents to the company’s computer system consumes unnecessary time and budget.
Manual data entry by a human is typically slower and more prone to error than using designated software that can add a large volume of information to the system in a fraction of the time it would take an employee to do.
The hidden costs of manual data entry can far exceed the investment required to purchase claims management software that automates key functions, resulting in a faster and more accurate process. Employees can be better deployed elsewhere, performing tasks that only a human can do, instead of being paid for hours of slow and potentially error-ridden data entry.
- An Outdated Onboarding Process
Acquiring new clients is crucial for any business. But if the onboarding process is slow and difficult, it can consume more of the budget than it needs to. Furthermore, a poor onboarding experience is likely to negatively impact customer retention levels. For claims management companies, a time-consuming or confusing onboarding process can result in lost business — if it’s too hard to submit a claim, the customer is likely to give up and go to a competitor.
Many businesses mistakenly believe that customers want to speak with a human when they start a claim. In some areas of business, customers do need human interaction; for example, to discuss the service or products provided before making a purchase. But beginning a claim only requires the claimant to provide the required information and documentation. People live fast-paced, busy lives. The quicker and easier it is to start the ball rolling, the better. If onboarding is managed entirely by employees, the business will inevitably payout for hours of their time as they make multiple phone calls to gather the information needed, chase essential documents, address errors and talk customers through the whole process.
- An Ineffective Document Management System
To process a claim, organisations often require a large amount of data from multiple sources. This may entail contacting numerous companies and organisations while ensuring that all relevant legal requirements and regulations are adhered to.
An effective document management system can easily lead to lost or misplaced information that results in errors and unsuccessful claims. Locating and retrieving documents can also take considerable employee time — an extra cost to the business — if client information is not stored logically.
- Insufficient Data Security
Since the General Data Protection Regulation (GDPR) came into force on 25 May 2018, customers have more control over their personal data, and organisations must ensure that this data is gathered and stored legally. Despite Brexit, it seems unlikely that this regulation, brought in under EU law, will change any time soon.
Claims management requires the collection and storage of large volumes of personal data. Companies that rely on outdated, manual processes for protecting this data could be more vulnerable to data breaches, resulting in irreparable damage to the business’s reputation and revenue. GDPR also gives supervisory authorities the power to issue penalties of up to £17.5 million or 4% of the annual worldwide turnover, whichever is higher.
- Poor Preparation for Company Audits
Unless you fall within one of the exemptions outlined by the government, your business will be required to have an audit of its accounts to verify that they are accurate.
If you lack an efficient document management system, it could take considerable time and resources to find the information required by the auditors. Furthermore, you will find it more difficult to spot any issues of fraudulent activity promptly, which could cost the business thousands of pounds.
How to Reduce the Cost of Claims Management
- Automate data entry
Removing human intervention will streamline and expedite the process as well as reduce errors. The initial investment in software will soon pay for itself in money saved on expensive human resources.
- Allow customers to self-register
Optimise the client onboarding process and save the business the cost of employee time. Claims management software can also streamline the questionnaire and document submission process.
- Centralise document management
Logican claims management software allows businesses to create a file for each client and keep all the information and documents relating to a case in a single easy-to-access location. Effective document management ensures that confidential data is secure and that the reliance on expensive human resources is reduced.
- Update and Upgrade Data Security
Advanced claims management software can help a business achieve GDPR compliance by improving how data is stored and handled. Enhanced data security will protect the business from breaches that could negatively impact its reputation and revenue while also giving customers peace of mind.
- Simplify the Auditing Process
Create a clear audit trail by automating your claims processing system. Every activity on a client’s account will be tracked and recorded, making it fast and easy to provide the auditors with everything they need, while helping you quickly spot and address fraudulent activity.
Switching to an automated claims management system could save your business thousands of pounds in wasted time and resources. Avoid expensive mistakes and deliver a first-class customer experience by streamlining your process and cutting unnecessary expenditure.
Logican Claims Management software will transform the way you manage and process claims. LogiClaim offers powerful, flexible automation that can effectively manage large volumes of claims. Book a free consultation to find out more.