How can insurers overcome the challenges to improving claim procurement? Depending on the relative size of the insurer, there are three possible ways to achieve leading edge claims procurement capabilities:

Build. The most capital-intensive approach is for an insurer to construct its own proprietary supply network. However, the "build" approach is limited to the few insurers with sufficient scale and corresponding operational budgets to fund the substantial investments required. Only the biggest insurers in the world have a large enough spend in claims (and, consequently, large enough potential savings) to justify the costs associated with building the required systems and hiring the in-demand expert personnel.
Borrow. Another route is to collaborate with other insurers to aggregate claim volumes across a shared supplier base. This approach is more suitable for middle-tier insurers that lack the savings potential or investment capital to justify building supply networks and procurement capabilities on their own. Insurers following the "borrow" path can effectively aggregate transaction volumes into the same supplier base to achieve the economies reserved for the larger players in the market. However, this may entail the sharing of contracts, employees, and technology infrastructure to be fully effective.
Outsource. A third way to improve claim procurement is by outsourcing the management of the claim supply chain to a third party. This approach generally requires a lower investment from the insurer because some of the foundational investments, such as legacy system overhaul, may not be fully required. The most common example of such outsourcing arrangements to date has been the use of an external loss adjuster organization, which can provide insurers with access to its preferred supplier networks.

However, while such arrangements can optimize the direction of the claim, they do little to improve the overall process of claim management and compliance. The insurer still must match the hundreds of invoices it receives from suppliers to the appropriate claims so they can be correctly accounted for and paid, a process that can take considerable time and effort. Instead, by outsourcing the entire claim process, the insurer not only gains access to a large supplier network (and, thus, better discounts on products and services), but it also receives a consolidated invoice from the managed service provider for each claim settlement. This enables the insurer to dramatically reduce the time and effort it takes to fulfill each claim and, consequently, improve customer satisfaction.

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Creating a High Performance Claim Organization

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