Operational Excellence Claiming Your Customers

In this extract from DST’s insights paper ‘Growth from the inside out: Mastering the complexity of operational excellence in financial services’, Head of Relationship Management Shaun McKenna explores the profound impact of operational excellence on claims management and customer retention.

There are two things that really stand out about claims.

Firstly, they are a relatively infrequent opportunity for an insurance company to prove its worth. In the extreme case of life insurance, a claim is the one chance to deliver in a customer relationship that may have lasted 40 or 50 years.

Secondly, claims managers are often dealing with people facing significant stress – aggrievement, injury or illness, or significant personal or financial loss.

If ever there was a moment of truth in financial services, this is it. An insurance claim isn’t just about a customer claiming on their insurance. It is also about the insurance company claiming that customer… once and for all.

But, unfortunately, insurers have been placing their attention on customer touchpoints while viewing the claims management process that underlies it as a pure expense. They either innovated with a primary focus on cutting cost or avoided innovation entirely by maintaining spreadsheets and printed or PDF manuals.

This leads to a customer experience that promises much, but fails to deliver. It is also the prime reason why, according to a 2016 DST survey:

  • 60% of insurers have not upgraded their claims process in the last 12 months.
  • 26% of consumers said they thought their insurer seemed to be using old technology.
  • A fifth of policy holders have changed insurers due to being unhappy with how a claim was handled. 1

To make matters worse, the ‘do nothing’ approach is more likely to increase costs than reduce them. It leads to slow, manual processes, excessive handovers, difficult to find records, experienced examiners performing routine tasks, duplications, errors, limited compliance and performance reporting capabilities, poor communication, and a raft of other issues.

Thankfully, this is now changing. More and more insurers recognise that the claims process itself is the real source of differentiation; and they are applying operational excellence principles to change the claims game.

Put simply, operational excellence is the ability to deliver sustainable competitive advantage through enhanced operational performance. It is achieved by aligning your planning, people, and processes to clearly defined customer and organisational goals. In this case, that means a claims process that empowers customers while optimising efficiencies and compliance.

Based on the work of Sandy Kemsley in the DST-sponsored ‘Case Management in Insurance: Focus on Claims Processing,2 operational excellence will drive these benefits by unlocking the ability to:

  • Maintain a single view of each claim, policy, and customer through a fully-electronic claim folder.
  • Model regulations and best practices and then codify them in claims processes and business rules.
  • Build flexible and unique processes, including rules, handovers, and templates to suit the specific needs of each claim.
  • Log all actions, whether manual or automated, for reporting and auditing.
  • Empower examiners to easily hand-off routine tasks to less-skilled workers while maintaining control.
  • Integrate multiple legacy systems to reduce the demands for system training and multiple entries.
  • Automate standard parts of the claims process, enabling more straightforward claims to be entirely auto-adjudicated.
  • Create easy-to-use mobile interfaces for some functions, such as analytics and reporting or claim status updates for customers.

You could further add to this list:

  • Improve communication with customers, partners, and (where relevant) third party or group insurers.
  • Significantly reduce processing time as key data and documents (such as evidence) are entered directly into systems by customers through customer portals.
  • Enhance your ability to evolve your claims management systems and processes over time in line with emerging technologies and market trends.

In the end, there is one reality operating here. Your customers’ claims experience will ultimately be defined by what they cannot see, rather than what they can.

To learn more about operational excellence, register now to receive DST’s next insights paper ‘Growth from the inside out: Mastering the complexity of operational excellence in financial services’.

This insight was first published in the September 2017 edition of Australian Banking & Finance magazine.

Shaun McKenna
Head of Relationship Management
DST Systems, Australia

1 DST Systems, ‘Consumers, claims and key concerns’. November 2016, https://www.dstsystems.com/insights/consumers-claims-and-key-concerns

2 Sandy Kemsley, ‘Case Management in Insurance: Focus on Claims Processing’, July 2016, https://www.dstsystems.com/insights/case-management-in-insurance-focus-on-claims-processing

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