Business leaders tend to weigh the cost of one action versus another – but what about the cost of doing nothing? Faced with uncertainty, many people favor inaction over action, a tendency that has been dubbed omission bias. However, inaction can be more harmful than action. When it comes to the claims process, insurance companies that fail to make improvements now could lose a fortune due to their inaction.
Poor Claims Experiences Could Cost Billions
$170 billion. That’s how much is at stake because insurers aren’t meeting policyholder expectations for the claims process. Accenture says that insurers could lose up to $170 billion in insurance premiums over the next five years due to poor claims experiences.
Insurance companies have been investing in digital upgrades. However, the J.D. Power 2022 U.S. Property Claims Satisfaction Study found that overall satisfaction scores have dropped, largely due to slower cycle times and difficulties associated with the transition to digital tools.
Taken together, these two findings should be a major wakeup call. Claimants are not satisfied, and insurers could lose billions as a result.
Inefficient Workflows Are Holding Insurance Companies Back
Whenever your team needs to accomplish a task, the individuals on your team need to go through a series of smaller steps. The term “workflow” is used to describe this process.
Every business has workflows, but most business leaders don’t think in terms of workflows. Because workflows don’t get the attention they deserve, they tend to suffer from redundancies and inefficiencies. Time is wasted dealing with tedious and repetitive tasks, while extra steps are added to address inconsistencies and other problems. The lost time adds up, and it can become a major drain on company resources.
Poor claims workflows are especially problematic.
- When claims processes are inefficient, they drag on. Claimant satisfaction often hinges on a speedy resolution, so these delays can be disastrous.
- Busy claims handlers may not communicate with policyholders as frequently as they should. As a result, claimants can feel that they’re being left in the dark, and this can contribute to distrust.
- The longer the claims process takes, the more money it costs. Claims professionals waste an incredible amount of time on tedious actions that don’t produce revenue. Fast resolution is in everyone’s best interest.
An efficient claims process is critical. Unfortunately, many insurance professionals are lagging behind. It’s time for action.
Examining the ROI of a New Claims System
Revamping the claims process can be a major investment. To see real change, you may need to completely overhaul your current system, and that takes money and time. Some insurers may be reluctant to make this type of investment, but it’s important to remember that inaction also comes with a price tag. In the long run, the cost of doing nothing can be far greater than the cost of adopting a new claims system.
VCA clients are usually able to save an average of two hours per day per person. Think about that – two extra hours every day. That’s a huge time savings, and as the saying goes, time is money. If you reallocate this wasted time to revenue-producing tasks, think about how much you could boost your profits.
How Much Is Inaction Costing You?
We want you to see how doing nothing costs, so we’ve created a quick calculator that will show you the numbers.
ABC company handles 250 claims per month. Their 10 employees earn an average of $40/hour. The company bills it’s clients at an average rate of $95/hr.
After assessing the daily claims workflow, ABC determined that each employee is spending an average of 2.67 hours a day on manual tasks like sending acknowledgements and claim status notifications; logging time; maintaining file notes and diaries; generating letters, reports, invoices and summaries; and locating claims information.
While 2.67 hours per day doesn’t sound too bad on the surface, it means that 6,408 hours are lost every year on these inefficient tasks that could potentially be automated by a new cutting edge claims platform.
While ABC’s leaders weren’t shocked to learn of the 2.67 hours per day, they were blown away by the price tag because they’d never stopped to do the math. The yearly lost wages added up to $256,320!
If this company could covert just half of these wasted hours into revenue-generating billable hours, this company could add $304,380 to its yearly revenue potential.
It’s Time to Take Action
It can be hard to put a precise price tag on inaction, but as our calculator shows, there is a cost for doing nothing. Right now, the insurance industry is evolving fast, and this means that inaction is especially costly.
Every day you wait to fix your inefficient claims processes, the cost of inaction adds up. Do you want to see how much inaction is costing you? Request access to the ROI Calculator.