Presentation on theme: "Claims Leakage Control"— Presentation transcript:
1Claims Leakage Control Unique, Detailed and Independent
2“In a competitive insurance market, controlling claims costs is vital Traditional in-house audits may not be the answerDo you measure claims leakage?If so, is the process independent?
3What is Claims Leakage?Claims Leakage is the loss of time or money from current claims practices and proceduresCMC’s Claims Leakage Program measures all aspects of claims cost management from small regular issues to major over payments.Claims costs are the single largest cost of running an insurance company.Why do insurers often only measure their claims service in terms of productivity levels and customer service?CMC’s Claims Leakage Program - improved profitability without additional costs or infrastructure.
4Benefits of Reducing Claims Leakage Reduce claims spend - every claim dollar saved = $1 profitCompare saving just 2% of claims cost with the effort and expense required to otherwise achieve a 2% increase in net profitReduced claim expense =Positive impact on RI costsPositive impact on regulatory capital requirementsCompliance Benefits for claims practicesCMC has previously detected Claims Leakage levels ranging from 0.2% to a massive 41%Typically leakage levels of 2% -10% of untapped savings have been foundWhat profit improvements can you make from reduced claims leakage levels?
5About Claims Management Consulting Pty. Ltd (CMC) CMC was launched in 2000 to provide high quality claims management services to the Insurance IndustryCMC’s aim is to be a major reference point on claims cost control and claims service quality.CMC services are suitable for insurers or any organizations handling claimsMark Rayner (Director) has more than 35 years of experience in Insurance Claims Management including National Claims Management rolesMark is a Claims Leakage identification specialist with extensive experience in claims audits
6Why CMC’s Leakage Program? CMC’s Claims Leakage reviews:Specialize in reviewing all general insurance classesUse a purpose built claims leakage database that has been designed by an insurance claims professionalProvide a detailed and accurate measure of claims leakage within claims practicesDemonstrate where operational changes or training needs to be implemented to improve claims outcomesBecomes the catalyst for positive change and improved operations and claims costs
7Basic Steps Detailed Report Analysis of result On site Claim Review Agree Termsof reviewDetailedReportAnalysisof resultDataandSamplingOn siteClaimReview
8Data and Sampling Details of recently finalised claims are collected Using CMC’s database selection process a precise extract of claims is undertaken for review150 claims are selected to accurately represent all recently finalised claimsThe strict selection criteria is vital to ensure an accurate reflection of all recently finalised claimsThis method is far more reliable than a random file selection process
9On Site Claims ReviewAn extensive review of the 150 claims is then conducted by the CMC Representative and a senior local claims handler, using our leakage questionnaireThe questionnaire asks over 70 questions of each claim reviewed based on the following common areas of claims leakage:The results of the review are shown by product, leakage severity, leakage frequency, cost band and in the above categoriesWe comment on every leakage found and those where there is potential for leakage to occurDuplicatesPolicyTimelinessAdjustersInvestigatorsSolicitorsService ProvidersSettlementReworkRecoveriesSalvageFraud
10On Site Claims Review 2CMC works closely with the senior claims executive you nominate as your project leader to ensure we understand your claims systems, processes and procedures.This not only speeds up the file review process, but also ensures it is tailored for your business and produces meaningful results that accurately reflect the leakage outcome.Throughout the process, leakage areas identified are discussed with your nominated project leader.As a consequence, staff involved in the reviews see the leakage first hand and often become “champions” for anti-leakage practices and procedures.
11Analysis of the results File review data is entered into our database on siteThis enables constant monitoring throughout the process and enhanced areas of focus where trends are identifiedOnce the File Review is completed and all results have been determined and analysed, we provide a detailed reportThe report contains:an executive summarya detailed commentary on leakages identifiedrecommendations for leakage control and reductiona comprehensive set of leakage reports
12Case Study 1Scope: Large Australian insurer with a significant commercial portfolio. CMC reviewed their large specialty commercial portfolio in all statesResults: Identified claims leakage in all state offices. In one state we were able to identify a massive 41% leakage level due to an absence of recovery processes and checksAction: Recommendations included major process changes which when implemented resulted in immediate improvement in portfolio profitability
13Case Study 2Scope: Large Personal Lines insurer requested review of Motor and Home claims Australia wideResults: Able to identify leakage percentage by state office in both motor and home portfolios ranging from under 1% to over 9%Action: The implementation of just one of CMC’s recommendations to change motor damage assessing methods in one state resulted in saving of over $1.7M in the first twelve monthsThis saving represented a significant reduction to the average motor vehicle claims cost
14Summary CMC’s Claims Leakage Program: Is a powerful, robust yet flexible tool that can be modified to meet the individual needs of each and every client.Introduces claims leakage benefits without affecting customer serviceDetermines the priorities for improvement in claims procedures and trainingEnable strategies to be developed that WILL positively effect results. Real results – Real savingsMark Rayner. Mobile: Office: