This is our presentation on Claims Leakage audits that we perform for insurers. Please visit our website if you'd like more information or to see the presentation with narration. Please feel free to contact me if you'd like to discuss or comment. Mark Rayner.
2. “In a competitive insurance market,
controlling claims costs is vital.”
Traditional in-house audits may not be the answer
Do you measure claims leakage?
If so, is the process independent?
3. What is Claims Leakage?
Claims Leakage is the loss of time or money from
current claims practices and procedures
CMC’s Claims Leakage Program measures all aspects
of claims cost management from small regular issues
to major over payments.
CMC’s Claims Leakage Program - improved
profitability without additional costs or
infrastructure.
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?
4. Benefits of Reducing Claims
Leakage
Reduce claims spend - every claim dollar saved = $1 profit
Compare saving just 2% of claims cost with the effort and
expense required to otherwise achieve a 2% increase in net
profit
Reduced claim expense =
• Positive impact on RI costs
• Positive impact on regulatory capital requirements
Compliance Benefits for claims practices
CMC 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 found
What profit improvements can you make
from reduced claims leakage levels?
5. About Claims Management Consulting
Pty. Ltd (CMC)
CMC was launched in 2000 to provide high quality claims management
services to the Insurance Industry
CMC’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
claims
Mark Rayner (Director) has more than 35 years of experience in Insurance
Claims Management including National Claims Management roles
Mark is a Claims Leakage identification specialist with extensive
experience in claims audits
6. Why CMC’s Leakage Program?
CMC’s Claims Leakage reviews:
- Specialize in reviewing all general insurance classes
- Use a purpose built claims leakage database that has been
designed by an insurance claims professional
- Provide a detailed and accurate measure of claims leakage
within claims practices
- Demonstrate where operational changes or training needs to
be implemented to improve claims outcomes
- Becomes the catalyst for positive change and improved
operations and claims costs
8. Data and Sampling
Details of recently finalised claims are collected
Using CMC’s database selection process a precise extract of claims is
undertaken for review
150 claims are selected to accurately represent all recently finalised
claims
The strict selection criteria is vital to ensure an accurate reflection of all
recently finalised claims
This method is far more reliable than a random file selection process
9. On Site Claims Review
An extensive review of the 150 claims is then conducted by the CMC
Representative and a senior local claims handler, using our leakage
questionnaire
The 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 categories
We comment on every leakage found and those where there is
potential for leakage to occur
Duplicates Policy Timeliness
Adjusters Investigators Solicitors
Service Providers Settlement Rework
Recoveries Salvage Fraud
10. On Site Claims Review 2
CMC 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.
11. Analysis of the results
File review data is entered into our database on site
This enables constant monitoring throughout the process and
enhanced areas of focus where trends are identified
Once the File Review is completed and all results have been
determined and analysed, we provide a detailed report
The report contains:
- an executive summary
- a detailed commentary on leakages identified
- recommendations for leakage control and reduction
- a comprehensive set of leakage reports
12. Case Study 1
Scope: Large Australian insurer with a significant commercial
portfolio. CMC reviewed their large specialty commercial
portfolio in all states
Results: 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 checks
Action: Recommendations included major process changes
which when implemented resulted in immediate improvement in
portfolio profitability
13. Case Study 2
Scope: Large Personal Lines insurer requested review of Motor
and Home claims Australia wide
Results: 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
months
This saving represented a significant reduction to the average
motor vehicle claims cost
14. Summary
CMC’s Claims Leakage Program:
Enable strategies to be developed that WILL positively effect results.
Determines the priorities for improvement in claims procedures and training
Introduces claims leakage benefits without affecting customer service
Is a powerful, robust yet flexible tool that can be modified to meet the individual
needs of each and every client.
Mark Rayner. Mobile:+61 403 434 204 Office: +61 2 9874 2727
Real results – Real savings