 Mark Kirpalani, managing director at Capital Capture, explains how electronic data capture and management can help insurers tackle insurance fraud and reduce operating costs by establishing efficient claims management processes
The insurance industry will no doubt welcome the accountancy firm BDO LLP’s recent findings, which showed that, in 2012, overall fraud in the finance and insurance sector fell from £834 million to £473 million. Yet, despite the substantial progress that has undoubtedly been made, there is still no room for complacency: According to the Insurance Fraud Bureau (IFB), one in seven personal injury claims are linked to suspected criminal ‘cash for crash’ scams.
Unfortunately, at a time when many householders are hard-pressed for money, it’s not just criminals that are tempted by the prospect of getting a quick payout; in many cases opportunistic policy holders are also adding to the problem by inventing or exaggerating claims. Inevitably, honest insurance customers tend to end up footing the bill, with the IFB putting the average cost per year at an extra £50 per premium.
For insurers, new legislation and the ongoing soft market will compound the requirement for insurers to work proactively to outperform the market in any way possible. In the coming year, the analyst firm Ovum predicts that the same economic issues will persist as existed in 2012, creating a difficult environment in which to generate profitable growth. The implementation of the Gender Directive could further compound the challenge, by reducing overall profitability in the UK motor insurance market by 2% [Ernst & Young].
Better processes
In its report ‘2013 Trends to Watch: Insurance’, Ovum notes that, in order to remain competitive in the modern insurance market, it has become essential for today’s insurers to optimise their core administration systems and make good use of advanced analytics.
With its potential to speed-up claims handling and give insurers more time to identify and investigate questionable claims, the intelligent use of document capture and electronic data management can go a long way – both in the fight against fraud and in meeting the challenge to become more competitive. By utilising a capture solution to convert claims correspondence electronically as soon as it enters the business, data can be delivered instantly to the correct work stream, which in turn cuts down waiting time and makes the whole process much quicker.
Similarly, by automating paper-based processes, employees can store, retrieve and share new claims files and add on-going updates more effectively. This faster, more efficient way of operating can also prevent delays in handling dubious claims, which may otherwise end up being settled rather than investigated so that the insurer does not fall foul of regulatory requirements.
Good document management capabilities are also essential to avoid potential false claims being missed. Without them, essential data and documentation can be lost or mislaid. Whether a claim turns out to be fraudulent or not, to avoid possible litigation, it’s also important for the insurer to have an accurate timeline that shows when and how things happened in the process, as well as substantiate that the process was handled in a consistent manner.
Overall, enabling claims to be dealt with more efficiently in this way can make an important contribution towards lowering the insurers’ combined loss number.
Better outcomes
As well as helping bring to light potential fraud, using electronic document capture and management to achieve faster response times also presents the important opportunity to maintain or improve customer retention. Ensuring claims handlers and other customer-facing teams are working with up-to-date, transparent and accurate information can undoubtedly help to make customer experience both faster and more responsive, as well as enabling legitimate claims to be paid out more quickly.
Other important potential benefits of document capture and management technology include the chance to satisfy compliance, governance and legislative demands, in addition to achieving important productivity gains.
With an estimated £2bn worth of fraud going undetected each year [IFB], any opportunity to improve operational practices by reducing fraud should not be missed. And with market conditions continuing to prove challenging, adopting the most proactive approach possible is likely to be essential, both to reduce potential losses resulting from fraudulent activity and, ultimately, to help maximise profitability.
www.capitalcapture.com
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