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The Hidden Costs of Not Having a Comprehensive Claim Intake Process

Written by
Amrish Singh
The Hidden Costs of Not Having a Comprehensive Claim Intake Process

Rolling out a new claim intake process may seem expensive, but sticking with an inefficient process could cost you even more. When calculating the cost of such an investment, don’t just look at how much you’ll spend implementing a new system – also consider the hidden costs that come with having a poor claim intake process. These can add up faster than you might realize.

There are five ways your inefficient claims intake process could be causing your company to hemorrhage money.

1. Higher Call Center Costs

An inefficient claim intake process may lead claimants to spend longer talking to representatives. They may be transferred from one representative to another or need to call back later to tackle problems the rep didn’t address the first time. In addition to leading to claimant dissatisfaction, this can result in higher call center costs. 

According to PriceItHere, call center services cost around $1.29 per minute. If your inefficient claims intake process is wasting time, the cost of those extra minutes will add up. With a more comprehensive and automated claims intake process, you can reduce your reliance on call centers while improving the claimant experience.

2. Higher Fraud Losses

According to the Coalition Against Insurance Fraud, fraud occurs in approximately 10% of all property and casualty insurance claims. American consumers lose about $308.6 billion to insurance fraud each year.

In a ValuePenguin survey, most respondents said they’d never committed insurance fraud. However, when they were asked about specific fraudulent activities, the numbers increased. For example, 35% of consumers admitted they had submitted a claim for preexisting damage to their vehicle. This suggests that many Americans are committing fraud without believing that they are behaving fraudulently.

Since the claims intake process is an insurer’s first opportunity to catch claims-related fraud, it needs to be comprehensive. By asking the right questions and collecting the right data, you can halt some instances of fraud. AI-power photo analysis can detect fraud and AI algorithms can flag anomalies in the report, helping human adjusters focus their time effectively.

3. Longer Cycle Times

The longer a claim drags on, the more expensive it may become. Administrative costs may increase, eating into the insurer’s loss ratio. Longer claims may also result in increased damage from delayed repairs – for example, water damage that leads to mold. Auto insurance claims may lead to higher rental car fees, homeowners insurance claims to additional living expenses, and commercial insurance claims to business interruption. 

An efficient claim intake process can reduce the time needed to deploy repair services and close the claim, leading to lower costs (and happier claimants).

4. More Claim Handler Investment

If your claim intake process is not intuitive or involves workarounds, your claim handlers may require more training to learn it. Even once they have mastered the inefficient system, their work may be slow, as they may need to spend hours on processes that should take minutes. 

Your claims handlers will find it easier to use a more efficient system. You will spend less time on training and your claims handlers will spend less time on claims. Insurers may also have an easier time finding and retaining workers when the system they use is less of a headache.

5. Reduced Subrogation Opportunities

Insurers often find it necessary to pay a claim even though a third party should be held liable. Through the subrogation process, they can recoup these costs. However, an inefficient claim intake process may overlook subrogation opportunities. For example, an auto insurer may pay for car repairs after a crash caused by a pothole even though the city may be liable for failing to maintain the road. If the claim intake process doesn’t identify and flag this, the insurer may never follow through with a demand letter to the city. Furthermore, there may be opportunities to automate outgoing or incoming subrogation requests so your team, and your call center isn’t bogged down by dealing with other insurers.

6. Poor Data Quality

A smart FNOL process captures structured data. When your FNOL intake is integrated with your core system, that structured data goes directly into other platforms, making it instantly available for analysis. When you have access to quality data, you can identify loss trends, cost containment opportunities and information to help you analyze and price risk.

Improving Your Claim Intake Process May Cost Less Than You Think

When you add up all the hidden costs associated with an inefficient claim intake system, the cost of upgrading becomes quite reasonable. In fact, improving your claim intake process may cost considerably less than you assume.

Liberate’s claims automation integrates seamlessly with the other systems you already use. As a result, there’s no need to replace your current system, and the entire implementation process is faster and less expensive. We can automate every touchpoint of the claim process – from FNOL to payment. Learn more.