Better claims strategy could reap industry £1bn savings

Claims functions could save the industry up to £1bn a year through developing more effective claims strategies, according to new research from the CII and Ernst & Young.

The survey of 36 senior claims executives, which was carried out for the report “Strategy Matters – driving claims to the next level of performance”, revealed that many of the respondents had a documented claims strategy.

Almost two thirds of respondents (61%) said they update their claims strategy on an annual basis but a fifth reviewed it only every two years or less often.

And while 51% of respondents gathered customer insight monthly or more frequently, 24% admitted that they rarely or never used it to aid the development of the claims strategy.

The survey also showed that 40% of interviewees believed claims needed to have a bigger voice in the boardroom with half of respondents saying that claims were not fully involved in company strategy development.

Forty three per cent said they reported directly to the chief executive officer with the remainder reporting either to the chief underwriting officer (16%), the chief operating officer (16%) or another business unit head (20%).

Tony Emms, CII claims faculty chair said: “The claims function is at an insurance company’s core – in terms of the significance of both customer experience and of course the bottom-line. Its critical role in delivering the strategy means that engagement at board level (and ideally representation on it) to inform that strategy in light of the issues it faces is key.”

Imran Ahmed, head of claims advisory for Ernst & Young, said: “For too long claims has been the Cinderella function of insurance companies, which seems odd given it controls the largest spend in any insurance company. Our research identifies a real opportunity to turn this around, particularly as boardroom pressures in the current environment continue to bear down on managing costs. Key to claims transformation is the development and articulation of a strong business strategy and the ability to execute.”