Look inside the typical insurance company and you’ll see something interesting. Instead of a single, synchronized enterprise where data and processes flow seamlessly across departments, you’ll probably find a grouping of discrete departments each pursuing its own mission.
For example, consider the procurement and claims department. Both of these teams have the same logo on their business cards. Their paychecks have the same signature. They may even work in the same building. But they tend to operate independently of one another. The claims department focuses on providing value to the policyholder, while procurement sources services to resolve claims at the lowest cost. These may seem like overlapping functions, but in many cases, they’re not. Over the decades, they’ve evolved into siloed disciplines within the same enterprise. There’s no single digital ecosystem that the two share. Each relies on its own systems and data.
The era of CX
But there’s a change underway that is driving these two departments to work together in a more seamless way. Suddenly, improving the customer experience is a top strategic imperative for every department. The longer a customer must wait to resolve a claim—and the more disjointed and frustrating the claims process is—the lower the customer’s satisfaction and the greater the likelihood they’ll shop around when it’s time to renew a policy. Without an efficient collaboration between claims and procurement, the quality of the customer experience suffers.
As with many challenges, the first step is admitting there’s a problem. According to Bain, some 80% of CEOs believe that they deliver a superior experience. But only 8% of their clients agree. And 83% of dissatisfied property and casualty customers in the U.S. have switched insurers due to a bad claims experience.
The industry’s C-suite is on notice. Today’s policyholders want instant responses to claims. That means that providers need the cross-departmental processes in place to accelerate claims resolution. Decision-making needs to be unified and instantaneous. Roles and responsibilities need to be clearly defined, and both claims and procurement need to be accountable for client satisfaction. The two functions need the same goals, and they need shared processes that eliminate delays and bottlenecks.
Rethinking the procurement-claims relationship
How can procurement and claims flip the script and achieve the seamless collaboration that customers demand? It starts with working on the same technology platform and operating from the same source of data. In the modern enterprise, collaboration drives innovation, and technology is the enabler of that collaboration. Procurement and claims need the shared processes and a single version of the truth to streamline cross-departmental processes and to connect with suppliers for quicker sourcing and claims resolution. But technology is just part of the equation. Achieving this seamless collaboration also requires a cultural shift. The two functions must recognize that delivering a more holistic customer experience means abandoning a “not-my-department” mindset.
Better for the customer = better for the bottom line
The good news is that making procurement more agile and customer-centric is also good for the bottom line. In a discussion of how insurers can improve combined ratios by five percentage points, McKinsey and Company identified procurement excellence as the top initiative with the highest possible impact on both expense and loss ratios.
By creating a digital ecosystem with an integrated claims and procurement solution, insurers can resolve claims faster (which customers love), and they can do it at a lower cost (which C-suite executives and investors love).
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