By: Tjaart Oosthuizen, Head of Claims and Procurement at Western National Insurance
One way to assist a reduction in short-term insurance claims costs, which is always the optimal scenario, is having a robust supply chain within a business.
A supply chain that flows makes for a positive impact on cashflow, thus leading to reduced insurance premiums. Businesses looking to master their budgets should focus on working within a trusted supply chain that is constantly monitored. Here are some top tips for your clients:
Take back control
Reducing your client’s average claim ratio is made a lot easier by having the correct and monitored controls in place. Monitoring and adjusting the process regularly,
will have a direct impact on the reduction of fraud and mainly on the containment of costs. Insisting on a real time tracker in the supply chain is an excellent way to manage this. Having stringent procurement processes and comprehensive service level agreements in place with vendors, allows for better control and bargaining power.
Trust is central to business
Proper management with vendors who are trustworthy are essential components of a well-run business, that also makes a good case for insurance. The vendors must understand and more importantly, conform
to your processes and procedures allowing for the seamless integration of their service offerings into your systems. This all leads to a reduction in fraud and also encompasses best business practices. Keep in mind that once a service level agreement is defined and signed, it needs to be systemised (if possible) and revisited, often to ensure that the agreed upon rates and conditions
are being employed in reality. Your vendors are at the forefront and in many cases represent the face of your business, so their selection criteria and processes must always be aligned to the image you wish to portray. Businesses and vendors now have Covid-19 prevention measures to adhere too as well.
Treating Customers Fairly (TCF) in today’s business is
no longer a luxury but a requirement, this begins at the underwriting stage of the policy by ensuring the client knows what they are entitled to, ensuring this is what they receive at claim stage. The transparent process means nothing is being hidden, and everyone is operating in an open environment where all understand the controls in place.
Once again ensuring your vendors are aligned to your policies, procedures and execution of duties will ensure that clients can feel they are being dealt with in the same and correct manner, irrespective of the actual person
providing the service. TCF also indirectly contributes to the financial bottom line. This could be either in the form of a client accepting a settlement offer on a claim as
they fully appreciate that their best interest has been served, or a client not cancelling a policy as all the correct procedures have been followed.
Savvy supply chain sheds rands
Minimising issues within the claims’ environment can extend to saving money on your premium. The cost of running a well-oiled supply chain may be a little steeper as compared to having minimal to no controls, but also has the added bonus of a positive financial impact on the monthly premiums being paid. Insurers like a supply chain that works, one that has the correct measures in place, and that offers a transparent look into how a company runs. As claims risk reduces, so do monthly premium costs, proving how important it is to run a tight ship.
Choose a vendor you can trust
Supply chains do not primarily focus on costs and utilising the cheapest vendor is not always the best solution. An incorrect or ill qualified vendor could lead to higher costs at the finality of the process. Reversely, the friendliest vendor is also not always the best option, as in his effort to be nice, he loses focus of the job at hand and costs escalate. Getting the balance is key, ensuring you have the most cost effective, qualified and competent vendor to represent your business. Monitoring of- and allowing yourself the fluidity to easily adapt your vendor make-up leads to a comprehensive and efficient supply chain.
Think insurance. Now think again.
Western National Insurance Company Ltd, affiliates of the PSG Konsult Group, are authorised financial services providers. (FAIS: Juristic Reps under FSP 9465)