Process Landscape and Efficiency in Non-Life Insurance Claims Management: An Industry Benchmark

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Serval ID
serval:BIB_E8CC2511C152
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Process Landscape and Efficiency in Non-Life Insurance Claims Management: An Industry Benchmark
Journal
Journal of Risk Finance
Author(s)
Mahlow N., Wagner J.
ISSN
1526-5943
Publication state
Published
Issued date
2016
Peer-reviewed
Oui
Volume
17
Number
2
Pages
218-244
Language
english
Abstract
Purpose
- In view of the fact that claim payouts account for about 70 per cent of annual direct costs in non-life insurance companies and that claims-handling staff sums up to 10-20 per cent of all employees, an optimal claims management environment is of strategic importance. The purpose of this paper is twofold, i.e. on the one hand, the authors introduce a standardized claims management process model and, on the other hand, they apply process benchmarks to various operational parameters.
Design/methodology/approach
- The proposed claims management process landscape comprises current industry standards for claims handling from a theoretical perspective, supported by practice insights from the industry. Our model aims to reflect the most important claims processing activities. The claims-handling work flow is structured into five core steps, namely, notification, registration, coverage audit, settlement and closing of the claim. For these core steps, the authors differentiate between three claim complexity categories and their associated back-office levels. In the second part of the paper, the authors assess the industry's claims-handling efficiency. The authors benchmark industry processes with reference to detailed claims management data from 11 insurers in Germany and Switzerland.
Findings
- The benchmarks are based on the previously defined claims management model and are applied separately to the three retail business lines of car, property and liability insurance. We measure claim process times (cycle times) as well as claim quantities and average claim payouts at different levels. Overall, within each business line, more than 30 data points are gathered from each respondent insurer. This allows us to compare the process performance of different insurance companies and to describe significant differences in their process patterns. Furthermore, principal findings are derived from descriptive statistics as well as ad hoc data analyses.
Originality/value
- The paper seeks to contribute to the discussion of how different insurance companies perform in claims management and to define best practice. Our findings are relevant to academics and practitioners alike.
Keywords
Process efficiency, Claims management model, Industry benchmark, Non-life insurance
Web of science
Create date
07/01/2016 15:41
Last modification date
15/09/2020 6:10
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