Agile claims supply chains: Building an ecosystem of strategic partners

A common pain point in claims is the opaque nature of supply-chain activity. Traditionally, each party — client, broker, insurer and supplier — possesses a separate view and record of each claim. Clients often don’t know where the claim sits, what will happen next and when — making communications a leading cause of client complaints. Brokers, meanwhile, can also endure timewasting efforts to track claims status updates or manage clients’ claims-service delays. For insurers, the lack of fast, accurate and reliable visibility into the claims lifecycle and supplier actions can result in delays, higher costs, damaged insurer-supplier relationships and client dissatisfaction.

Fortunately, digital technology is unlocking new capabilities for a single timely view of each claim, with secure access provided across the spectrum of clients, suppliers and insurers. Digital solutions are giving insurers a new window into the claims journey and its efficient management, including improved workflow, the use of data and analytics to track claims, and updates to clients during the claims lifecycle.

In our view, transformational change must be executed with a holistic view, tying together an end-to-end across claims , and integrating the organization’s capabilities and systems with its client touchpoints. It means crossing boundaries, tearing down walls, combining silos in order have a single digital record available for everyone without the need for a specific technology.

Many insurers traditionally depend on their procurement teams to organize and manage suppliers to the claims function. While common practice, this reduces visibility into the supply chain’s end-to-end performance and efficiency. When coupled with broader complexities involving diverse geographies, services or product offerings, disjointed and inefficient approaches impair the insurer’s ability to maximize the value of key relationships.

Insurers are starting to address this in two ways. Firstly, by rationalizing supplier numbers so as to focus on trusted suppliers possessing relevant scale and expertise to meet today’s ever-evolving needs. These suppliers can be integrated into modern digital claims platforms that reduce friction and improve the flow of data and information. We see many claims functions having integrated supplier instruction and invoicing functionality, but with further development required on integration that can help to enhance client experience and supplier performance management. Clients are more often than not left to call claims functions for updates on their repairs or the suppliers service without any automated notifications to provide these updates. It’s also commonplace for suppliers to be left to mark their own homework with claims functions having no data to assess performance against agreed SLAs and KPIs.

Secondly, insurers are establishing ‘strategic partnership’ teams that are responsible for top-tier suppliers. These teams focus on deepening relationships with suppliers and coordinating end-to-end services in ways that maximize the value of each partnership moving beyond a contract approach to a joint continuous improvement mindset.

Many insurers could need to develop a more precise, end-to-end view of their entire evolving supply chain and how each supplier is interacting with a claim at any given moment. This requires insurers to pivot their thinking, adopting a horizontal view throughout the claims organization and operating more collaboratively to improve claims outcomes. This will speed service, improve the client experience, reduce costs and optimize efficiency overall.

Insurers are increasing their focus on sustainability in response to public expectations and exploring how to enhance the claims function’s role in enabling a more sustainable future. There are, for example, obvious environmental impacts to consider and manage in areas such as materials sourced during claims to repair vehicles, homes and commercial buildings. Insurers will also be expected, where feasible, to establish local ‘micro’ supply chains that quickly and efficiently connect clients to local businesses and communities.

Insurers are also increasingly considering, the potential for reputational harm that unethical or illegal supplier practices could have on them. Questionable supplier behaviors and practices can reflect directly onto the insurer and harm the organization’s reputation in the marketplace. Insurers are therefore looking to deepen their understanding of how their suppliers work and their commitment to upholding ethical practices, ESG policies and more.

Innovative new suppliers who can rapidly enhance speed of service, create end-to-end claim visibility and launch powerful new digital solutions are gaining ground among insurers looking to reshape operations and efficiency.

Forward-looking insurers are broadening their options and looking beyond traditional suppliers in order to take advantage of different types of services and modern capabilities needed for future success.

Suppliers who invest to extract maximum value from claims data and provide insights to improve claims management and risk selection will find themselves increasingly at the center of strategic partnerships with insurers.

Actionable insights derived from weather information, travel and navigation data, sensor technology, geospatial data and economic activity indicators — to name but a few — can be of tremendous operational and strategic value, allowing insurers to better assess, manage, resolve and prevent claims.

In their efforts to enhance efficiency and competitiveness, more insurers are looking at their supply-chain partners to provide specific services that insurers choose not to perform in-house.

Insurers who can move with agility to innovate their operating models — connecting to different suppliers and flexibly coordinating effective end-to-end value streams — will increasingly stand out. Achieving optimal approaches to decision making on the ‘build, buy or partner’ question will become increasingly key to success.

It’s clear that the claims supply chain is critical to the success of the claims functions and today’s insurers should be exploring how they can reimagine their supply chains to enable future success. Digital capabilities will enhance efficiency, the client experience and the bottom line. Connected insurers are digitally enabled organizations. They are flexible and adopt new digital technologies across front, middle and back offices, with the long-term focus on reducing technical debt.

The choice of environmentally aware and active partners is also more important than ever in an increasingly informed and activist consumer marketplace. Deeper relationships with existing suppliers are required, while insurers can also benefit from the integration of new suppliers who have the ability to deliver a new breed of services that help drive competitive advantage.