Because of strict industry regulations, insurance companies often struggle to find ways to reduce expenses. The good news is that today’s digital capabilities are having a positive and measurable effect on both front- and back-office processes to help drive savings. In fact, a recent Infosys study suggests that by adopting digital initiatives, life, health, and property and casualty insurers can save a projected 10 to 25% of sales expenses and operational costs.
Three key strategies for reducing admin expenses include automation, outsourcing, and creating a paperless environment.
1. Automate key processes
Insurance companies can significantly reduce administrative costs by automating some of the processes associated with underwriting, payments, and claims, among other areas.
Underwriting: Underwriters can take advantage of digital data processing power, allowing them to collect and analyze policyholder information with the click of a button. Whether you outsource or implement your own data analytics software, automation frees up the time underwriters need to focus on the more complex tasks, such as developing creative solutions to knotty problems that require human consideration.
Payments: Automated payments create a positive customer experience and improve the likelihood of consistent, timely payments. Additionally, digital reporting lifts the burden from multiple teams (e.g., accounting, customer service, collections), who are often stuck with tedious tasks involved with generating and mailing bills, processing checks, and manual reconciliation.
Claims: Claims are an especially exciting area where automation is benefiting insurers and policyholders. Options can include online First Notice of Loss (FNOL) forms, data collection, fraud detection, and digital payments. Because claims is such a high-impact touch-point in the customer journey, improving efficiency through automation can significantly affect retention and persistency.
2. Outsource vital operations and services
Insurance companies can reap financial benefits by outsourcing various aspects of their operations, such as underwriting, data processing and mining, accounting and payments, and claims handling — including adjudication and fraud investigation. Leveraging the power of business process outsourcing (BPO) allows companies to reduce admin expenses while streamlining front- and back-office operations. By outsourcing some of the more repetitive and time-consuming tasks, insurers gain the bandwidth to improve those areas that require human attention, such as complicated customer service requests.
3. Follow the path to paperless
With today’s greener business initiatives, creating a paperless environment is almost unavoidable. The fact is, managing paper is a bulky and expensive process, incurring costs associated with labor, paper, ink, storage, shipping, and disposal, just to name a few.
The first step to going paperless is rethinking old processes with a digital mindset. Simple changes, such as online applications and electronic signatures, can quickly add up to noticeable savings. You can also replace fax machines with e-fax services that allow you to send and receive documents as PDFs via email. Online payments, both inbound and outbound, can reduce expenses while improving the entire customer experience at the same time.
Begin thinking about what functions you can automate, outsource, and digitize, and you will likely find areas to cut costs without negatively impacting services, employees, or policyholders. In fact, by reducing your admin expenses and time-consuming tasks, you free up the resources you need to focus on innovation and growth.
To learn more about how the One Inc Digital Payments Platform can help insurers improve the customer experience, reduce admin expenses, and increase security, contact us today.