Costs drivers in the Insurance Claims process and how Technology Can Reduce Them
Have you considered the costs drivers in the insurance claims process and how the right technology could reduce some of these drivers for your business?
- Inactivity of lawyers – using technology claims handlers can easily monitor the progression of cases at all times and any inactivity can be spotted and challenged.
- Productivity and efficiency of the law firms – in addition to challenging inactivity; which causes inefficiency and lower productivity; with technology, cross panel comparisons can be made ensuring the most efficient law firms receive the work they are best at.
- Number of matters that settle – this should increase as a digital database of claims information is built up (such as claimant lawyer behaviour and the average levels of damages for different types of case) so promoting proactive and enlightened decision making.
- Level of damages – Increased information on damages awarded for different types of case, on the law firms that generally achieve lower levels of damages and on the claimant lawyers involved will push down damages levels.
- % of matters won - indeed with a greater digital database of knowledge including claimant law firm behaviour the number of case won should increase.
- Input of the external legal teams – with digitally more informed claims handlers the actual input required from the legal teams will reduce.
- Case Lifecyle – reducing lawyer inactivity, increasing law firm efficiency and productivity, increasing the number of matters that settle and reducing the input of external legal teams will all reduce the case lifecycles.
It can be shown therefore, that there are a number of cost reducing benefits to the right technology not least by increasing the digital maturity of the relationship with your panel lawyers you will reduce case lifecycles.
By taking the NHS Resolution (NHSR) as an example of a public sector “insurance” body where the figures are readily available we can illustrate how enormous costs savings can be made by increasing the digital maturity and reducing case lifecycles. The NHSR has a duty to compensate fairly and to preserve funds for the NHS. Spending on inefficient and sometimes unnecessary litigation diverts money away from key NHS expenditure.
There are currently over 5 law firms assisting the NHSR defend negligence claims. The NHSR in 2017/18 spent £135.8m per year on defending legal costs and £486.2m per year on legal costs from the claimant (NHS Resolution Annual Report 2017/2018) totalling £622m. 426 is the number of days the average (median) time taken to resolve claims in 2016-17 (Managing the costs of clinical negligence in trusts – Report by the Comptroller and Auditor General September 2017).
It would be very realistic by increasing the digital maturity of the relationship between the NHSR and their panel law firms, by using a solution such as LHQ, and so increasing transparency and visibility, to reduce case lifecycles and costs. We believe it is not at unrealistic to reduce case lifecycles by between 1-3 months which would result in huge costs savings.
This we are sure is a calculation you could do in your insurance organisation.
Through visibility of actions at case level and expenditure, you can interact much closer with your legal team, taking positive actions to reduce claims life cycles and in turn reduce legal spend.
If you would like us to work with you to assess the potential saving digital maturity could bring to your organisation or you would like more information on LHQ then please contact us on 0203 637 1950 or make an online enquiry here.