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Three key strategies will help navigate financial strains, surging claims and a hardening market.
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How cost containment must become the top priority for insurers
21 July 2023
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13 minute read
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The growing costs of repairs, increasing regulatory requirements and rising competition have put pressure on insurers to find ways to reduce expenses and improve efficiency. Cost containment is therefore a top priority for insurers.
If your business is seeking support to redefine its financial footing against the shifting economic landscape, Gallagher Bassett offers three solutions for cost containment.
- Work with the right partner
One of the most effective ways to manage costs in the insurance industry is to work with the right partner. As many insurers face financial strains, surging claims costs and a hardening market, leveraging the expertise of a strategic partner can be instrumental in shifting the dial towards stability and success.
The Road Ahead, our recent global industry whitepaper, recently revealed two significant issues faced by insurers.
First, 44 per cent are feeling the pressure of keeping up with technology advancements. Second, they are focused on stability and client retention rather than new business growth.
Among the many benefits of a strategic partner are leading customer service strategies to support the highest standards of operations and client satisfaction. Additionally, partners provide access to best-in-class claims management and analytics technologies that reduce total cost of risk and increase profitability. By outsourcing and implementing cost-effective strategies, insurers can improve overall business performance and achieve their cost-containment objectives.
- Enhance the speed of reinstatement
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Another way to manage cost containment in today’s insurance industry is to enhance the speed of reinstatement. The road to achieving this is for insurers to respond quickly and efficiently to claims and reinstatement requests.
By harnessing the power of technology, insurers can automate claims processing and underwriting, leading to streamlined reinstatement processes and reduced turnaround times for claims.
This innovative approach not only decreases administrative costs but also enhances customer satisfaction levels. By receiving prompt and efficient service, customers are more inclined to renew their policies and recommend their insurer to others in the market. To assist insurers in optimising the speed of reinstatement in today's industry, we have provided the following key strategies:
Automate the reinstatement process – Implementing advanced claims management systems to automate the reinstatement process will reduce the need for manual intervention and speed up the time it takes to restore a policy. This strategy will also help to reduce errors and improve the accuracy of the reinstatement process.
Provide online self-service tools – These self-service tools will allow policyholders to request reinstatement of their policies online, without the need to contact an agent or customer service representative. This will ultimately speed up the process by providing a quick and convenient way for policyholders to restore their coverage.
Streamline underwriting processes – By using advanced underwriting technologies and techniques, insurers can more quickly and accurately assess the risk associated with reinstating a policy. This can help to reduce the time it takes to complete the reinstatement process and ensure that policies are restored as quickly as possible.
Implement effective communication strategies – Effective communication is essential for enhancing the speed of reinstatement. Insurers should communicate clearly and regularly with policyholders about their reinstatement process. By sharing clear and concise information, insurers can reduce the time it takes to complete the reinstatement process.
- Managing pricing strategies
Effectively managing pricing strategies using the right tools is crucial for cost containment in the insurance industry. Insurers must strike a balance between competitive pricing and maintaining profitability.
To achieve this, insurers can leverage modern pricing tools and techniques, such as data analytics and predictive modelling, to identify customer behaviour patterns and pricing trends. An expert claims management can also support pricing strategies through the provision of solid reserving and cost containment practices, and deep claims insights. The outcome is like having a crystal ball that helps insurers confidently navigate the market, offering competitive pricing while keeping profitability in check.
In today's inflation-filled world, managing cost containment is vital for the success of insurance companies. Implementing these key strategies in your business offers numerous benefits, including improved financial performance, enhanced policyholder protection, and success in a highly competitive marketplace.
John White is head of sales and client services, general insurance, at Gallagher Bassett.
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