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There is no silver bullet to reducing the cost of EoW claims, but the good news is Procurato have worked with clients to implement some simple steps which can reduce indemnity spend. At the core, is ensuring you have a solid commercial model which drives the right outcomes and complements your focus, whether that is Indemnity Control, Customer Satisfaction, Expense Reduction, or a combination of the three.
When deciding on your commercial strategy, focusing on some critical cost and service levers - hands-on project management of the claim, decisions on accommodation and drying strategies and partners - is what we have seen drives enhanced outcomes. Combining these, through a conscious commercial model, into a focused strategy has given some clients a step change in indemnity control performance, reducing costs by as much as 20%.
1. The Right commercial model
We have established, through work with clients around Europe, that a holistic strategy which targets total average claim cost derives a better overall outcome.
Insurers need to recognise the unintended consequences of targeted procurement focus on individual elements. We often see insurers, for example, focusing on a cost per a room for drying because it gives greater certainty on the cost of drying.
However, this does not incentivise the supply chain to use new equipment or ways to reduce cycle times; the unintended consequence of this is potentially extended drying duration on each room, which drives up accommodation costs.
2. Project management principles
Grabbing and owning the claim, hands-on, end to end is critical to managing cost. Successful project management of escape of water claims - having a set of detailed handling principles, getting a claim plan set out at the start, managing restoration against it has one of the biggest impacts in reducing costs and improving customer satisfaction. Our research shows savings of ~10% on claim costs by having milestone steps in a claim and then following them.
3. Alternative Accommodation
The right solution, at the right cost for the minimum duration really drives savings for insurers. In domestic cases accommodation can be up 50% of the cost of the claim and yet our research has identified vast differences in performance, even from the same supplier: average nights vary significantly between insurers, ranging from 50 up to 140 nights.
Key savings drivers:
Be clear with your supplier about the performance drivers you expect, and manage them to them
Optimise booking of short-term alternative accommodation
Improve drying by using techniques such as remote monitoring and speed drying
Make sure your activity is linked to your claim plan
4. Restoration Approach
Understanding and agreeing the right drying technique for the case is the single most important intervention an insurer can make on restoration.
In a recent study we conducted, over 20% of cases reviewed had the incorrect approach applied and therefore excess indemnity spend. More worryingly, in very few cases did it appear the insurer had set a strategy (claim plan) for the outcome or seem to be monitoring progress with an eye on the clock or the cost.
Using the accumulated data and learnings from project management and claims plans enables an insurer to make better holistic decisions.
Our experience of working with insurers in both the UK and Europe is that taking a case-management approach to managing the claim from the outset and then getting the critical decision-points right can make a difference of thousands of pounds and knock tens of days off claim duration.