By looking at the title, you may say not just insurance 🙂 Let’s dive into the insurance landscape and what is the best course of action the businesses can take. 

Day by day, the inflation is going up or at least ‘showing up’ it stays wherever it is, but the costs have gone up multifold, and that’s reflecting on the claims. The pandemic has erased some of our memory too. The claims were low in the pandemic period (except for health insurance) due to the lower utilization of the assets or lesser activities. Just out of the pandemic, so-called the new normal of the pandemic has become just a reference point. Some businesses are able to act quickly and skip the pandemic trends and stride straight, but some are still unable to.

Now the new normal is inflation. Insurers are trying to counter this by increasing the cost. Is that the only solution? Of course, what else could they do if they can’t control the volume of claims?

I see the accuracy of the claims adjudication is not much spoken about. How accurately the adjudication happens today? I highly doubt many could make it realistic. A lot of improvements and cost optimization can be brought in here. The adjudication is happening based on historical data and ballparked cost estimation from third-party vendor data. Is this the best way to adjudicate a claim? 

I agree that historical data can play a vital role, but that won’t have had the context like the pandemic, inflation, or other influencers on that given period of time could have been entirely different, which is not relevant for today’s market. Likewise, the market data can be a benchmark, but it shouldn’t be a decision-maker. You can refer to what your competitor is doing but aligning with the market would question your long-term survival.

What can be done then? The most significant investment should go here by the insurers to bring better technology products to get the most accurate data. In today’s world, the very next moment, businesses assume AI-based solution is the savior. Yes, AI is powerful, but quality data acquisition is vital (I mentioned it in detail in my previous post. check it out). The data could be in any form, whether to identify a cost-effective supplier to optimize the processing cost. In today’s world, Insurers have a moral obligation to proactively help the repair facilities to bring down the cost. As long as the business can save a penny, that reflects in the insurance cost, which helps the customer and attracts more business.

Generally, customers are very accommodating as they understand the outcome of inflation or anything that challenges their pocket, but when businesses take that for granted, they might see them quietly moving out. Customers are not here to signal and help businesses. Any business that is not proactively to be relevant and brings the best to the table may exist but won’t survive. Isnt it? 

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