Loss run reports offer detailed claims history of a customer. These details are critical for underwriters to determine a customer’s risk value and decide whether to extend coverage to the person or not. An underwriter’s ability to forecast risk accurately depends entirely on the accuracy of the loss run report.
Imagine a scenario when you approve your customer’s claim for flood insurance coverage because of waterlogging in the basement. But upon investigation, you discover that poor house maintenance had resulted in an underground tap leakage. This leakage was primarily responsible for the damage and not a flood. Further probe into the issue reveals that the particular customer had a history of filing such undue claims under the pretext of flood-induced damage. To avoid fraudulent claims like this, insurers request loss run reports from the incumbent carrier. However, the task of obtaining loss run reports from the previous carrier has never been an easy job.
Challenges in Obtaining Loss Run Reports
Loss run reports ordering is a manual process which makes it prone to errors. It entails writing emails, making phone calls, sending follow-ups, and so on. In addition, if the new customer has been serviced by more than one insurance carrier, you need to obtain multiple loss run reports. Here’s digging deeper into the potential challenges:
Current insurer can be your potential competitor– It is true that current insurers are legally obligated to issue loss run reports. But they have no obligation to do it on time. They usually sit on it because they have no vested interest in it. As a matter if the customer happens to be a rich prospect, the insurance company will resort to aggressive retention tactics. This will further delay the process.
Varying data format in loss run reports– Insurance carriers use a unique format for generating loss run reports. For instance, commercial insurance carriers have a particular way of sharing claims history. This results in the presence of multiple data in separate formats. Underwriters must manually go through all the data presented in multiple formats. The challenge becomes even more serious when a customer holds multiple policies from different carriers. Underwriters will have to convert all the unstructured data into a coherent and a singular structure. This significantly delays the process and increases the chance of man-made errors.
Manual process delays loss run report ordering– Doing a manual loss run process can take well above a week to issue the quote. The manual nature of obtaining and analyzing loss runs reports consumes a significant amount of time as well as money. This is not a viable option for carriers providing smaller insurance coverages. Underwriters have to manually sift through multiple paperwork to get the information they need. This is a gross wastage of time and talent of underwriters. This also increases the chance of underwriters overlooking an important information which can be a costly mistake for the insurer.
How BPOs Mitigate the Challenge
The current insurer gets communication requests of different sorts on a daily basis. This means that there are chances that a loss run request sent via an email gets overlooked or lost. It is imperative for the enquiring insurer to constantly follow up on their request. Some insurers choose to dedicate a team to execute the entire process of procuring a loss run request and following up on it. Some even have one team to handle different functions including this. Practically, none of the options are viable. Having a dedicated team can be counterproductive as at times the dedicated team will have to either sit idle or overwork because of seasonality of changes. Meanwhile, allocating this additional duty on the existing will shift their focus on other critical tasks such as claims processing, underwriting, and others. Such a dilemma adds to the already existing challenges associated with loss run report ordering. This reinforces the importance of insurance BPO in executing the entire task of loss run ordering. Here’s looking at the potential benefits of outsourcing this task:
Automation of the entire workflow – In a process driven industry like insurance, finance etc, lesser the manual intervention, lesser are the chances of errors. Most insurance BPOs use automated technology to execute a majority of the loss run report ordering workflow. Insurance BPOs use intelligent process automation (IPA) that helps in loss run reports processing. This tool automatically sifts through multiple documents to highlight the data relevant for underwriters. The IPO tool features models that have over 500 million indexed data points. This makes the tool a perfect fit to decipher multiple unstructured and differently formatted data in loss run reports for different carriers.
Reduced operational overheads– Automation helps to reduce reliance on human labor which leads to huge cost savings. Insurance BPOs provide access to this tool to their clients at no extra costs. As insurers have to deal with bigger volumes of loss run reports with a growing business, it will require them to hire a team to order and process loss run reports. This will add to their operational costs. Outsourcing to an insurance BPO will help them get the entire job done in half of the investment required to maintain an in-house team. Insurers are exempted from the cost of hiring team, training them, and then providing them with compensation and other benefits. When outsourced to an insurance BPO it becomes a one-time investment on a need-basis.
Lesser turnaround time– The more time insurers take in processing a loss run report, the more is the chance of losing customers to competing insurers. It is essential for insurers to reduce the TAT to submit and get the loss run reports. However, this task is an impossible feat to achieve for the existing team who have other objectives. Insurance BPOs have dedicated team who takes an end-to-end responsibility of loss run report requests and processing. This being their core objective, they are able to significantly reduce the TAT to get the entire job done. A dedicated team keeps themselves updated with the latest work standards and practices. This helps them to imbibe more efficiency and acceleration in their mode of operation.
Better quality control– Multiple report formats, varying requirements of different insurance carriers can make loss run reports an extremely confusing puzzle. Processing such a confusing pool of data heightens the chance of man-made errors. There are high chances of inaccurate information processed despite a correct filing of reports. Inaccurate information will mislead underwriters about the risk profile of a customer. Insurance BPOs maintain a robust quality check process that includes spot checking and auditing to ensure maintaining the highest quality. They are active in clarifying doubts of underwriters and in the process play an important role in making accurate risk assessment.
There is no doubting the fact that outsourcing loss run report requests to insurance BPOs takes the stress out of the insurance carriers and help them focus on growing their business. However, it is recommended that they make a careful choice before developing the partnership with a vendor. Service scalability, cutting-edge infrastructure, data security policies, quality control are some of the critical parameters that must be considered prior to partnering with insurance BPOs for loss run report requests and processing.
Who We Are and Why Are We Considered as an Industry Authority?
At Insurance Backoffice Pro, we provide support for an end-to-end loss run management process. We specialize in dealing with large and complex sets of loss run reports to decipher the required data and organize it in a well-structured way. We maintain the perfect blend of automation and human resources to provide error-free services in an expedited way.