San Francisco, Calif. — Insurance organizations are wasting as much as $10 on every policy because of inefficient business processes, a study by Exigen Group has revealed. Duplications, bottlenecks and over-reliance on paper can block corporate effectiveness by causing insurers to spend up to 30% more on processing claims, policies or customer inquiries than necessary.
The business process specialist conducted a detailed analysis of the processes in personal property and casualty insurance organizations (study participants represented approximately 28% of the consumer insurance sector and a total of 44 million policies). It found that by reengineering and automating certain processes, insurance firms can save up to $16 million on every $1 billion of revenue.
"Inefficient processes are like cholesterol in the corporate bloodstream. They slow you down and can have significant consequences for the overall health of the business. Unfortunately, identifying inefficiencies and eliminating them is a complex task that spans multiple departments and, as a result, often gets delayed," said Jim Logan, general manager, insurance at Exigen.
Exigen also identified that insurance providers can save a further 18% to 31% on the cost of a process by aggregating transactions over a single, fixed-cost infrastructure shared with other insurers, or other internal departments. Known as Business Process Utilities, these aggregated models can create up to $33 million in savings for every $1 billion in revenue generated by the participants.
In response to the findings, Exigen has developed a guide to help insurers identify symptoms of corporate cholesterol in their organization. The guide highlights the most common signs of cumbersome processes such as overflowing filing cabinets, lines at the photocopier and escalating spend on compliance fines. It cites specific symptoms that management teams can look out for such as 'swivel chair syndrome', where data from one terminal has to be manually retyped into another.
"As the economy picks up, businesses are shifting their focus from survival tactics to growth strategies," continued Logan. "But inefficient processes threaten to hold many organizations back. Insurers should be considering business process transformation, automation and shared services to ensure they are ready for the upturn."
"Spotting the Symptoms of Corporate Cholesterol: A Guide to Identifying Process Inefficiencies in the Insurance Sector" is available at www.exigengroup.com/downloads/index.html#insurance.
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