Issue brief: Claims leakage

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Essentially, claims leakage is the difference between what an insurer did spend to settle a claim and what they should have spent.

Detecting claims leakage and preventing it is a very complex topic that is top of mind for every insurer. This is because it is estimated that claims leakage accounts for 5% to 10% of all claims paid. In addressing claims leakage, insurers are not attempting to underpay claimants, but rather control their outlay to only the amount they are contractually obligated to pay.

Controlling claims leakage is a difficult balance to strike for insurers who must decide between the time and cost of thoroughly investigating a claim vs. the impact to customer satisfaction and retention resulting from a protracted claim settlement experience. 

In other words, at what point does is make more financial and business sense to simply pay the claim? A difficult choice when trying to deliver the best customer experience at the lowest cost

This content outlines:
• The main causes of claims leakage.
• Areas where claims leakage is most likely to occur.
• How insurers can proactively address the early warning signs.