Tackling claims leakage

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Many insurers shy away from using the term ‘claims leakage', which refers to the difference between the actual claim payment made and the amount that would have been paid with more effective controls in place. They fear it might suggest they have a higher cost base than their competitors, which will eventually lead to higher premiums or, at worst, suggest they are vulnerable to fraud. Others dismiss it as too simplistic a term to describe a complex problem.

The full breadth of such issues is most brutally exposed when faced with a barrage of claims from natural or man-made catastrophes. These frequently test the most robust claims management systems to the limit.

Post's article studies the causes of claims leakage and looks at how insurers can tackle the problem.