The insurance industry offers a unique service to the economy, offering financial protection against potential losses. By nature, the industry relies heavily on principles like risk and uncertainty to assess the likelihood of such losses and provide coverage that mitigates this risk.

However, an insurer must balance the cost of providing such coverage and the customer experience they provide, especially amid macro factors like rising customer expectations, increased competition, and inflation.

Below, we’ll explore how insurers can balance cost, claims, and customer service to remain competitive in the modern insurance marketplace.

Understanding the Trade-Offs Between Cost, Claims, and Customer Service

While each of these elements plays a crucial role for insurers, many find it challenging to optimize each aspect without compromising too much on the others. Let’s go more in-depth into the difficulties that insurers face while trying to find the right trade-off between these factors:

Limited In-House Resources

One main factor that can limit the ability of an insurer to find this balance is if they have limited resources available to them. This may mean they lack the workforce to invest in better policyholder engagement while trying to improve the claim settlement process and increase cost efficiency. Or, they may not have enough funding to invest in multiple projects at once. Whether it’s a lack of money or a labor shortage, either scenario would keep most insurers from finding the balance in these three principles.

Competing Priorities

An obvious challenge is that there may be competing priorities within insurance companies as to whether claims, cost management, or customer service are deemed the most crucial to the business’s success. For example, there may be a struggle to meet policyholder expectations while remaining profitable. If a particular managing director has personal preferences towards one over the other, the organization could neglect the other aspects.

With this in mind, offering extensive coverage and an excellent policyholder experience can increase costs, making it challenging to invest in other growth initiatives and stay competitive. But, cutting costs or reducing coverage to improve profitability can result in dissatisfied policyholders and a loss of business due to the poor policyholder journey.

Strategies for Balancing Cost, Claims, and Customer Service

While challenging, finding a balance in the policyholder journey, costs, and the claims process can be done with the right strategy. A few tips include:

Optimize Processes

Insurers can balance costs, claims, and customer service by streamlining and optimizing processes. This is largely possible by investing in cutting-edge technology that can automate routine tasks and reduce costs while improving service quality. Additionally, faster claims processing will improve policyholder satisfaction through quick service and reduce the cost of claims management.

Focus on the Policyholder Experience

Another strategy is implementing a customer-centric approach to improve the policyholder experience. With the idea of building policyholder loyalty at the forefront, insurers can better understand their needs and tailor their services accordingly. This can make the claims management process more efficient and drive profitability.

Satisfied policyholders are more likely to renew their policies and recommend the insurer to others, reducing the cost of acquiring new policyholders for the business. Thus, addressing policyholder demands to boost loyalty can also help balance the other core aspects for insurers, like saving money.

Work with a BPO Provider

Working with the right Business Process Outsourcing (BPO) provider can be an effective way for insurers to simultaneously balance costs, claims, and policyholder satisfaction. BPO partners help behind the scenes so insurers can focus on their core competencies; they’re built to offer specialized support in several processes and tasks that insurers require.

For one, BPO providers often have economies of scale that allow them to provide services at lower costs than the insurer could achieve in-house. For instance, many BPO partners can provide more robust customer support, offering 24/7 access to a customer service agent, multilingual support, and personalized service. By outsourcing customer service functions, insurers can reduce the costs associated with hiring and training staff while still providing high-quality, on-brand customer support.

BPO partners can also offer better claims management via their highly qualified customer service agents. This can reduce the time and cost associated with processing claims and improve the policyholder experience.

Working with a BPO provider also enables insurers to scale up or down with flexibility. They can deploy and manage resources to maintain their preferred balance of costs, claims, and customer service to fit the current market conditions.

Find the Right Balance with Covenir

Finding the right balance between costs, claim management, and customer service isn’t easy, but it’s a crucial part of growing an insurance business sustainably.

Partnering with the right BPO provider can help insurers balance cost, claims, and customer service by providing economies of scale, specialized expertise in claims processing and customer service, and the ability to focus on core business functions.

Covenir has extensive onshore experience providing on-brand and seamless solutions like FNOL and claims, underwriting support, policy advising/sales, print and distribution, and virtual mailroom services.

Contact us today to see how easy it is to implement our turnkey solutions that offer you the people power you need to build sustainable growth.