Insurance Carriers' Claims Quality Control Conundrum

Yesterday in Chicago I had the pleasure of spending a little time with Aite Group senior analyst Stephen Applebaum who gave me a preview of his soon-to-be-released research, North American P&C Vendors: Partners in Claims Excellence. In their pursuit of claims excellence, insurance carriers depend on a range of vendors, such as repair shops, car rental companies, auto glass and restoration vendors, Applebaum notes. Insurers want to offload as many claim-related services as possible onto vendors for whom they are a core competency. The problem is that there is very limited quality control over what one might call those temporary representatives.

"Policyholders rarely meet anyone from the insurance company, but they do absolutely meet the vendors — which makes the vendors the face of the insurance company," comments Applebaum.

Aite's research will presents and assesses claims executives’ views of and reliance on various vendors, products, and services. An in some cases, the research points to exemplary partners who have evolved their businesses into finely tuned symbiotic partnerships with insurers. For example, Enterprise Rent-A-Car has mastered the economics and logistics of providing cars while juggling the concerns of claimants, repair shops and insurance carriers. In the wake of its acquisitions of National and Alamo, the company has an insurance claims market share of about 80% and processes claims-related rentals for an average of about $400.

Unfortunately, few vendors present the combination of economy and quality that Enterprise offers. Given the sheer number of personal lines insurance policies and their distribution across the continent, it perhaps should not be surprising to learn that insurers call upon the products and services of approximately 250,000 vendors nationwide for claim purposes. Those vendors range from nationally known brands to local mom-and-pop businesses and, no doubt, a good few fly-by-night operations of dubious reliability. As things stand, insurers face difficult decisions in finding partners who can economically and satisfactorily act as the mediating "face" of their company during what is likely to be the most crucial interaction between the carrier and its policyholder.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio