Three Ways To Manage Cost Containment In An Inflation-filled World

The insurance industry has been grappling with the growing impact of inflation, leaving insurers wondering how to strengthen their bottom line. These three cost containment strategies can help insurers navigate rising claims costs and growing competition, to ultimately enhance operational efficiencies.

In today’s inflation-filled world, cost containment is a top priority for insurance companies. The high costs of claims, increasing regulatory requirements, and rising competition have put pressure on insurers to find ways to reduce expenses and improve efficiency.

Working with the right partner, enhancing the speed of reinstatement, and managing pricing strategies are three key ways insurers can manage cost containment. We take a deeper look into these three solutions and just how they can combat inflation in today’s insurance industry.

Working with the right partner

One of the most effective ways to manage costs and combat inflation in the insurance industry is to work with the right partner. Outsourcing your claims management to a trusted expert brings several benefits:

• Reduced capital costs by utilising partner platforms
• Reduced operating costs through better capacity management
• Improved claims efficiencies
• Access to supply chain networks
• Compliance support
• Customised solutions

Partnering with Gallagher Bassett (GB) will provide insurers access to specialised expertise and technologies that help improve efficiencies, reduce costs, and improve profitability, making the choice to outsource a key effective strategy to achieve cost containment objectives.

Enhancing the speed of reinstatement

Another way to manage cost containment in today’s insurance industry is to enhance the speed of reinstatement. This simply means insurers will need to be able to respond quickly and efficiently to claims and reinstatement requests.

By leveraging technology, insurers will have the ability to automate claims processing and underwriting, streamlining procedures and reducing policy reinstatement times. This solution will help to reduce administrative costs and improve customer satisfaction levels, which means customers who receive prompt and efficient service are more likely to renew these policies and recommend their insurers to others in the market.

Key strategies to enhance reinstatement speed:

1. Automate the reinstatement process – Implementing advanced software systems to automate the reinstatement process will reduce the need for manual intervention and speed up the time it takes to restore a policy. This strategy will also help to reduce errors and improve the accuracy of the reinstatement process.
2. Provide online self-service tools –Offer policyholders online tools to request reinstatement of their policies online without requiring agent or customer service representative interaction. This will ultimately speed up the process by providing a quick and convenient way for policyholders to restore their coverage.
3. Streamline reinstatement programmes – For BAU claims, use blind tenders to test the supply chains pricing and availability. For Event claims, rely on well-established supply chain relationships to access dedicated reinstatement builders, especially on lower value or simple remediations.
4. Implement effective communication strategies – Effective communication is essential for enhancing the claims experience of a reinstatement. Insurers should communicate clearly and regularly with policyholders about their reinstatement process or whether they could ‘cash settle’ their claim. By sharing clear and concise information, insurers can reduce the time it takes to complete the reinstatement process.

Managing the Statement of Works pricing strategies

Managing pricing strategies with the correct tools is crucial for cost containment in the insurance industry. It’s important to accurately price the scope of the remediation to ensure both the insurer and customer are having the reinstatement achieved for the ‘best price’.

To achieve this, insurers need to access and use the appropriate pricing tools and techniques available today. These may include scoping tools, use of quantity surveyors, having agreed pricing for common reinstatements, using a preferred supply chain pricing model, and running blind tenders are ways in which the ensure that the cost to reinstate is as efficient as possible.

Managing cost containment in today’s inflation-filled world is crucial for the success of insurance companies. Implementing these key strategies into your business brings many benefits, such as improved financial performance, enhanced policyholder experience, and success in a highly competitive marketplace.

Want to learn more? Reach out to our team of experts today and see how we can help your business manage cost containment in today’s inflation-filled world.