Process Landscape and Efficiency in Non-Life Insurance Claims Management An Industry Benchmark

Purpose – In view of the fact that claim payouts account for about 70 per cent of annual direct costs in
non-life insurance companies and that claims-handling staff sums up to 10-20 per cent of all employees,
an optimal claims management environment is of strategic importance. The purpose of this paper is
twofold, i.e. on the one hand, the authors introduce a standardized claims management process model
and, on the other hand, they apply process benchmarks to various operational parameters.
Design/methodology/approach – The proposed claims management process landscape comprises
current industry standards for claims handling from a theoretical perspective, supported by practice
insights from the industry. Our model aims to reflect the most important claims processing activities.
The claims-handling work flow is structured into five core steps, namely, notification, registration,
coverage audit, settlement and closing of the claim. For these core steps, the authors differentiate between
three claim complexity categories and their associated back-office levels. In the second part of the paper, the
authors assess the industry’s claims-handling efficiency. The authors benchmark industry processes with
reference to detailed claims management data from 11 insurers in Germany and Switzerland.
Findings – The benchmarks are based on the previously defined claims management model and are
applied separately to the three retail business lines of car, property and liability insurance. We measure
claim process times (cycle times) as well as claim quantities and average claim payouts at different
levels. Overall, within each business line, more than 30 data points are gathered from each respondent
insurer. This allows us to compare the process performance of different insurance companies and to
describe significant differences in their process patterns. Furthermore, principal findings are derived
from descriptive statistics as well as ad hoc data analyses.
Originality/value – The paper seeks to contribute to the discussion of how different insurance
companies perform in claims management and to define best practice. Our findings are relevant to
academics and practitioners alike.