In an era of heightened competition, increasing customer expectations, and the need to deliver greater shareholder or policyholder value, insurers are faced with significant pressure to make noticeable improvements in business performance. Historically, insurers have viewed the claims as an area that offers considerable opportunity to address all of these dimensions.

For instance, up to 10 percent of loss costs can be saved via negotiated volume discounts and streamlined claim-procurement processing — without compromising customer service. That can translate into savings of up to $100 million for every $1 billion dollars in loss claims. Streamlined procurement processes also dramatically reduce the amount of time that claim professionals spend on administrative activities that do not affect the outcome of a claim.

The opportunity to improve the performance of the claim function is very real, yet insurers have struggled in their efforts to capture this value because of a highly diverse supplier base and inadequate technology infrastructure in the claim organization. Insurers can begin to address these challenges by adopting the supply chain management and procurement techniques found in the manufacturing industry.