“An effective operational excellence strategy can lead to more stable and predictable loss costs,” Pil Chung, Deloitte's claims management leader says in a statement. “It can also positively impact operating expenses, increase overall claim service ratings and policyholder retention and improved regulatory compliance.”

To enhance operational excellence in claims, the report suggests:

• Leveraging advanced analytics—Since 20 percent of claims typically drive about 80 percent of losses and expenses, it is critical for insurers to quickly identify which claims are likely to prove most complex. Predictive modeling can help provide this insight by applying data mining techniques and statistical algorithms to effectively forecast outcomes for individual claimants.
• Supplier management—Improving management of spending on third-party suppliers for claims is essential, Deloitte says, estimating that 40 to 50 percent of losses stem from payments to suppliers of goods and services.
• Legal cost management—Data-driven analysis and traditional cost management combined with predictive modeling for litigation management can help create a disciplined process that assigns cases to the most appropriate resources for the specified resolution.
• Technology enablement—Developing an overarching approach to how and where to invest in new capabilities can improve efficiency and increase the likelihood that the technology infrastructure effectively supports the organization's initiatives to enhance operations.
• Fraud detection—Insurers that adopt advanced fraud detection tools and techniques that promptly identify claims with a high propensity for fraud can reduce losses and may gain a reputation in the industry of being hard on fraud.