Why Auditing Is A Springboard To Cost Reduction

Many property and casualty (p&c) carriers have not yet examined how to enhance claims operations to reduce costs—this is likely because they’re facing more pressing financial issues. Still many companies erroneously believe certain claims costs simply fall into the “cost of doing business,” thereby assuming little can be done to curb expenses. However, insurers can take a variety of measures to improve the cost-efficiency of their claims programs.

Claims audits are an efficient and cost-effective method for evaluating how well a program has been structured, developed, and maintained in this difficult environment. For instance, claims audits, which can be performed for any insurance line, may sometimes be necessary to document whether an insurer’s or a third party administrator’s (TPA) performance has fallen short of its duties—and possibly resulted in significant financial loss to the client. In the majority of cases, however, claims audits should not be viewed as a “gotcha.” Rather, they should be seen as a method for improving the full suite of claims management activities in order to achieve better outcomes.