Historically, claims departments have viewed themselves as specialized, believing that purchasing decisions require unique expertise and judgment. Instead of sharing data with procurement, claims departments guard the information they have. Procurement departments, on the other hand, misconstrue what matters to claims and typically are uncomfortable partners in the process of handling third-party vendors such as auto body shops, attorneys and independent adjusters.

“The result,” says Robert Fuhrmann, Managing Director in Accenture’s Insurance strategy Practice, “is a misguided turf war in which everyone loses.”

Instead of spending their time debating their respective areas of responsibility, Fuhrmann says claims and procurement should consider working together to drive innovation and improve loss ratios.

One global multi-line insurer based in Asia-Pacific did just that. The carrier achieved a $100-million-plus reduction in its loss costs through claims vendor management. To do so, the company took three major steps. First, it implemented a vendor management program across all major third-party spend categories to monitor performance and cost. Then, it rationalized and restructured independent property adjuster relationships to be focused on value, and insourced certain commercial property services (i.e. forensic accounting and third-party administrators). Finally, it rationalized auto body shops and the customer interaction process in one Asia-Pacific country from 1,300 to 115, taking out costs and creating stricter performance and customer service requirements for those shops.

In order to achieve similar loss-ratio reductions, claims and procurement departments should:

  • Unify decision-making, governance, process ownership and performance management;
  • Work together to select, manage and pay vendors;
  • Develop a technology strategy and improve antiquated processes.

When claims and procurement work together, insurers increase their competitiveness and drive economic value. Winning at the intersection is possible, with plenty of benefits for the taking. So, why not end the turf wars and seize the opportunity?

Read the Q&A with Robert Fuhrmann.

To learn more, register to download the report: Boosting competitiveness at the intersection of claims and procurement

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