Claims Leakage Control
Unique, Detailed and Independent
“In a competitive insurance market,
controlling claims costs is vital.”
Traditional in-house audits may not be the answer
Do you measure claims leakage?
If so, is the process independent?
What is Claims Leakage?
 Claims Leakage is the loss of time or money from
current claims practices and procedures
 CMC’s Claims Leakage Program measures all aspects
of claims cost management from small regular issues
to major over payments.
Claims costs are the single
largest cost of running an
insurance company.
Why do insurers often only
measure their claims service
in terms of productivity
levels and customer
service?
CMC’s Claims Leakage Program - improved
profitability without additional costs or
infrastructure.
Benefits of Reducing Claims
Leakage
Reduce claims spend - every claim dollar saved = $1 profit
 Compare saving just 2% of claims cost with the effort and
expense required to otherwise achieve a 2% increase in net
profit
 Reduced claim expense =
• Positive impact on RI costs
• Positive impact on regulatory capital requirements
 Compliance Benefits for claims practices
 CMC has previously detected Claims Leakage levels ranging
from 0.2% to a massive 41%
 Typically leakage levels of 2% -10% of untapped savings have
been found
What profit improvements can you make
from reduced claims leakage levels?
About Claims Management Consulting
Pty. Ltd (CMC)
 CMC was launched in 2000 to provide high quality claims management
services to the Insurance Industry
 CMC’s aim is to be a major reference point on claims cost control and
claims service quality.
 CMC services are suitable for insurers or any organizations handling
claims
 Mark Rayner (Director) has more than 35 years of experience in Insurance
Claims Management including National Claims Management roles
 Mark is a Claims Leakage identification specialist with extensive
experience in claims audits
Why CMC’s Leakage Program?
 CMC’s Claims Leakage reviews:
- Specialize in reviewing all general insurance classes
- Use a purpose built claims leakage database that has been
designed by an insurance claims professional
- Provide a detailed and accurate measure of claims leakage
within claims practices
- Demonstrate where operational changes or training needs to
be implemented to improve claims outcomes
- Becomes the catalyst for positive change and improved
operations and claims costs
Basic Steps
Agree Terms
of review
Detailed
Report
Analysis
of result
Data
and
Sampling
On site
Claim
Review
Data and Sampling
 Details of recently finalised claims are collected
 Using CMC’s database selection process a precise extract of claims is
undertaken for review
 150 claims are selected to accurately represent all recently finalised
claims
 The strict selection criteria is vital to ensure an accurate reflection of all
recently finalised claims
 This method is far more reliable than a random file selection process
On Site Claims Review
 An extensive review of the 150 claims is then conducted by the CMC
Representative and a senior local claims handler, using our leakage
questionnaire
 The questionnaire asks over 70 questions of each claim reviewed
based on the following common areas of claims leakage:
Duplicates
Policy
Timeliness
Adjusters
Investigators
Solicitors
Service Providers
Settlement
Rework
Recoveries
Salvage
Fraud
 The results of the review are shown by product, leakage severity,
leakage frequency, cost band and in the above categories
 We comment on every leakage found and those where there is
potential for leakage to occur
On Site Claims Review 2
 CMC works closely with the senior claims executive you nominate as
your project leader to ensure we understand your claims systems,
processes and procedures.
 This not only speeds up the file review process, but also ensures it is
tailored for your business and produces meaningful results that
accurately reflect the leakage outcome.
 Throughout the process, leakage areas identified are discussed with
your nominated project leader.
 As a consequence, staff involved in the reviews see the leakage first
hand and often become “champions” for anti-leakage practices and
procedures.
Analysis of the results
 File review data is entered into our database on site
 This enables constant monitoring throughout the process and
enhanced areas of focus where trends are identified
 Once the File Review is completed and all results have been
determined and analysed, we provide a detailed report
 The report contains:
- an executive summary
- a detailed commentary on leakages identified
- recommendations for leakage control and reduction
- a comprehensive set of leakage reports
Case Study 1
 Scope: Large Australian insurer with a significant commercial
portfolio. CMC reviewed their large specialty commercial
portfolio in all states
 Results: Identified claims leakage in all state offices. In one
state we were able to identify a massive 41% leakage level due
to an absence of recovery processes and checks
 Action: Recommendations included major process changes
which when implemented resulted in immediate improvement in
portfolio profitability
Case Study 2
Scope: Large Personal Lines insurer requested review of Motor
and Home claims Australia wide
Results: Able to identify leakage percentage by state office in
both motor and home portfolios ranging from under 1% to over
9%
Action: The implementation of just one of CMC’s
recommendations to change motor damage assessing methods
in one state resulted in saving of over $1.7M in the first twelve
months
This saving represented a significant reduction to the average
motor vehicle claims cost
Summary
CMC’s Claims Leakage Program:
Is a powerful, robust yet flexible tool that can be modified to meet the individual
needs of each and every client.
Introduces claims leakage benefits without affecting customer service
Determines the priorities for improvement in claims procedures and training
Enable strategies to be developed that WILL positively effect results.
Real results – Real savings
Mark Rayner. Mobile:+61 403 434 204 Office: +61 2 9874 2727