What is Claims Management?

Insurance

Published 17 Jul 2024
5 min reading
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At its core, what is claims management? It is the comprehensive, end-to-end process that insurance companies use to handle a formal policyholder request, from the First Notice of Loss (FNOL) to the final settlement or denial.

For insurers, claim management is more than just an administrative necessity; it represents the defining moment in the customer relationship. It involves a complex balancing act of investigating the validity of the claim, accurately determining payout amounts, preventing fraud, and ensuring strict adherence to regulatory standards. When executed well, it transforms a customer's moment of crisis into a demonstration of reliability and trust.

Regulatory Tip: Effective claims management requires rigorous auditability. Systems must log every decision point to ensure compliance with regional mandates, such as GDPR in Europe or state-specific insurance laws in the US.

The Claims Lifecycle: From Intake to Payment

The lifecycle of a claim is a multi-stage journey that requires seamless coordination between people and technology. A modern claim management system typically orchestrates the process in five distinct phases:

Intake and Triage

The process begins when a policyholder reports an incident via a mobile app, portal, or call center. AI-driven chatbots can immediately collect data and photos. The system then instantly verifies coverage and routes the claim, sending simple cases to a "fast-track" automated workflow while assigning complex losses to specialized adjusters.

Investigation and Evaluation

Adjusters (assisted by AI tools) assess the extent of the damage and determine liability. This phase is critical for cost control, as automated flags run in the background to detect suspicious patterns or inconsistencies before the process moves forward.

Settlement and Resolution

Once the investigation is complete, the system calculates the payment based on policy limits and deductibles. If necessary, negotiations occur, culminating in final approval.

Payment and Recovery

Funds are disbursed to the claimant or repair network. If applicable, the insurer initiates subrogation to pursue third parties for reimbursement, closing the loop on the financial transaction.

what do you mean by claims management

Why is Claims Management Important in Insurance?

The actual value of claim management lies in its direct impact on an insurer's two most critical metrics: the Combined Ratio (profitability) and Net Promoter Score (customer loyalty).

Customer satisfaction is heavily dependent on this process; approximately 87% of policyholders cite their claims experience as the primary factor in deciding whether to renew their policy. A smooth, transparent resolution retains customers, whereas a clumsy process drives them away. Furthermore, efficient management is the primary defense against "claims leakage", the money lost to overpayment or process inefficiencies. By automating routine tasks, insurers can reduce operational costs and free up skilled adjusters to focus on high-value, complex cases that require human empathy and judgment.

key components of claims management

Industry Benchmarks & KPIs

To understand the effectiveness of a claim management system, it is essential to measure performance against industry standards. Implementing advanced technologies such as Comarch’s solutions can significantly shift these Key Performance Indicators (KPIs).

KPI	Industry Average	Best-in-Class (Tech-Enabled)
Days to Settlement	15–30 days	< 5 days (Simple claims)
Claims Processing Costs	10–15% of premium	5–8% of premium
Automation Rate	15%	> 60% (Touchless processing)
Fraud Detection Accuracy	~70%	> 95% (AI-driven)

Statistics from McKinsey suggest that automation can reduce claims processing time by up to 50% and lower manual error correction costs by 30%. Similarly, insurers using Comarch’s modern infrastructure have reported handling more policies per employee, highlighting the power of digital transformation.

why is claims management important

Challenges in Claims Management: The Fraud Frontier

One of the most critical answers to "what is claims management preventing?" is fraud. Traditional detection methods often rely on manual red flags, which are slow, reactive, and error-prone. Modern systems, however, deploy AI and automation to catch fraud before a payout occurs, utilizing three sophisticated layers of defense.

Image Forensics & Computer Vision

Advanced systems can analyze user-uploaded photos to ensure authenticity. For example, if a user uploads an image of a "damaged" bumper, AI algorithms analyze the metadata to verify it wasn't taken months ago or downloaded from the internet. It can even detect if the image has been altered via software like Photoshop to simulate damage.

Network Analysis (The Spiderweb)

Organized crime rings often submit multiple small claims across different insurers to avoid detection. Network analysis tools link these disparate claims by connecting shared data points, such as a common IP address, phone number, or the recurring use of a specific doctor for medical reports, instantly flagging the entire ring.

Behavioral Biometrics

Fraudsters often behave differently from genuine claimants. If a user navigates a digital form with "inhuman" speed or pastes data into fields rather than typing, the system can flag the interaction as a potential bot attack or a scripted submission, triggering a manual review.

Did You Know? Insurance fraud costs the U.S. industry over $300 billion annually. AI-driven detection is no longer just a "nice-to-have"; it is a massive profit protector.

challenges in claims management

Real-World Use Cases

Integrating advanced technology yields tangible results. Here are two verified examples of how Comarch’s technology transforms operations.

Allianz: Efficiency at Scale

Allianz faced a challenge in handling massive volumes of reinsurance data and settlement transactions, which overwhelmed their manual teams. By implementing Comarch’s automated solution, they achieved enormous scalability. The system is now capable of processing approximately 500,000 records in just two working days, ensuring that volume spikes, such as those following a natural disaster, do not cripple the claims department.

elipsLife (part of Swiss Life): From Legacy to Leadership

elipsLife needed to replace outdated legacy systems in the Netherlands that were hampering client service and driving up operational costs. By migrating to Comarch’s integrated platform for Life Insurance and Claims, they unified their "siloed" operations into a single, customer-centric ecosystem. This reduced the complexity of managing claims and allowed for faster, more accurate responses to policyholders, directly improving their competitive position in the Benelux market.

What is an Effective Claims Management System?

When evaluating what claim management software can do, insurers should look for a solution that positions them as a digital leader. Comarch Insurance Claims is designed not just to record data but to manage the entire lifecycle actively.

A truly effective system features a digital-first architecture with omnichannel support, allowing customers to start a claim on a chatbot and finish it with an agent withouat repeating information. It offers configurable workflows, enabling non-technical staff to update business rules instantly to adapt to new regulations or fraud trends. Finally, it ensures seamless integration via Open APIs, allowing the claims system to communicate with policy administration, billing, and third-party data providers (such as weather services) in real time.

By leveraging a system like Comarch Insurance Claims, insurers move from being simple "payers" to being true "partners" in their customers' time of need, delivering security, speed, and trust when it matters most.