Optimising Claims Handling: A Guide to Outsourcing Insurance Claims
Insurance CFOs understand that underwriting alone cannot guarantee profitability. Investment income is a vital component of their financial strategy. However, with 56% of premiums paid late in the Lloyd's Market and 63% in the Company Market in 2024 [Source: Insert Specific Source Here], bad debt can severely impact cash flow, hindering investment income and overall financial performance.
For commercial insurance, the challenges are further amplified because insurers often pay claims before receiving premiums, leaving them financially exposed. Additionally, many insurers lack a single source of truth for tracking premium payments, making it difficult to identify repeat offenders and manage bad debt effectively.
A lack of visibility creates a vicious cycle: unnoticed late payments lead to accumulating bad debt. Inaccurate data prevents insurers from distinguishing true debt from perceived debt, resulting in flawed financial reporting, hindered problem identification, and inaccurate industry benchmarking. This data gap poses significant reputational risks, as insurers may struggle to accurately report on their financial health, potentially eroding investor confidence and damaging their brand.
Outsourcing for Improved Cash Flow and Reduced Risk
Proactive credit control is essential, but in-house teams are often overwhelmed by manual tasks like payment chasing and letter writing. These time-consuming activities impede productivity and strategic focus. Moreover, they lack the data to identify repeat offenders and implement effective solutions.
By outsourcing to an expert credit control service provider such as Velonetic, insurers can transform their cash flow and mitigate financial risks by:
- Proactively managing debt: Implementing debt management strategies to ensure timely payments and boost the bottom line.
- Assessing debt accurately: Gaining a clear understanding of true debt versus perceived debt and identifying root causes.
- Streamlining reporting: Receiving access to dashboards and visualisations that show trends and focus areas to save time and improve efficiency using our Data Insights Platform.
- Analysing root causes: Delving into the underlying reasons for late payments and having informed, solution-oriented conversations with brokers.
Final Thoughts: Securing cashflow with Credit Control Services
In the complex world of insurance, where late premium payments can severely undermine cash flow and profitability, adopting proactive strategies is no longer optional – it's essential. By outsourcing credit control to specialists like Velonetic, insurers can move beyond reactive debt chasing to implement strategic, data-driven solutions. This approach not only alleviates the burden on in-house teams but also provides critical visibility into payment patterns, helps identify root causes of delays, and ultimately safeguards your investment income and reputation.
Embracing expert credit control isn't just about managing debt; it's about building a more financially resilient and strategically focused insurance operation.
Speak to one of our experts to learn more