Claims performance has historically focused on improving efficiency. McKinsey spoke with Virginie Vitoux, associate partner in the Paris office, to better understand why health and protection companies should think holistically about claims performance.
McKinsey: What is happening in the field of health and protection?
Virginia Vitoux: Insurance companies operating in health and personal protection are faced with multiple challenges. At present, the possibilities for raising prices are limited, given the strong competition in the market. Claims costs are structurally increasing as the public system gradually shifts costs to the private sector. And customers are becoming less loyal, a trend that is reinforced by new regulations such as non-automatic renewal.
Overall, health and protection insurance companies must find new ways to create value and sustain it in an increasingly difficult regulatory environment due to solvency rules and an evolving market due to of COVID-19.
Historically, insurers have not viewed claims as a means of creating new value. But players in health and provident insurance are showing a new interest in transforming the heart of the claims function and rethinking claims to control leaks. Indeed, focusing on claims can add value and improve insurers’ bottom line. But sustainable performance is only possible if it is thought out holistically.
McKinsey: What does it mean to think about performance holistically?
Holistic performance deals with efficiency and effectiveness, but also positively affects customers, employees and society.
Virginia Vitoux: Insurers need to go beyond materially improving profitability – for example, claims ratio – through targeted claims controls and reduced lead times. Holistic performance deals with efficiency and effectiveness, but also positively affects customers, employees and society.
On the customer side, insurers can improve the experience and satisfaction of personal and business customers, for example by improving and simplifying claims processes, clarifying contract documents to avoid misinterpretation and reducing the burden administration. Better customer interactions also generate leads and cross-sell opportunities, potentially driving revenue growth.
When it comes to employees, it’s important to create an environment and culture that becomes more customer-centric than process-centric. This change will not only improve customer satisfaction, but will also engage the organization and create a work environment where employees, in the context of increased process automation, will see the value of their work and feel purposeful. This forces companies to rethink the jobs of tomorrow and to improve and requalify accordingly.
Succeeding in this structure will provide a foundation for high and lasting impact and ensure the long-term health and protection of organizations.
And a holistic approach benefits society by ensuring smooth claims processes for people who have been injured in an accident, have a serious illness or disability, or need long-term care. It also encourages innovation in the healthcare market. In the context of the COVID-19 pandemic, it has become even more critical for people to be able to access health and protection companies and have the right insurance coverage.
McKinsey: What advice would you give to insurers embarking on this transformation?
Virginia Vitoux: Major insurance companies are ready to invest in talent management in combination with new digital solutions, instead of fully automating and shrinking the employee base. They are repositioning themselves in the health and protection ecosystem by partnering with public players and new players, such as leading start-ups. And they think long term.
It takes time and effort to mobilize an organization to embed new and holistic performance mindsets and behaviors throughout the value chain. But succeeding in this structure will provide a foundation for high and lasting impact and ensure the long-term health and protection of organizations.
Virginie Vitoux is a partner in the Paris office of McKinsey.