The Claims Value Chain Is Complicated by Competing Priorities

What happens when every participant is optimising for a different objective?

Imagine bringing together: Customer, broker, insurer, loss adjuster, solicitor and reinsurer

Now ask them one question: “What is the ideal claim outcome?”. You would likely get six different answers.

The Mis-Alignment Conundrum

Everyone in the claim ecosystem does not share common objectives; customers seek certainty, brokers seek responsiveness, claims teams seek accuracy, finance teams seek predictability, lawyers seek defensibility, suppliers seek utilisation, reinsurers seek transparency.

All are rational, all are acting appropriately, but all are optimising different goals.

A fast settlement may delight the customer but concern the insurer. A robust legal defence may reduce long-term exposure but frustrate the broker. A conservative reserve may satisfy finance teams whilst creating challenges for operational performance measures. The same claim can therefore be viewed as a success and a failure simultaneously depending on where you sit within the value chain.

This creates an uncomfortable reality. Claims is not a single optimisation problem. It is a continuous balancing act between competing definitions of success.

Why Process Has Reached Its Limits

This helps explain why some claims transformation programmes do not deliver the level of benefit envisaged.

Traditional claims technology was designed to standardise activity, not resolve competing priorities.

Workflows are excellent at determining what happens next, who owns a task, when a deadline is approaching, whether a control has been followed.

But they cannot determine whether the customer feels fairly treated, whether litigation could have been avoided, whether the best expert has been selected, whether the reserve accurately reflects future exposure, whether the chosen strategy creates the greatest long-term value.

The technology can ensure the process is followed; it cannot determine whether the outcome is the right one.

That is because outcomes are rarely driven by process alone. They are the consequence of hundreds of decisions made throughout the lifecycle of a claim.

Complex losses do not behave like linear workflows. They behave more like living systems. Information changes. Strategies evolve. External conditions shift. New risks emerge.

The challenge is not coordinating activity but making better decisions in the face of competing interests.

So What Is A Valuable Claim?

Claims value cannot be measured through a single lens.

A claim that settles quickly may improve customer experience but increase overall cost. A claim that minimises indemnity spend may damage retention. A perfectly defended claim may be legally successful whilst creating reputational harm.

True claims value sits at the intersection of three outcomes:

• Customer outcomes: Was the policyholder treated fairly, transparently and with certainty?

• Portfolio outcomes: Did the decision improve the overall performance of the book rather than simply optimise an individual file?

• Financial outcomes: Was capital deployed efficiently and were indemnity, expense and leakage costs appropriately managed?

The controversy is that these outcomes are not always aligned. Improving one can sometimes worsen another.

The role of modern claims management is therefore not to optimise a single measure of success but to continuously balance all three.

A Challenge To The Industry

Many insurers continue investing heavily in making processes faster. Yet relatively little investment goes into making strategic decisions better.

Why?

Perhaps because process improvements are easier to explain. A workflow can be measured. Decision quality is harder. But if decision quality is where most value is created, perhaps that is also where most future investment should be directed.

Claims value is not created by making everyone happy. It is created by making the best trade-off between customer outcomes, portfolio outcomes and financial outcomes. The challenge is that what is best for one stakeholder is often not best for another.

From Individual Claims To Portfolio Outcomes

Claims departments also spend enormous energy managing individual files. However executive teams care about something bigger. They care about portfolio performance.

The portfolio does not know organisational boundaries. It does not care who owns a task. It only reflects the aggregate quality of thousands of decisions.

That raises an important question: What if the future of claims is not managing individual claims better? What if it is understanding the portfolio better?

That question takes us directly into the next stage of the conversation. Because answering it requires a very different type of technology.