According to a 2015 study by The Hartford, a financial services company, 40% of small businesses will incur a property or liability loss within 10 years. This may be surprising for entrepreneurs, as they most likely view insurance policies as a means of protection from unanticipated events.
Professional cleaning companies, for instance, often incur minor property damage claims. Their liability policies will then include a property damage deductible. This scenario is known as claim frequency, which means the probability of a loss incurring.
The second key aspect of insurance claims is claim severity. This refers to the size of the loss, regardless of the frequency. For instance, a cosmetic surgeon may perform numerous successful operations before botching one. When their patient files a claim, it will likely be substantial, despite the incident only occurring once.
But though insurance policies truly protect businesses from bigger losses, processing claims still tend to be time-consuming. This worsens the damage on the business’s end, because the longer an incident is dealt with, the more trust and confidence they lose from their customers.
How Long Do Claims Get Processed?
Whether that’s a claim for a business loss or a car accident, the process can take longer than you expect. That’s because a whole team works on an insurance claim. You also have a part of answering questions so the claims adjusters can do their jobs. Then another player will work with you and the claims adjuster. Delays typically stem from at least one player that failed to do their part.
Hence, to avoid delays, invest in an effective claims management software. This automates a lot of steps involved in filing claims, thereby speeding up the process.
You should also know when filing a claim is the right decision. Gather your evidences first, and find out the time limit, as there are deadlines for filing claims.
The Most Common Business Insurance Claims
The study by The Hartford gathered the 10 most common claims filed by businesses, along with their costs:
- Vehicular Accident — ≤5%: $45,000
- Reputational damage — ≤ 5%: $50,000
- Struck-by injuries — ≤ 5%: $10,000
- Product Liability — ≤ 5%: $35,000
- Customer injury and harm — ≤ 5%: $30,000
- Customer accidents (slips and falls) — 10%: $20,000
- Fire — 10%: $35,000
- Wind and hail storm damage — 15%: $26,000
- Water and snow damage — 15%: $17,000
- Burglary and theft — 20%: $8,000
How Technology Helps in Processing Claims
Since incidents that will require claims aren’t likely to be completely avoided, a good risk management strategy is crucial for all businesses. The use of the right technology will also help in reducing damage and speeding up the process of filing claims.
Insurtech is one innovation that helps in modernizing traditional insurers. It uses artificial intelligence (AI) to customize packages and complete coverage processes without a broker’s involvement. Meanwhile, to investigate claims in a vehicular accident, a telematics device can be installed in an auto’s on-board diagnostics port. This will track a driver’s driving habits and passes the information to the insurer.
Social media holds a part as well. It has become the avenue for insurance agents to connect with customers. They use different social networking sites to spread awareness about insurance and offer quotations.
And in the near future, robots may also take over the insurance industry. But rather than actually replace the entire team that handles claims, robots will simply automate some tasks like claims processing and document verification. This reduces the need for back-office jobs, and provides consumers with more self-service options.
Seeing that these advancements mitigate the challenges in processing claims, we’ll likely witness more of them emerging in the future, with improved functions and features. Insurtech is also foreseen to streamline health insurance claims soon, finally eliminating the issue of lengthy waiting times and uncertainties.