In many insurance companies, claims and procurement departments do not work well together, even though a closer alignment could bring a number of benefits. Why do these two functions spend so much time debating their respective areas of responsibility?
In part, it’s because they co-exist as uncomfortable partners, each with their own biases and interpretations. Claims, for example, is heavily influenced by the cost of procured products and services from third-party vendors, and holds tightly to the decision-making reins. Procurement, on the other hand, often misconstrues what claims wants and has its own agenda.
See also: How to Avoid Common Tactic by Insurers
If, however, claims and procurement were to look beyond their siloed tactical practices to the common goal of increased competitiveness, they could make critical improvements, including:
- Strategic assessment of total cost of partnership. The two departments need to collaborate to translate qualitative claims criteria into tangible procurement measures that enable objective vendor selection and contractual terms.
- Integrated technology. By coming together on the strategic use of technology across claims and procurement value chains, insurers can achieve innovation and unlock the value currently lost due to conflicting tactical approaches.
- Globally consistent, locally optimized practices. Global claims procurement programs need to be consistent but optimized for local regulatory and economic realities.
