Prompt claims settlement is a low-hanging fruit for insurance

Many long-term insurance companies in Kenya still rely on outdated systems that are ill-equipped to handle the growing volume and complexity of claims.

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Recent data from the Insurance Regulatory Authority (IRA) showing up to 17 insurers and 15 brokers being fined for a number of breaches casts a dark shadow over the industry.

While the value of the fines has significantly dropped from the previous year, the number of players still in breach of this crucial process is alarming.

This number represents almost a third of industry players which implies a significant number of customers were inconvenienced during the period.

Long-term insurance remains key for economic stability, financial inclusion and personal growth.

It provides critical safety nets for individuals and their livelihoods, offering financial protection against life’s uncertainties. However, public perception remains a significant hurdle for many of these institutions, often marred by a number of challenges chiefly being delays in claims settlement.

Most players have adopted the wrong approach of investing more on publicity campaigns rather than working on building reputation as a trusted partner.

Unlike other sectors, insurance industry is plagued with a perception problem that can be better addressed by creating a reputable brand that delivers on its promises, the huge one being able to settle admitted claims within the shortest time. Too much publicity may actually work against a firm that is struggling with a reputation of delay in claims settlement.

In short, before proudly shouting about your brand, make sure your customers can back you up with positive testimonies, otherwise, every campaign will turn into a crisis management.

The knowledge, especially in long-term insurance, that more than two-thirds of the covers will eventually end in a claim ideally should provide justification for adequate preparation.

The type of claim may vary, but like the sun rising from the East, it is a sure event, with some covers having multiple claims during their existence.

Despite this, some industry players still get caught putting out fires in claims and customer experience departments arising from systemic inefficiencies, operational bottlenecks and cultural factors that hinder the industry's ability to provide timely and seamless claims processing.

To reshape this narrative, investing in robust and efficient claims processes is not just an operational imperative, it is a strategic move with far-reaching implications.

The regulator, in imposing the fines, is enforcing the law which requires insurers to admit or deny liability, and in case of admission, identify the claimant and settle the claim within 90 days. However, companies have set their own turn-around times ranging between a day to 30 days based on the claim type.

This flexible claim settlement way below the legal threshold is mainly to improve customer experience and overall public perception of the specific player. However, from the IRA data, it appears the industry is still struggling to exceed customers’ needs and expectations.

Many long-term insurance companies in Kenya still rely on outdated systems that are ill-equipped to handle the growing volume and complexity of claims. Manual processes dominate in some firms, leading to delays caused by human errors, inefficiencies and a lack of real-time data integration.

Even when companies recognise the importance of streamlining operations, upgrading or replacing legacy systems can be prohibitively costly and disruptive to ongoing operations, leading to resistance to change.

This manual process also implies that claims verification processes to mitigate fraud, a prevalent challenge in the sector, becomes tediously long, leading to significant delays, as extensive documentation and multi-level approvals are often required. While protecting against fraudulent claims is necessary, the lack of automation or streamlined workflows exacerbates delays for legitimate claims.

Despite the availability of advanced technologies such as artificial intelligence, machine learning and blockchain, adoption within the Kenyan insurance sector remains limited. These technologies can significantly improve efficiency by automating claim assessments, fraud detection and payment processes.

However, many insurers hesitate to invest in these solutions due to upfront costs, skills gaps or uncertainty about return on investment.

In some cases, insurance companies prioritize profitability over customer experience. Claims processing is often viewed as a cost center rather than a strategic opportunity to build trust and loyalty.

This mindset leads to limited resource allocation to improve claims processes such as technology and having a skilled workforce capable of managing high volumes of requests efficiently and empathetically. Overworked or inadequately trained personnel may inadvertently cause delays.

Additionally, customer complaints about delays may not always be adequately addressed, reinforcing negative perceptions of the industry.

The good news is that the solutions are with the players, including; Automating claims workflows, sensitising policyholders about claims processes, documentation, and timelines, simplifying claims procedures and eliminate unnecessary steps to create more efficient and customer-friendly experiences, embracing a customer-centric ethos, treating claims as opportunities to build trust and loyalty rather than as liabilities, and working closely with the regulator to create balanced frameworks that encourage both speedy claims settlement and fraud prevention.

Positive customer experiences in claims processing have a ripple effect. A satisfied customer is likely to become an ambassador for the brand, spreading positive word-of-mouth endorsements that can significantly influence potential customers. In Kenya’s increasingly digital society, where opinions can quickly gain traction on social media, such organic advocacy is invaluable.

Conversely, a single negative experience, amplified on social platforms, can undo years of reputation building. Thus, prioritizing claims efficiency is not just a service improvement, it is a proactive reputation management strategy.

Kenya’s insurance sector is witnessing a shift toward stringent regulatory oversight and consumer protection measures. Improved claims processes do more than enhance reputation, they drive long-term growth.

While publicity campaigns may temporarily boost awareness or attract new customers, they often fail to address the core issues underlying public scepticism about the sector. Reputation building, on the other hand, offers a sustainable and impactful approach to transforming perceptions and addressing the industry's challenges at their core.

Demonstrating reliability and customer-centricity is a great way for insurers to tap into the vast potential of Kenya's underinsured population. Products like life insurance, retirement plans and education policies become more appealing when potential customers perceive the industry as responsive and trustworthy partner.

This expansion of the customer base translates into increased premiums and consequently, greater financial stability for insurers.

The writer is an insurance analyst and communication specialist

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