Technology’s Role in Enhancing Self-Insurance Programs

8 MINUTE READ

Self-insurance is becoming an increasingly popular choice for enterprises looking to manage their risk more effectively. Companies are drawn to self-insurance for several reasons, including cost savings, greater control over claims handling, improved cash flow, customized coverage, and enhanced risk management through direct investment in safety and loss prevention programs. Leveraging technology is essential in optimizing self-insurance programs. 

Let’s explain why.

Why Do Large Companies Opt for Self-Insurance?

Large companies opt for self-insurance to achieve greater financial control, cost efficiency, and customized risk management. By self-insuring, large companies with much collateral to insure, such as transportation companies with large vehicle fleets, manufacturers with extensive workforces, and real estate or hotel chains, can avoid high premiums paid to traditional insurers. Instead, they allocate funds into a dedicated reserve, allowing them to manage and mitigate risks more effectively.

Self-insured employer plans are popular, with 64% of all covered workers in the U.S. were in a self-funded plan last year and with 82% of all U.S. companies with 200 employees or more chose self-funded models (RTI).

According to a UnitedHealth Group report, over 100 million people in the U.S. are covered through self-insured plans, which represents a significant portion of the employer-sponsored insurance market​​.

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Doing It The Wrong Way: Managing Self-Insurance with CRM Systems

Many self-insured companies use their Customer Relationship Management (CRM) systems to also manage customer and employee claims. Managing self-insurance programs using systems like Salesforce, HubSpot, or Zoho might seem like a cost-effective solution initially. However, CRMs are designed for sales and customer interactions, not for the intricate needs of claims management. 

CRMs lack the specialized functionalities required to efficiently handle claims, such as claim-related fields, automated workflows, claims analytics, and regulatory compliance. This can lead to inefficiencies, increased manual work, and higher risks of errors.

CRMs fall short in providing a holistic view of claim-related data. They are not equipped to centralize claims data, automate routine tasks, or offer AI-driven insights that predict claims outcomes and suggest next steps. 

As a result, managing claims through a CRM can be cumbersome and time-consuming, ultimately affecting the overall efficiency and effectiveness of the self-insurance program. The lack of dedicated claims management features can also hinder the ability to handle claims effectively. For an optimized self-insurance program, it’s essential to use a purpose-built claims management system that accommodates self-insurance, like Five Sigma.

How Technology Supports Self-Insured Companies 

1. Streamlining Claims Management

Self-insured companies may have greater control over their claims processes but face the challenge of efficiently managing claims on their own, without the extensive resources of a large insurance carrier or Third-Party Administrator (TPA).

Technology simplifies the claims management process by centralizing data and automating workflows, ensuring that all claims-related information is easily accessible, and reducing the time and effort required to handle each claim. 

  • Automated workflows eliminate manual and routine tasks, such as data entry, document processing, and communication logging, allowing your internal adjusters – employees who deal with the claims – to focus on more strategic aspects of claims management, like decision-making and customer service. 
  • Centralized claims management systems provide a single view of all claim-related data in one convenient location, making it easier for adjusters to track the progress of each claim and make informed decisions, reducing the risk of errors and omissions, which can lead to costly delays and disputes. 

2. Enhancing Claims Analytics and AI-driven Insights

Self-insured businesses need to manage claims costs directly and spreadsheets are not enough. An accurate cost analysis is needed and automated dashboards and simple reports are the way to go. Modern Claims Management Systems (CMS) leverage sophisticated data analysis to report Loss Adjustment Expenses (LAE), identify cost drivers, and suggest areas for improvement.

  • Advanced data analytics play a crucial role in identifying trends and risks within self-insured claims management programs. AI-driven predictive analytics, if available, can forecast future claims and set reserves accurately, helping companies manage their financial exposure more effectively. Data analytics can help self-insured enterprises identify patterns and trends by analyzing historical claims data, such as types of common claims, recurrence, average cost of claims, and other factors that contribute to damage and claim costs. By analyzing historical claims data and other relevant factors, companies can develop more accurate predictions of future claims costs. This helps to ensure that sufficient funds are set aside to cover potential claims, reducing the risk of underfunding or overfunding reserves. They can also choose the projects that would reduce the likelihood for certain types of damage.
  • Real-time monitoring and reporting tools provide a continuous stream of data on key metrics, such as claims volume, claims costs, and claims processing times. This information can be used to identify potential issues, such as an increase in claims volume or a spike in claims costs, and take corrective action. A real-time monitoring tool can provide alerts when claims processing times exceed a certain threshold, allowing adjusters to take immediate action to resolve the issue. It can also provide detailed reports on claims performance, helping to identify areas for improvement and develop targeted strategies to enhance efficiency and reduce costs.

3. Improving Communication and Collaboration

Self-insured companies must ensure efficient communication between internal departments, external service providers, and claimants, often without the standardized processes found in large insurance carriers. This can lead to communication gaps and inefficiencies.

Integrated claims communication tools significantly enhance efficiency by enabling seamless collaboration between stakeholders. All communication channels, including emails, phone calls, video calls, and text messages, can use AI to capture and organize the communication data, preferably within a single system. This ensures that all parties are on the same page and can access up-to-date information when needed.

AI further utilizes the logged communications to provide insights about the next step needed in a claim, helping all stakeholders to stay informed and take appropriate action.

By improving communication and collaboration, technology reduces the risk of misunderstandings and disputes. It also improves the customer experience by ensuring that claimants receive timely and accurate information about their claims.

4. Ensuring Regulatory Compliance and Security

Self-insured companies must comply with a wide range of regulatory requirements, which can vary by jurisdiction, company size, and insurance line-of-business. Unlike carriers, businesses and their legal teams may lack familiarity with the insurance legal landscape to manage their claims with appropriate compliance.

Technology helps maintain regulatory adherence and secure sensitive data within claims. With advanced claim management systems, compliance is built-in and ensures that regulatory requirements are met, reducing the risk of penalties.

Technology can help to streamline compliance by automating documentation receipt and generation, or providing alerts and reminders for critical compliance tasks.

Technology also helps to protect sensitive claims data – such as personal information and medical records. By providing secure hosting, encryption, and access controls, technology helps prevent data breaches and other security incidents, which can lead to significant privacy issues, fines, and reputational damage.

How Five Sigma Helps Self-Insured Companies

Five Sigma provides a comprehensive AI-native claims management platform, perfectly designed to meet the needs of self-insured companies, simplifying every step of the claims process. The design of our web-based application is simple and intuitive, so any employee can be easily trained in an hour to use the platform.

Our platform offers secure data management, automated claims workflows, and real-time analytics. With built-in communication tools, Five Sigma ensures all claims-related communications are captured and organized, facilitating smooth collaboration. Real-time dashboards and reporting tools offer unparalleled visibility into claims operations, aiding in efficient management and strategic planning. Our built-in compliance and security features help self-insured businesses meet the requirements of the changing regulatory landscape with no effort. 

By leveraging advanced automation and AI insights, Five Sigma reduces administrative burdens and the time needed to handle claims, allowing companies and their employees to reduce costs and improve efficiency. 

Five Sigma - AI-Native Claims Management Platform

Five Sigma offers an AI-native claims management platform that streamlines every step of the claims process. With full visibility of the claim at a single place, advanced automation, and data-driven insights, Five Sigma empowers adjusters to excel, speeding up claims handling and improving policyholder satisfaction. Adjusters are freed to focus on decision-making and customer service. 

For insurers, MGAs and TPAs, Five Sigma is a risk-free solution that unlocks unprecedented benefits quickly. Insurers gain unparalleled visibility into their claims and operations. The result is a significant reduction in Loss Adjustment Expenses. Five Sigma is a future-proof platform that is always up to date for the benefit of all its customers and gives insurers the agility to handle any claim faster, add new Lines of Business in less than a day, and accommodate new business models easily, enabling you to adapt swiftly to market changes ahead of the competition.

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