25 Jan 2011

Claim recovery income is negatively impacted by disasters such as the Queensland and Victorian floods, as insurers divert additional staff to manage the spike in claims and customer enquiries.  The negative impact on recovery income is exacerbated for those insurers that do not have an effective plan in place to increase outsourcing until a return to normal operations, according to Jonathan Agnew, Head of Insurance at Recoveries Corp.
 

“While insurance companies understandably delay the pursuit of debtors affected by catastrophes, they will often divert staff from claims recovery work in other geographical areas to help customers who are in need,” Mr Agnew says.

“When this continues for a few weeks, insurers lose recovery income at a time when they are paying out millions of dollars in claims. This creates a particular problem with uninsured debt, as time decay is a key cost here. Even if insurance companies immediately outsource only their uninsured debt, they have a better chance of maintaining this income stream.”

The problem can be mitigated in large effect if insurers develop a claim recovery outsourcing plan in advance that can be implemented as soon as a catastrophe occurs, rather than reacting after the event.

"Such a plan enables the insurer to divert staff to care for customers whilst maintaining the focus on recovery income, ensuring that the impact on revenue is minimised. In addition to maintaining revenue, the other major benefit of outsourcing extra files during a catastrophe is to eliminate the morale sapping effect of large file backlogs on claims staff when they return to their normal roles", Mr Agnew says.

Noting that no business can afford to have unutilised staff capacity, Mr Agnew says Recoveries Corp’s size and flexible team structure means it can respond immediately to additional requirements from clients.

The company’s 200 staff includes 70 insurance recoveries employees working in non-client specific teams. If the volume from clients suddenly increases, the additional load can be spread amongst team members.

“We have a scale which enables us to respond immediately,” Mr Agnew says. “But it’s a great deal easier if clients have an established catastrophe outsourcing plan which we can implement with them as soon as an event occurs.”