There’s a timeless, twofold problem that insurance firms must deal with every year: how to increase the firm’s margins while at the same time, reducing its costs. Effective revenue management and cash management go hand in hand, and practicing both is vital to sustaining the insurance industry. With full control over the financial side of their business, insurers are more likely to remain relevant in their industry.
But a timeless problem like this actually requires a timely and forward-thinking set of solutions. Given the challenges of running an insurance business today, firms must be extra creative at generating revenue, managing their cash flows, and cutting costs. Taking on a more innovative mindset to money management could be extremely rewarding for the company in the long run. Better strategies will do more than drive up margins and shear unnecessary costs. In general, they will also put an insurance firm in better financial standing for future operations.
Do you hold a leadership position in your insurance company? Are you thinking about how to solve this twofold problem for your finances? Here’s where you can start. Below are three practical steps you can take to drive your margins up and drive your costs down.
Invest in a More Robust Health Insurance Solution
The first thing you can do is to invest in a new health insurance solution that will optimize your insurance delivery for the digital era. Doing so can jumpstart a whole-of-enterprise modernization effort that will give your insurance firm an advantage over others.
There are several benefits to upgrading your core insurance system and gradually making it an integral part of your insurance delivery. Here are a few examples to illustrate:
- When you use new health insurance software for policy administration, you can engineer more lightweight policies to attract your policyholders. Underwriting for these will be faster and more efficient, and will save your firm from costly errors due to manual data entry. Product development can also be done much more quickly, thus decreasing your new insurance programs’ time-to-market and increasing your opportunities for customer engagement.
- The shift towards digital insurance delivery can also help you appeal to a larger demographic of customers. You can attract fresh new clients, especially from the millennial generation, and therefore get access to new streams of income. At the same time, you can sustain old streams of income by pleasing your old policyholders and giving them reasons to stay loyal.
- With a new health insurance solution, you can garner major savings due to increased business efficiency. You’ll be able to reduce how much you spend for overhead, maintenance, and overtime labor because your new system allows you to work smarter.
Be More Data-Driven and Cloud-Oriented in Your Insurance Approaches
Upgrading your core insurance system may be a great idea on its own. But when you onboard it, you must be committed to improving your capacity to handle large volumes of insurance data. Your efforts to modernize your firm—and earn more money off of your modernization efforts—will be for naught if you don’t become more data-driven.
Most insurance firms treat technology and process audits like they’re necessary evils and only worth doing from time to time. The firms that have the best chances for increasing their margins are the ones that are willing to utilize the power of a solid data foundation. Increased data management and data analytics capabilities will help your firm analyze just how effective, and how costly, your insurance processes are. They will make it easier to pinpoint which stages of insurance delivery are worth reinvesting in and, conversely, which ones still function adequately with a leaner budget.
Adopting a more data-driven approach is easier in the cloud. When working in the cloud, you can achieve a full view of your enterprise, your customers’ insurance data, and your profits on a 24/7 basis. Plus, you and your insurance staff aren’t limited to being productive onsite, and can remain engaged even while doing work on a remote basis.
Consider Outsourcing Costly Business Processes
The last thing you can explore for your firm is the Business Process as a Service (BPaaS) model, or outsourcing certain insurance business processes. This could work very well for areas like provider management and medical management. You can partner with a call center, which can bolster the technological and human resources at your disposal.
Some insurers may be hesitant about outsourcing, and that’s understandable. They may have a fear of tapping third-party contractors and third-party technologies because these may seem like an additional, potentially expensive hassle. But as long as you can trust your partners and you’ve onboarded technology that makes the outsourced network easy to monitor, you’ll likely do fine. In fact, you may be able to reduce hefty administrative costs while benefiting from the added productivity and specialization of your outsourcing partner.
Conclusion: Toward Revenues That Will Sustain Your Insurance Firm in the Future
One of the easiest ways for your insurance company to lose money in the future is to continue as it always has. If you do nothing to innovate your current revenue management, cash flow management, and cost reduction strategies, you’ll stay stuck where you are. Pull your company back from the brink of stagnation, and prepare it to thrive in these new business conditions. Ultimately, that’s what will improve your insurance company’s state of affairs now, and what will carry it towards a brighter and more profitable future.