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Counteracting Insurance Claim Problems

Simple Alliance, Kenya Limited


Insurance Company Receipts - The Risks

Should you depend on insurance companies for cash receipts, you need to beware of a number of possible sticky situations. Problems with insurance companies are not uncommon. You may find that:

  • Your income takes relatively long time before it checks into your account
  • Your receipt sum is lower than what is due   

Slow Coming Cash Receipts 

Like most corporate businesses, insurance companies tend to take too long to process payments. A key reason for this tendency is corporate bureaucracy that significantly slows down operations. An extended claims process puts your income in jeopardy. Alternatively, the insurance firm may be processing very many payments at the same time, thus slowing down service delivery.

Lower Receipt Sums

More often than not, insurance companies deduct some ‘processing fee’ or ‘commission’ figure from the claims they process. If this happens to you, your projected cash receipts will be lower than the actual receipts. In such a situation, your financial estimates will be disrupted.

Recommended Strategies    

You would not want an insurance firm’s slackness or underhand dealings to have a serious negative consequence on your business. Would you? So as to mitigate the potential disruptions that your business could experience, you are advised to take certain measures. You could:

  • Stringently manage your billings
  • Hire third-party claims processing firms  

Strict Management of Billings

You need to always be in control of your billings. This will call for your concerted efforts and attention. Apart from this strategy, you could incorporate non-insurance billings into your revenue projections. You will thus minimise errors that could delay the receipt of owing monies.  

Seeking the Services of Third-Party Claims Processing Companies

If you do not want to be involved in the billing and collection of monies owing among insurance companies, you could hire a thirty-party claims processing agent. This firm will bill the relevant insurance firm on your behalf. The agent will as well collect payments from the insurance firm on your behalf. In the meantime, you will have the responsibility of conducting other important administrative activities.

Important Caution

While engaging a third party claims processor is an advisable option, the strategy has a loophole. The processing agent will only perform as good as you want them to be. This involves the accuracy of the billings as well as the meeting of deadlines. Although you will enjoy the services of the third party claims processing agent, your responsibility of ensuring that the billings are accurate and if they meet the stipulated deadlines remains intact.

If your income comes from insurance agencies, you need to be aware that you face certain demerits. There are some problems with insurance companies you need to come to terms with. The insurance firm could deduct some monies from the receipt sum. This means that you will ultimately receive money that is lower than the sum quoted on the invoice. You should also not forget that insurance company-derived cash receipts usually take a lengthy time before they are reflected on your bank statement. You will thus have to endure a long ‘wait’ time due to a potentially drawn-out claims process. Such circumstances call for your appropriate response. One mitigation strategy you could adopt is hiring a third-party claims processing firm to act on your behalf. This agency would bill and collect the insurance sum on your behalf. You could as well institute stringent billing management procedures. This strategy could encompass your incorporation of non-insurance cash receivables into your income projections.

Copyright (C) 2016, Simple Alliance Kenya Limited

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