In a Nutshell: The Four Pillars of a Healthy Claim

Before we explore the entire ecosystem, let’s establish the foundational principles.

If you’re navigating a claim right now, whether as a policyholder or a professional, these are the immediate, non-negotiable actions that protect the integrity of the process.

1. Document Everything, Immediately. The first 24 hours after a loss are the most critical. Before you clean up or move anything, document all damage with photos and videos. Create a detailed list of lost or damaged items. Keep every receipt for temporary repairs, lodging, or any other expense incurred as a result of the incident. This initial data set is the bedrock of your entire claim.¹
2. Never Accept the First Offer. An insurer’s first settlement offer is a starting point for negotiation, not the final word. It is often intentionally low, designed to test your resolve and close the file quickly.³ Politely decline, request a detailed breakdown of how they calculated the amount, and be prepared to present your own evidence-backed counteroffer.⁴
3. Communicate Proactively and in Writing. Think of your claim as a business negotiation. Maintain a professional, persistent, and organized approach. While phone calls are necessary, follow up with emails summarizing the conversation to create a paper trail. Present clear, written requests that explain what you need and why your policy entitles you to it.³
4. Understand Your Policy Before You Need It. The time to learn what your policy covers is before a loss occurs. Familiarize yourself with your coverage limits, deductibles, and, most importantly, your exclusions. This knowledge is your most powerful tool in any claims discussion.⁸

The Journey of a Claim: Unpacking the Process from Start to Finish

To truly master the claims process, we must first map its terrain.

While it may appear as a sequence of steps, it’s more accurately a series of interconnected phases, each with its own function and potential pitfalls.

Missteps in the early stages can have cascading consequences, jeopardizing the final outcome.

The Spark of Life: First Notice of Loss as the Nucleation Event

The entire lifecycle begins with the First Notice of Loss (FNOL).

This is the initial report from the policyholder to the insurer, containing basic information like the policy number and the date and time of the incident.¹⁰

I used to see this as a simple administrative step, but my perspective shifted dramatically when I began to see the process through the lens of chemistry, specifically

crystallization.

In a supersaturated solution, molecules begin to gather into stable clusters called nuclei.

This initial formation, or nucleation, is the critical event that allows a larger, well-structured crystal to grow.¹²

Without a stable nucleus, no crystal forms.

The FNOL is the nucleation event of a claim.

A clear, accurate, and timely FNOL provides the stable nucleus around which a well-structured, valid claim can be built.

Conversely, an FNOL that is delayed, incomplete, or riddled with errors introduces impurities from the very beginning, contaminating the entire process and making a fair resolution much harder to achieve.

Over 60% of manually entered claims contain errors, seeding dysfunction from the outset.¹⁰

Sorting and Sending: The Critical Role of Triage and Assignment

Once the FNOL is received, the claim enters triage.

Here, it is categorized by its type and complexity.

A minor property damage claim might be fast-tracked for automated processing, while a significant general liability case involving a workplace injury will be routed to a specialized team.¹⁰

This assignment to an adjuster with the right expertise is a pivotal moment.

Proper routing sets the tone for the entire journey, ensuring that resources are allocated efficiently and that the claim is managed by individuals equipped to handle its specific challenges.¹⁰

The Core Engine: How Adjudication and Evaluation Shape the Outcome

This is the heart of the process, where the insurer makes its core decisions.

It involves three parallel streams of analysis:

1. Policy Review: The adjuster meticulously examines the insurance contract to determine what is covered, what is excluded, and which deductibles or limits apply.² This is a binding legal analysis that forms the boundaries of the potential payout.
2. Damage Evaluation: The insurer must assess the extent of the loss. This can involve on-site inspections, reviewing documentation, and, for complex claims, hiring external experts like engineers, contractors, or forensic accountants to provide specialized evaluations.² The goal is to create a repair or replacement cost estimate that is both accurate and defensible.¹⁴
3. Liability Determination: The investigation must establish who is financially responsible for the loss.¹¹ This is straightforward in a simple property claim but can become incredibly complex in multi-party accidents or liability cases, requiring a thorough analysis of evidence to assign fault.¹⁵

A World of Its Own: The Healthcare Claims Workflow

While sharing the same basic principles, the healthcare claims process operates in a far more complex ecosystem, involving a triangular relationship between the patient, the healthcare provider, and the payer (the insurer).¹⁶

The journey begins with patient registration and insurance eligibility verification.¹⁷

After care is delivered, the provider’s billing department translates the services into a universal language of standardized codes (like CPT and ICD-10) that describe diagnoses and procedures.¹⁷

This coded claim is then submitted, often through a

clearinghouse—an intermediary that scrubs the claim for common errors and reformats it to meet the specific requirements of the payer.¹⁸

Once at the payer, the claim undergoes adjudication, where it is scrutinized for patient eligibility, medical necessity, and alignment with the patient’s plan benefits and pre-determined rates.¹⁸

If approved, the payer sends payment to the provider and an

Explanation of Benefits (EOB) to the patient.

The EOB is not a bill; it is a crucial document that details what the insurer covered and what portion of the bill remains the patient’s responsibility.¹⁹

The Final Steps: Payment and the Pursuit of Recovery

The lifecycle culminates in settlement and payment, where the final agreed-upon amount is disbursed to the policyholder or relevant parties.¹⁰

Delays at this final stage are a primary source of customer dissatisfaction, making speed and transparency paramount.¹⁰

For the insurer, the story doesn’t always end there.

In many cases, a third party was legally responsible for the loss.

The process of subrogation allows the insurer, after paying the policyholder’s claim, to step into the policyholder’s shoes and pursue that responsible third party to recover the funds.¹⁰

This is a vital, behind-the-scenes financial mechanism that directly impacts an insurer’s bottom line.

Table 1: The Insurance Claims Lifecycle: Key Stages and Functions

Stage	Primary Function	Key Activities	Critical Success Factors
First Notice of Loss	Initial reporting of the incident.	Collecting policyholder info, incident details, and preliminary evidence.	Timeliness and accuracy of information.
Triage & Assignment	Categorizing and routing the claim.	Assessing claim complexity; assigning an appropriate adjuster or team.	Correct routing to specialized teams.
Investigation	Verifying facts and assessing damages.	Gathering evidence (documents, photos, digital data), interviewing witnesses.	Thoroughness of documentation and evidence.
Adjudication & Evaluation	Determining coverage and liability.	Reviewing the policy, evaluating damages, setting financial reserves, making a decision.	Consistent, fair, and evidence-based decision-making.
Settlement & Payment	Negotiating and finalizing payment.	Calculating the final settlement amount, issuing payment, and closing the claim file.	Speed, transparency, and clarity of payment.
Subrogation	Recovering funds from a responsible third party.	Identifying subrogation opportunities, gathering evidence of liability, pursuing recovery.	Proactive identification and relentless pursuit.

The Gauntlet of Verification: A Claim’s Trial by Fire

Every claim, once initiated, must pass through a gauntlet of verification.

This is not a passive process; it is an active, forensic examination designed to establish the truth of what happened and determine the insurer’s contractual obligation.

The most effective way I’ve found to conceptualize this phase is to see it not as paperwork, but as an archaeological dig.

Years ago, struggling to make sense of a chaotic claim file, I had my epiphany while reading about archaeological stratigraphy.

Archaeologists understand that soil layers build up over time, with the oldest layers at the bottom and the newest at the top.

This Law of Superposition allows them to create a timeline of a site’s history.²⁰

The crucial insight is that an artifact’s meaning comes from its

context—its precise location in the layers and its relationship to other artifacts.

An artifact removed from its context loses its story and becomes just an object.²¹

A claims investigation is an exercise in stratigraphic analysis.

The loss event is the “site.” The pieces of evidence—receipts, photos, police reports, witness statements—are the “artifacts.” The investigator’s job is to carefully excavate this evidence, preserving the context of each piece to reconstruct the chronological sequence of events and understand their relationships.

A receipt without a date, a photo without a location, a statement without corroboration—these are artifacts stripped of their context, their value diminished.

The First Line of Defense: Automated and Manual Validation

Before the deep dig begins, every claim hits a validation checkpoint.

This is the first filter, designed to catch basic errors and confirm fundamental eligibility.¹⁴

In the past, this was a manual, error-prone process.

Today, modern insurers deploy a formidable first line of defense using AI-powered validation agents.

These systems automatically scan incoming claims, particularly in high-volume areas like healthcare, for completeness and accuracy.

They check for essential details like patient information, diagnosis and treatment codes, and billing information.²³

They are programmed to flag a host of common issues that are known to cause denials ²³:

• Policy Expiry: Was the policy active on the date of service?
• Code Mismatches: Does the diagnosis code logically align with the procedure code? (e.g., a claim with a respiratory diagnosis but an orthopedic procedure would be flagged).
• Duplicate Claims: Has this exact service for this patient on this date already been submitted?
• Ineligible Services: Is this service (e.g., cosmetic surgery) explicitly excluded from the policy?
• Missing Information: Are all mandatory fields, like the policy number or provider name, complete?

This automated screening is incredibly efficient at catching the low-hanging fruit of claim errors, allowing human adjusters to focus on more complex issues.

The Deep Dive: Conducting the Investigation

For claims that pass the initial validation but require deeper scrutiny, the methodical “archaeological dig” begins.

The investigation is a systematic process aimed at gathering and analyzing information to make an informed decision on the claim’s validity and the insurer’s liability.¹⁵

This process relies on three primary forms of evidence:

• Documentary Evidence: This is the bedrock of the investigation. It includes official records like police and accident reports, medical records and bills, repair estimates, and proofs of ownership or purchase.²⁵ In a theft claim, for example, receipts for stolen items are crucial to prevent inflated claims.²⁷
• Physical and Digital Evidence: Investigators conduct on-site surveys to photograph or video the scene of the loss, whether it’s a damaged vehicle, a property, or a workplace.²⁷ In the digital age, this extends to securing surveillance footage, emails, GPS data, and social media posts, which can be invaluable for corroborating or contradicting a claimant’s story.¹⁵
• Testimonial Evidence: The investigator interviews the claimant, witnesses, and any other involved parties to gather detailed, firsthand accounts of the incident.¹⁵ These statements are recorded and meticulously compared against the documentary and physical evidence to identify consistencies and discrepancies.

This process is fundamentally about managing a conflict between speed and thoroughness.

Insurers are under pressure to resolve claims quickly to maintain customer satisfaction, but a truly comprehensive investigation takes time.²⁸

Rushing the process risks missing critical details or red flags of fraud, while moving too slowly can frustrate policyholders and increase administrative costs.²⁹

The most effective claims operations manage this tension by using technology to automate and accelerate low-risk claims, thereby freeing up their most experienced investigators to conduct the careful, methodical “digs” required for complex, high-value, or suspicious cases.

Frictions and Failures: Why the Claims System Breaks Down

Despite being a core function of the insurance industry, the claims process is fraught with friction points that create inefficiency, financial loss, and profound customer dissatisfaction.

These are not isolated problems but systemic flaws that reveal deeper issues in how the industry operates.

The Data Integrity Problem

The single most pervasive challenge in claims management is ensuring the accuracy and completeness of data.³⁰

A claim is fundamentally a data package, and if that data is flawed, the outcome will be flawed.

In a 2024 survey, nearly half (46%) of healthcare providers identified missing or inaccurate information as the primary reason for claim denials.³¹

This is often the result of simple human error during manual data entry—a misspelled name, a transposed digit in a policy number, an outdated billing code.³²

These seemingly small mistakes have enormous consequences, triggering a cascade of rework, delays, and denials that not only create financial setbacks but also erode the trust between patients, providers, and payers.³⁰

The Denial Epidemic: A System in Crisis

The data on claim denials is stark and paints a picture of a system under severe strain.

Denial rates are not just high; they are rising dramatically.

In 2024, an alarming 77% of healthcare providers reported that denials are increasing, a massive jump from 42% in 2022.³¹

For plans sold on the ACA marketplace in 2023, insurers denied nearly one out of every five (19%) in-network claims submitted.³⁴

The financial burden of these denials is staggering, estimated to cost the healthcare system around $260 billion annually.³¹

The reasons for these denials are often more bureaucratic than clinical.

The most common culprits are:

• Lack of Prior Authorization: Insurers increasingly require pre-approval for non-routine services. Failure to secure this authorization is a frequent and often avoidable reason for denial.³²
• Coding Errors: The complexity of medical billing codes leads to frequent mistakes, such as using an outdated code or a code that doesn’t match the services provided.³³
• Questions of Medical Necessity: An insurer may dispute whether a procedure was medically necessary, often citing a lack of sufficient documentation to support the treatment.³⁶ In 2024, denials related to medical necessity questions rose by 5%.³⁷

The human cost of this epidemic is profound.

Denials lead to significant delays in care, and in a 2023 survey, 24% of adults whose claim was denied said their health actually declined as a result.³⁶

Personal stories abound of patients in life-or-death situations being denied access to life-saving treatments.³⁸

Despite the high stakes, very few consumers fight back; fewer than 1% of denied claims are ever appealed.³⁴

This entire system functions like a pathological negative feedback loop.

In biology, negative feedback loops are essential for homeostasis—maintaining a stable internal environment.

When your body temperature rises, a feedback loop triggers sweating to cool you down, restoring balance.⁴⁰

The denial process is

supposed to be a financial feedback loop, rejecting improper claims to maintain the system’s financial stability.

However, the loop is broken.

The “stimulus” is often not an improper claim, but a minor administrative error.

The “response”—denial—is a blunt instrument that is disproportionate to the initial problem.

This broken loop doesn’t restore balance; it creates chaos.

It harms patients, financially cripples providers, and breeds deep-seated mistrust across the entire healthcare ecosystem.

Much like a disease like diabetes, where the body’s feedback loop for regulating blood sugar fails and causes systemic damage, the current denial system is an illness masquerading as a cure.⁴²

Table 2: Common Reasons for Claim Denials and Mitigation Strategies

Denial Reason	Common Cause	Provider Mitigation Strategy	Supporting Data
Missing/Inaccurate Information	Manual data entry errors, patient data oversight.	Implement automated data validation at registration; regular staff training.	46% of providers identify this as the primary cause.31
Lack of Prior Authorization	Failure to check payer requirements before service.	Develop a standardized pre-authorization workflow; confirm requirements in advance.	79% of practices say prior-auth requirements have increased.32
Coding Errors	Use of outdated or incorrect CPT/HCPCS codes.	Continuous staff training on coding updates; use of claim scrubbing software.	A significant and frequent contributor to denials.33
Service Not Medically Necessary	Insufficient documentation to support treatment.	Provide comprehensive medical records, physician reports, and discharge summaries.	Denials for this reason increased by 5% in 2024.37
Out-of-Network/Not Covered	Provider is not in the insurer’s network or service is an exclusion.	Verify network status and coverage details before scheduling service.	An obvious but common reason for denial.36

The Hidden Tax: Quantifying and Combating Insurance Fraud

Beyond administrative failures, the claims system faces a far more malicious threat: insurance fraud.

This is not a victimless crime.

It acts as a massive hidden tax on the entire economy, and the battle against it has become a high-stakes technological arms race.

The $308.6 Billion Problem

The scale of insurance fraud in the United States is breathtaking.

Across all lines of insurance, fraudulent claims are estimated to cost the industry and its customers $308.6 billion every year.⁴³

This cost is not absorbed by the insurance companies; it is passed directly to consumers.

The Federal Bureau of Investigation (FBI) estimates that fraud costs the average American family between $400 and $700 annually in the form of higher premiums.⁴⁵

The losses are distributed across every sector of the industry ⁴⁵:

• Healthcare Fraud: The largest category, costing $105 billion annually.
• Life Insurance Fraud: A massive $74.7 billion problem.
• Property & Casualty Fraud: Amounting to $45 billion per year.
• Auto Insurance Premium Fraud: An additional $29 billion is lost when applicants lie to get lower rates.⁴⁵

The New Face of Fraud

Fraudulent activity ranges from opportunistic “soft fraud,” such as exaggerating the value of items stolen in a legitimate burglary, to premeditated “hard fraud,” like staging a car accident.¹⁵

But the modern fraud landscape is increasingly dominated by sophisticated, technology-driven schemes.

Fraudsters are now the ones leveraging AI.

They use it to create highly convincing deepfake audio and video, as well as AI-generated documents, to fabricate evidence of loss or injury.⁴⁸

In 2024, the insurance industry saw a staggering

475% increase in synthetic voice fraud attacks.⁴⁹

Another growing threat is

synthetic identity fraud, where criminals combine real information (like a stolen Social Security number) with fictitious details to create entirely new, fraudulent identities that are difficult for traditional systems to detect.⁴⁸

The AI-Powered Defense

To combat this new wave of high-tech fraud, insurers are turning to their own advanced AI and machine learning systems.

This is where another powerful analogy from a different scientific field helps clarify the strategy: fractal geometry.

Fractals are complex patterns that exhibit self-similarity at different scales.

A classic example is a coastline or a snowflake; as you zoom in on a small part, the shape you see mimics the shape of the whole.⁵⁰

Organized insurance fraud operates like a fractal.

A single fraudulent claim might appear unique.

But when an AI system analyzes thousands of claims across a wide geography, it can detect the hidden, self-similar patterns of a fraud ring: the same doctors appearing in different claims, similar injury types reported from different accidents, the same lawyers representing different claimants.

These repeating patterns, invisible to a single human adjuster, are the tell-tale signature of organized fraud.

AI and machine learning algorithms are uniquely capable of performing this type of large-scale pattern recognition.³⁰

They can sift through vast, unstructured datasets—including claim notes, medical records, and even social media activity—to identify these fractal-like connections and flag suspicious claims for review by a human-led Special Investigation Unit (SIU).⁴⁸

This technological arms race is one the industry cannot afford to lose; as fraud becomes more sophisticated, the only effective countermeasure is technology that is even smarter.

Table 3: 2024 North American Insurance Fraud Landscape: A Statistical Snapshot

Category	Estimated Annual Cost	Key Driver / Component	Source(s)
Total Annual Cost (U.S.)	$308.6 Billion	All lines of business.	43
Cost per U.S. Family	$400 – $700	Passed on via increased premiums.	45
Healthcare Fraud	$105 Billion	Medicare/Medicaid ($68.7B) & Private ($36.3B).	46
Life Insurance Fraud	$74.7 Billion	Accounts for 24% of all insurance fraud.	45
Property & Casualty Fraud	$45 Billion	Includes home, auto, and business insurance.	46
Auto Insurance Premium Fraud	$29 Billion	Misrepresentation on applications to lower rates.	45

The Final Mile: Settlement, Negotiation, and Dispute Resolution

After a claim has been investigated and validated, the final and often most contentious stage begins: settlement.

This is where the abstract process of claims management becomes a deeply human interaction, a negotiation that can range from a simple, amicable agreement to a protracted, adversarial battle.

The Negotiation Playbook: An Asymmetrical Battlefield

The negotiation process is inherently an uneven playing field.

The insurer is a repeat player with deep expertise, vast resources, and a profit motive to minimize payouts.

The claimant is often a novice, dealing with a significant loss under emotional and financial distress.

This information asymmetry is the insurer’s primary strategic advantage.

Insurers’ adjusters are trained negotiators who employ a range of tactics that leverage this imbalance ³:

• The Lowball First Offer: This is a standard opening move. The offer is intentionally low to anchor the negotiation at a low point and to see if the claimant will accept a quick, cheap settlement out of desperation or ignorance.³
• Strategic Delays: By dragging out the process, an insurer can increase the claimant’s financial pressure, making them more likely to accept an unsatisfactory offer just to get the ordeal over with.³
• Blame Shifting: The adjuster may attempt to shift partial blame for the incident onto the claimant, which, under laws of comparative negligence, can reduce the value of the claim.³
• Downplaying Damages: The insurer may question the severity of injuries or the necessity of certain medical treatments, demanding extensive and often unnecessary documentation to create hurdles.³

The only effective counter-strategy for a claimant is to reduce the information asymmetry.

This involves meticulous preparation and a disciplined approach ³:

1. Build an Evidence-Based Case: The foundation of a successful negotiation is overwhelming documentation. This includes all medical records, police reports, repair estimates, receipts, and a detailed journal documenting the impact of the loss on one’s life.⁵³
2. Know the Full Value: A claimant must calculate the full value of their claim, which includes not only immediate bills but also future medical costs, lost wages, and non-economic damages like pain and suffering.³
3. Negotiate with Facts, Not Emotion: While the situation is personal, the negotiation must be treated as a business transaction. Arguments should be calm, professional, and always backed by the evidence you have compiled.⁵

Lessons from the Trenches: Real-World Case Studies

The abstract principles of negotiation come to life in the stories of real people.

These narratives reveal the profound human impact of the claims process and highlight the strategies that separate success from failure.

• When the System Fails: The UnitedHealthcare Ulcerative Colitis Case. Christopher McNaughton, a college student with a severe case of ulcerative colitis, was thriving on a specialized, life-saving treatment plan that cost nearly $2 million a year. His insurer, UnitedHealthcare, after initially covering the treatment, flagged his case as a “high dollar account” and initiated a review. A doctor contracted by the insurer deemed the treatment “not medically necessary,” and a lawsuit later uncovered recorded calls of United employees laughing about the denial.³⁸ The company misrepresented findings from McNaughton’s own doctors and buried a report from another paid doctor who warned that denying the treatment could put his health at risk. The case is a stark example of a system where cost-containment incentives can override medical necessity, leaving a vulnerable patient to fight a lonely, life-threatening battle against a corporate giant.³⁸
• When Strategy Wins: The Denied Commercial Hail Claim. In a powerful counter-narrative, a commercial property owner with a 700,000-square-foot facility faced a multi-million-dollar hail damage claim that was flatly denied by their insurer. Instead of accepting the denial or immediately resorting to litigation, the owner hired a public adjuster, Insurance Claim Recovery Support (ICRS). The ICRS team neutralized the insurer’s informational advantage by building an irrefutable case. They engaged a team of independent experts—thermal imaging specialists, industrial hygienists, structural engineers—and conducted core sample analysis to provide undeniable physical evidence of the damage. They compiled this overwhelming evidence into a comprehensive report and maintained persistent, professional communication with the insurer. Faced with a case this meticulously documented, the insurer reversed its denial and agreed to a multi-million-dollar settlement without the need for a costly lawsuit.⁵⁷

These cases illustrate a core truth: the negotiation is a battle of narratives, and the party with the most compelling, evidence-backed story wins.

A Better Way: The Collaborative Model

The adversarial nature of claims negotiation is not inevitable.

A more effective model is emerging, one based on collaboration and shared data.

A case study from the revenue cycle management firm Currance provides a blueprint.

A healthcare provider struggling with claim denials and delayed payments partnered with Currance not as a vendor, but as a strategic ally.

They established a system of radical transparency, with daily, weekly, and monthly meetings to review data and discuss issues.

By working together to identify the root causes of denials (like coding errors and authorization issues) and implementing streamlined processes to fix them, the partnership achieved remarkable results: gross collections increased by 11.8% and A/R days were cut in half.⁵⁸

This case demonstrates that when the dynamic shifts from confrontation to collaborative problem-solving, the entire system becomes healthier and more efficient for all stakeholders.

Strategic Imperatives: The Business Impact of an Optimized Claims Process

For too long, the insurance industry has viewed the claims department as a necessary evil—a back-office cost center whose primary function is to control expenses.

This is a profound strategic error.

The claims process is not peripheral to the business; it is the very core of the value proposition.

It is the moment the insurer’s promise is tested, and the outcome of that test has a direct and quantifiable impact on the company’s long-term financial health and market value.

The Moment of Truth: Claims as the Engine of Customer Loyalty

Insurance is a low-interaction business.

A customer may pay premiums for years without any meaningful contact with their provider.

The claim is the “moment of truth”.⁵⁹

A smooth, fair, and empathetic claims experience forges a powerful bond of trust and loyalty.

A poor one shatters it, often permanently.

Research shows that one negative experience is enough for half of all customers to switch to a competitor.⁶⁰

Customer satisfaction in the insurance industry, particularly in health insurance, is alarmingly low, having plummeted to a five-year nadir in 2024.⁶¹

Yet the drivers of satisfaction are clear: customers value speed, transparency, and efficiency, but they also place a high premium on the human element.

In fact, 50% of five-star ratings from insurance customers specifically highlight a “positive or empathetic adjuster attitude” as a key factor in their satisfaction.⁶⁰

The Undeniable Link Between Customer Experience and Shareholder Value

The connection between a positive claims experience and business success is not just anecdotal; it is backed by hard financial data.

A landmark 2021 study by Watermark Consulting analyzed 14 years of stock market performance and compared companies that were leaders in customer experience (CX) with those that were laggards.⁶²

The results for the insurance industry are nothing short of stunning:

• In Auto Insurance, CX Leaders generated a total cumulative shareholder return that was 3.1 times greater than that of the CX Laggards.
• In Home Insurance, the gap was even more dramatic. CX Leaders produced a total cumulative return that was a staggering 7.0 times greater than the Laggards.

This powerful correlation reveals the economic calculus of a great customer experience.

Happy, loyal customers are more likely to stay, are less sensitive to price increases, and are more likely to buy additional products—all of which drives revenue growth.

They also complain less, which reduces operating expenses.

Conversely, CX Laggards are trapped in a vicious cycle of high customer churn, negative word-of-mouth, and the high costs associated with constantly having to acquire new customers to replace the ones they’ve alienated.⁵⁶

The claims department, therefore, is not a cost center.

It is the hidden engine of the insurance business model.

Its performance is directly mirrored in the company’s stock price.

The market, over the long term, recognizes that an insurer’s ability to fairly and efficiently pay claims is the ultimate measure of its fundamental health and future viability.

A Call to Action: From Factory to Forest

The path forward requires a fundamental shift in mindset.

The industry must stop trying to optimize the factory assembly line and start cultivating a healthy forest ecosystem.

For Claims Professionals: The focus must be on proactive communication, meticulous documentation, and a balance of efficiency and empathy.

Treat every claim as a negotiation, but also as an opportunity to build trust.

Be a mentor to your team, understand their individual strengths, and empower them to give each claim the attention it deserves.⁹

For Industry Leadership: The strategic imperative is to invest in the claims function as a core asset.

This means leveraging data and technology not just to cut costs, but to gain actionable insights into team performance and customer behavior.²⁹

It means fostering a culture of collaboration, both internally and with external partners, to address the root causes of system friction.⁹

The future of claims management will be defined by the intelligent integration of technology and humanity.

AI will continue to revolutionize the industry, automating routine tasks and providing powerful new tools for fraud detection.⁶⁴

But technology alone is not enough.

The most successful insurers will be those who recognize that at the end of every claim is a human being seeking help in a moment of crisis.

By blending digital efficiency with genuine human empathy, they will not only build a more resilient and profitable business but will also fulfill the fundamental promise that lies at the heart of insurance itself.

Works cited

1. Navigating the Claims Process: Recover & rebuild – NAIC, accessed July 19, 2025, https://content.naic.org/article/consumer-insight-navigating-claims-process-recover-rebuild
2. Navigating the insurance claims process in 5 simple steps, accessed July 19, 2025, https://www.northbridgeinsurance.ca/blog/5-steps-of-insurance-claims-process/
3. 8 Insider Tips for Negotiating a Fair Settlement with Insurance …, accessed July 19, 2025, https://ceolawyer.com/blog/8-insider-tips-for-negotiating-a-fair-settlement-with-insurance-companies/
4. Tips for Negotiating an Injury Settlement With an Insurance Company – Nolo, accessed July 19, 2025, https://www.nolo.com/legal-encyclopedia/negotiating-with-insurance-company-29765.html
5. This is How You Talk to Insurance Claims Adjusters, accessed July 19, 2025, https://www.jp-law.net/this-is-how-you-talk-to-insurance-claims-adjusters/
6. Real-Life Case Studies on Claims and Recovery in the Industry, accessed July 19, 2025, https://objectstorage.us-ashburn-1.oraclecloud.com/n/idqpigefbdfq/b/business-insurance/o/manufacturing/manufacturing/real-life-case-studies-on-claims.html
7. Top 10 Insurance Claim Tips – United Policyholders, accessed July 19, 2025, https://uphelp.org/claim-guidance-publications/top-10-insurance-claim-tips/
8. How your health insurance claims process works | Office of the Insurance Commissioner, accessed July 19, 2025, https://www.insurance.wa.gov/insurance-resources/health-insurance/how-health-insurance-works/how-your-health-insurance-claims-process-works
9. From Chaos to Clarity: A Smooth Claims Management Guide, accessed July 19, 2025, https://www.craneagency.com/a-smooth-claims-management-guide/
10. Claims Lifecycle Management: Best Practices for Insurers – Decerto, accessed July 19, 2025, https://www.decerto.com/post/claims-lifecycle-management-best-practices-for-insurers
11. How Businesses Can Streamline the Insurance Claims Lifecycle – Pulpstream, accessed July 19, 2025, https://pulpstream.com/resources/blog/life-cycle-of-a-claim
12. en.wikipedia.org, accessed July 19, 2025, https://en.wikipedia.org/wiki/Crystallization#:~:text=Crystallization%20occurs%20in%20two%20major,leads%20to%20a%20crystal%20state.
13. Crystallization – Wikipedia, accessed July 19, 2025, https://en.wikipedia.org/wiki/Crystallization
14. Insurance Claim Process: Steps, Flowchart, Use Cases – Fluix, accessed July 19, 2025, https://fluix.io/insurance-claims-process
15. Investigation and evaluation of claims | Risk Management and Insurance Class Notes, accessed July 19, 2025, https://library.fiveable.me/risk-management-insurance/unit-8/investigation-evaluation-claims/study-guide/yCGEo9VvEXZONd7V
16. Healthcare Claims Processing Workflow Automation – Cflow, accessed July 19, 2025, https://www.cflowapps.com/healthcare-claims-processing-workflow-automation/
17. Medical claims 101: What you need to know – Definitive Healthcare, accessed July 19, 2025, https://www.definitivehc.com/blog/medical-claims-101-what-you-need-to-know
18. Healthcare Claims Processing: Workflow, Systems, Steps – Artsyl, accessed July 19, 2025, https://www.artsyltech.com/healthcare-claims-processing-workflow
19. Your Guide: Healthcare Claims Processing Steps | 6 Degrees Health, accessed July 19, 2025, https://www.6degreeshealth.com/healthcare-claims-processing-steps-sdh/
20. Archaeological Interpretation: Methods & Techniques – Vaia, accessed July 19, 2025, https://www.vaia.com/en-us/explanations/archaeology/analytical-archaeology/archaeological-interpretation/
21. The Archaeologist’s Toolkit: What is Stratigraphy? | Center for Archaeological Studies – University of South Alabama, accessed July 19, 2025, https://www.southalabama.edu/org/archaeology/news/stratigraphy.html
22. Validation – Definition and FAQs – Naked Insurance, accessed July 19, 2025, https://www.naked.insure/definitions/validation
23. Insurance Claims Validation Agent – ZBrain, accessed July 19, 2025, https://zbrain.ai/agents/Finance/all/Insurance-Claims-Processing/insurance-claims-validation-agent/
24. How to Automate Claims Forms Validation – Datagrid, accessed July 19, 2025, https://www.datagrid.com/blog/automate-claims-forms-validation
25. The Ultimate Guide to Claims Investigation – Number Analytics, accessed July 19, 2025, https://www.numberanalytics.com/blog/ultimate-guide-claims-investigation
26. How Insurance Companies Evaluate the Value of a Claim – Oleen Law Firm, accessed July 19, 2025, https://www.oleenlawfirm.com/blog/how-insurance-companies-evaluate-the-value-of-a-claim/
27. Insurance Claims Investigations: Detecting Fraud and Abuse – Case IQ, accessed July 19, 2025, https://www.caseiq.com/resources/insurance-claims-investigations-detecting-fraud-and-abuse/
28. Common Pain Points in Claims Management Companies – Riskonnect, accessed July 19, 2025, https://riskonnect.com/claims-administration/common-pain-points-in-claims-management-companies/
29. 6 Tips to Help you Manage a More Productive Claims Department, accessed July 19, 2025, https://blog.usclaimsolutions.co/6-tips-to-help-you-manage-a-more-productive-claims-department
30. Overcoming Challenges in Claims Management | Apexon, accessed July 19, 2025, https://www.apexon.com/blog/common-challenges-in-claims-management/
31. State of Claims 2024: Insights from survey findings – Healthcare Blog, accessed July 19, 2025, https://www.experian.com/blogs/healthcare/state-of-claims-2024-insights-from-survey-findings/
32. How to overcome common claims management challenges – Inovalon, accessed July 19, 2025, https://www.inovalon.com/blog/how-to-overcome-common-claims-management-challenges/
33. Most Common Reasons for Medical Claim Denials – Kentucky Counseling Center, accessed July 19, 2025, https://kentuckycounselingcenter.com/most-common-reasons-for-medical-claim-denials/
34. HealthCare.gov Insurers Denied Nearly 1 in 5 In-Network Claims in 2023, but Information About Reasons is Limited in Public Data | KFF, accessed July 19, 2025, https://www.kff.org/affordable-care-act/press-release/healthcare-gov-insurers-denied-nearly-1-in-5-in-network-claims-in-2023-but-information-about-reasons-is-limited-in-public-data/
35. Claims Denials and Appeals in ACA Marketplace Plans in 2023 – KFF, accessed July 19, 2025, https://www.kff.org/private-insurance/issue-brief/claims-denials-and-appeals-in-aca-marketplace-plans-in-2023/
36. Common Reasons for Health Insurance Claims Denials and How to Avoid Them, accessed July 19, 2025, https://gainservicing.com/common-reasons-for-health-insurance-claims-denials-and-how-to-avoid-them/
37. Claims denial rates up, prior auth denials down in 2024: Report – Becker’s Payer Issues, accessed July 19, 2025, https://www.beckerspayer.com/payer/claims-denial-rates-up-prior-auth-denials-down-in-2024-report/
38. Inside UnitedHealth’s Effort to Deny Coverage for a Patient’s Care …, accessed July 19, 2025, https://www.propublica.org/article/unitedhealth-healthcare-insurance-denial-ulcerative-colitis
39. Insurance denied Pennsylvania man cancer medication. Here’s how he still got it., accessed July 19, 2025, https://www.cbsnews.com/philadelphia/news/insurance-denial-cancer-medication-pennsylvania/
40. Negative feedback loop examples (article) – Khan Academy, accessed July 19, 2025, https://www.khanacademy.org/science/hs-bio/x230b3ff252126bb6:from-cells-to-organisms/x230b3ff252126bb6:homeostasis/a/negative-feedback-loop-examples
41. 3. The Negative Feedback Loop – Lemonade-Ed, accessed July 19, 2025, https://www.lemonade-ed.com/level-3/3-4-homeostasis/3-the-negative-feedback-loop
42. Homeostasis (article) | Feedback – Khan Academy, accessed July 19, 2025, https://www.khanacademy.org/science/biology/cell-signaling/x324d1dcc:feedback/a/homeostasis
43. Key Takeaways From Our U.S. Claims Fraud Survey – Gen Re, accessed July 19, 2025, https://www.genre.com/us/knowledge/publications/2024/september/key-takeaways-from-our-us-claims-fraud-survey-en
44. Facts + Statistics: Fraud | III – Insurance Information Institute, accessed July 19, 2025, https://www.iii.org/fact-statistic/facts-and-statistics-insurance-fraud
45. Insurance Fraud Statistics – ValuePenguin, accessed July 19, 2025, https://www.valuepenguin.com/auto-home-insurance-fraud
46. Insurance Fraud Statistics 2024 – Nasdaq, accessed July 19, 2025, https://www.nasdaq.com/articles/insurance-fraud-statistics-2024
47. Insurance Topics | Insurance Fraud – NAIC, accessed July 19, 2025, https://content.naic.org/insurance-topics/insurance-fraud
48. Top 4 Insurance Frauds and How To Prevent Them – FRISS, accessed July 19, 2025, https://www.friss.com/blog/top-4-insurance-frauds-and-how-to-prevent-them
49. Insurance fraud increased by 19% from synthetic voice attacks in 2024 – Fierce Healthcare, accessed July 19, 2025, https://www.fiercehealthcare.com/payers/insurance-fraud-increased-19-synthetic-voice-attacks-2024
50. www.ijisrt.com, accessed July 19, 2025, https://www.ijisrt.com/assets/upload/files/IJISRT24NOV823.pdf
51. Self-similarity – Wikipedia, accessed July 19, 2025, https://en.wikipedia.org/wiki/Self-similarity
52. How To Negotiate an Insurance Settlement: Top 9 Tips – Mighty, accessed July 19, 2025, https://www.mighty.com/blog/how-to-negotiate-insurance-settlement
53. Negotiating a Settlement with American Family Insurance: Insurance Claim Tips & Tactics, accessed July 19, 2025, https://milanoaccidentlawyers.com/negotiating-a-settlement-with-american-family-insurance-insurance-claim-tips-tactics/
54. The Art of Negotiating with Insurance Companies – WarmuthLaw, accessed July 19, 2025, https://warmuthlaw.com/the-art-of-negotiating-with-insurance-companies/
55. Steps to an Insurance Claim Settlement – Enjuris, accessed July 19, 2025, https://www.enjuris.com/personal-injury-law/insurance-claim-settlement/
56. The Customer Experience ROI Study | Watermark Consulting, accessed July 19, 2025, https://watermarkconsult.net/blog/2024/08/20/customer-experience-roi-study/
57. Insights from Multi-Million Dollar Claim Study, accessed July 19, 2025, https://www.insuranceclaimrecoverysupport.com/commercial-insurance-claim-case-study/
58. case study insurance resolution – Currance, accessed July 19, 2025, https://www.currance.com/2025/01/case-study-insurance-resolution/
59. Customer Experience in Insurance, accessed July 19, 2025, https://blog.icx.co/en/insurance-industry/customer-experience/customer-experience-in-insurance
60. Customer Experience in Insurance: Tips & Examples – InMoment, accessed July 19, 2025, https://inmoment.com/blog/insurance-customer-experience/
61. US Health Insurer CX Quality Plummets To A Five-Year Low – Forrester, accessed July 19, 2025, https://www.forrester.com/blogs/us-health-insurer-cx-quality-plummets-to-a-five-year-low/
62. 2021 Customer Experience ROI Study | Watermark Consulting, accessed July 19, 2025, https://watermarkconsult.net/wp-content/uploads/2021/10/Watermark-Consulting-2021-Insurance-Customer-Experience-ROI-Study.pdf
63. How to Improve Insurance Claims Process: 5 Essential Tips – N2uitive, accessed July 19, 2025, https://n2uitive.com/blog/how-to-improve-insurance-claims-process
64. The future of AI for the insurance industry – McKinsey, accessed July 19, 2025, https://www.mckinsey.com/industries/financial-services/our-insights/the-future-of-ai-in-the-insurance-industry