Digital workflows accelerate claims processing

Stefan Seufert, CTO/Vorstand EIKONA AG
Mit IT-Lösungen für die Schadensbearbeitung melden Speditionen effizient an die Versicherer.

Logistics processes along the value chain are designed to be executed quickly. This is especially true of distribution logistics, where goods need to get from production to the recipient as quickly as possible. Though rare when measured in terms of overall goods volume, damage is still a daily occurrence. Efficient supply chain management therefore also includes automatic processing of damage claims.


Claims in transport logistics are well below one percent, but costscan still be reducedby optimising claims processing. This is because insurance expenses are among the highest third-party costs in the logistics industry. Digital solutions to manage the reporting of all claims automatically reduce the liability risk considerably. Indeed, by checking all the details, they ensure not only that the claim is accurately documented but also that the processes are complete and efficient.


Did you know?

What is part of claims processing?

At a freight forwarding company, claims processing covers several sub-areas. This is because products can get damaged during handling in the warehouse and in transit . Claims processing entails the following tasks by definition:

  • Damage assessment
  • Description
  • Documentation
  • Claims reporting
  • Claims adjustment and settlement

One of the basic tasks of efficient claims processing is to determine the time of the loss as accurately as possible in order to identify who is responsible. This increasingly includes communicating the objectives to the customer early on. After all, companies in many sectors need to be able to plan accurately, which enables them to avoid consequential damage.


Clarity

Reconstruct damage events

Claims processing is always about assuming or denying liability and then adjusting and settling the claim. No matter how carefully services are provided, goods are constantly being damaged due to the sheer number of goods movements. That is why all the companies involved in the supply chain are insured against major liability risks. That highlights the need to identify as precisely as possible who is responsible for the area where the damage has occurred. For example, did the damage happen while the goods were being transported in the warehouse during handling? Or was it caused by the warehouse equipment during picking? Or maybe it occurred in transit, due to inadequate load securing materials or flimsy packaging? Therefore, before a claim is adjusted and settled, insurers will carefully check who was liable when the damage occurred.


Technology tools

How software supports claims processing

To protect themselves against unjustified claims, many freight forwarders use technical solutions to document the condition of the goods when liability is transferred. This can include cameras on warehouse ceilings and gates. The cameras take a picture of the cargo space immediately after the trailer or swap body is opened. They take additional pictures during the incoming scan of each package, showing the condition in which the goods reached the freight forwarder. If damage to individual products is spotted later in the handling process, it is now standard practice to use software with a predefined workflow for recording damage on the mobile devices used in warehouse scanning, which also directly captures photos of the damage. This ensures that damage is precisely documented from the earliest possible point in time and can be reported to the customer. In distribution logistics, this is usually the suppliers. In procurement logistics, by contrast, the recipient will have ordered the transport directly. The customer decides whether the goods can still be used and has to report the damage to its insurance company.


Be prepared

Submit complete information in time

Claims adjustment and settlement requires more than just a complete set of information. Claims also have to be reported by specific deadlines. Luckily, software helps employees meet this requirement, too. They already have a head start from having recorded the damage digitally . Also, their IT systems will ideally be linked in such a way that they associate all this data with the corresponding customer orders in order to speed up claims handling. That applies not just to individual damaged orders but particularly to truck accidents on the road. As long as there are no injuries, getting information out quickly can determine whether the freight forwarder can avoid further losses caused by missed delivery deadlines. However, that usually only works if the claim is reported through a mobile or web app right when the damage is discovered or the accident has occurred, which makes it possible to immediately check whether the truck was carrying time-sensitive orders. Another important function of the software is to keep the driver and dispatcher calm and provide precise instructions in a digital workflow to prevent important tasks being forgotten.

Conclusion

Digital claims processing reduces costs

Damage is inevitable in logistics. It is important for freight forwarders and logistics service providers to assume liability only when they are responsible for the damage. After all, more claims means higher insurance premiums. Without IT solutions, however, it is almost impossible to provide proof that they are not responsible because, say, the packaging was flimsy. Digital claims management helps to clarify liability beyond a shadow of a doubt.


Stefan Seufert
Stefan Seufert
CTO

As a design guru, the software developer delves into logistics service providers' requirements like no other. He is passionate about exchanging information securely and efficiently and thus speeding up the physical logistics process.


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