Analysing the efficiency and effectiveness of internal controls to detect and mitigate claims leakage in the Maltese insurance industry

Abstract

The only constant, at this day and age, is change. Unquestionably, the verity of such an oxymoron has become a pervasive challenge for insurance companies, and unless the industry thrives to succeed in becoming the creators of change, they will end up being a circumstance of it. Subsequently, as they are grappling with this turbulent environment, the value of knowledge and skill, robust claims strategy function and latest technologic advancements are becoming the determining factors as to the survival of the organisation by allowing for the preventions of unnecessary monetary outflows, resulting into significant cost reductions.

The study is based on one questionnaire which was directed to Maltese insurance companies. It was divided into quantitative questions to allow for statistical analysis, and qualitative questions to explore the main concepts and issues of claims leakage in greater depth.

The key findings pose that there are effective controls to minimize loopholes in the system, impacting positively the ability of the industry to meet its objectives of claims leakage reductions. It was established that the Maltese insurance industry is characterized with high levels of people involved in the claims handling process which although operative, is rather time consuming. Furthermore, it was evident that the industry is resilient to innovative changes and are strictly abiding to old claims strategy approaches that may not deliver the desired outcomes in the future. Lastly, the findings adduced that industry leading practices are non-existent mostly due to the hostility and lack of motives in the industry.

The industry needs to reconsider the current challenges of the claims function and gain the right perspective to plan adequately and accordingly for the future.