Understanding the Challenges of Third-Party Claims—and How to Overcome Them

Understanding the Challenges of Third-Party Claims—and How to Overcome Them

team in office on calls

If you’ve ever considered outsourcing your claims process, you may have encountered some surprising roadblocks. It’s not always as simple as handing off responsibilities and watching everything run smoothly. In fact, when it comes to third-party claims, there are unique hurdles that can affect everything from maintaining quality standards to keeping costs in check. The good news? With the right strategies and oversight, these challenges can be managed more effectively than you might think.
In this post, we’ll break down three of the biggest concerns businesses face when outsourcing their claims handling. We’ll also offer practical tips to help you stay on top of quality, communication, and costs. By the end, you’ll have a clearer understanding of the potential pitfalls—and some actionable ideas for keeping your claims process working in your company’s best interest.

Losing a Sense of Control

One of the first and most common issues companies experience when outsourcing their claims process is feeling like they’ve lost control. This can manifest as uncertainty about how quickly claims are being processed, confusion over communication protocols, and worries about whether standards are being upheld. After all, handing off your third-party claims process to an external partner means relying on someone else’s methods, timelines, and judgments.
Think of it this way: if your internal team handles claims, you know exactly who to talk to and how things get done. Outsourcing can introduce layers that make you less sure about what’s happening behind the scenes. Without proper oversight, you might only learn about issues after they’ve caused delays or frustrations.

Our Tip for Maintaining Control

The key is to set the stage before signing any contracts. Establish clear guidelines and performance indicators (KPIs) from the start. You might require that certain claim types be resolved within a specific number of days or that certain escalation procedures be followed when complex issues arise. Regular check-ins, scheduled status reports, and detailed dashboards can keep you in the loop without having to chase down information. It’s all about striking a balance: your outsourcing partner manages the day-to-day while you retain a bird’s-eye view through well-defined metrics and processes.

Communication Roadblocks

If there’s one area that can make or break a relationship with a third-party vendor, it’s communication. In the world of third-party claims, delays often happen because one team is waiting on details from another. If your outsourcing partner doesn’t fully understand your claims guidelines—or if your internal staff isn’t sure who to contact with questions—the process can slow to a crawl.
Poor communication can also lead to errors or misunderstandings. What if a claim is denied due to incomplete documentation, but no one informs the right team member to gather the missing info? These small missteps can accumulate and eventually erode trust and efficiency.

Our Tip for Better Communication

Start by identifying key points of contact on both sides. Who should your internal team reach out to for status updates or clarification? Who at the vendor’s end is responsible for escalation? Once these roles are established, consider setting up regular update calls and written reports at predetermined intervals—weekly, monthly, or whatever makes sense for your volume of claims.
Invest in collaborative tools that provide real-time updates on claim status, next steps, and any outstanding documentation for more streamlined communication. Clear expectations and structured touchpoints go a long way in preventing confusion and helping everyone work toward a common goal.

Ready to see how we can help you streamline third-party claims? Learn more about our specialized services and technology-driven approach to regain control, enhance communication, and keep costs in check.

Hidden Costs and Value Concerns

When companies outsource their third-party claims handling, they often do so hoping to cut overhead and operational complexity. On paper, this can look like a win: you’re offloading tasks to experts who can potentially handle them more efficiently. But what if things don’t go as planned? Delayed settlements, multiple rework cycles, or a barrage of complaints from claimants might lead to additional expenses you didn’t anticipate.
In other words, while outsourcing can reduce some upfront costs—such as hiring and training internal staff—it can also introduce new costs if performance metrics aren’t met. There’s also the potential for indirect costs, like damage to your brand reputation if customers have a poor claims experience and decide to take their business elsewhere.

Our Tip for Evaluating Cost-Effectiveness

Don’t just look at the initial sticker price. Before finalizing an outsourcing deal, analyze the full cost structure and ensure you have a clear understanding of what happens if certain KPIs aren’t reached. Will you need to pay for reprocessing claims? Are there penalties in place, or is there flexibility for renegotiation?
It’s also smart to continuously assess the arrangement. After the first few months or quarters, compare the data: Are claims being resolved faster? Are you spending less time and money on overhead? If the relationship isn’t providing the value you anticipated—either because of poor performance or hidden fees—it may be time to renegotiate terms or even consider alternative providers.

Maintaining Brand Reputation and Customer Satisfaction

Although it’s not always top of mind, outsourcing third-party claims handling can also affect how customers perceive your brand. If the external team isn’t as attentive or empathetic as your internal staff would be, claimants might feel neglected or frustrated. Over time, negative experiences can accumulate, leading to diminished trust and loyalty.
The tricky part is that it’s not always obvious when the quality of claimant interactions starts slipping. Without strong oversight and direct involvement, you might not notice problems until your customer feedback surveys or online reviews take a turn for the worse. This can be especially damaging in an industry where customer experience and fast resolution are major differentiators.

Tip for Preserving Brand Integrity

Include customer satisfaction metrics as part of your KPIs. This might mean periodically surveying claimants to gauge their experience, tracking resolution times, or reviewing the quality of claims adjuster notes for clarity and helpfulness. Make sure your outsourcing partner understands your company’s values and brand promise. When they know what you stand for, they’re more likely to represent you well.

The Importance of Compliance and Security

Compliance and data security are also huge factors in managing third-party claims. Insurance claims often involve sensitive personal information, and any breach or mishandling can lead to severe legal repercussions and loss of trust. Ensuring that your third-party vendor follows all relevant regulations and data protection standards is critical.

Tip for Ensuring Compliance

During the vendor selection process, ask detailed questions about data security measures, training for employees, and how they handle compliance with state and federal regulations. Require documentation that shows adherence to these standards and consider conducting periodic audits. Being proactive upfront can help you avoid future headaches or costly legal battles.

Knowing When Outsourcing Makes Sense

All these challenges might make you wonder if outsourcing third-party claims is worthwhile. The truth is, it can be—when done right. Outsourcing can free up your internal team to focus on strategic initiatives, reduce overhead, and even speed up claims resolution if your partner is truly specialized in this area. The key is to choose a partner who complements your company’s values, offers transparent reporting, and maintains strong communication channels.
Take the time to assess your own organization’s needs, resources, and limitations. If you’re prepared to manage the relationship actively—rather than taking a hands-off approach—outsourcing can still deliver significant benefits.

GGA Claims Solutions Helps You Navigate Outsourcing

When it comes to navigating these challenges, a reliable partner can make all the difference. GGA Claims Solutions takes a proactive approach to mitigating the common pitfalls of outsourcing claims handling. Drawing on decades of industry experience, GGA’s experts understand the importance of maintaining control, ensuring clear communication, and keeping costs aligned with performance.
What sets GGA apart? For starters, we don’t just hand you a set of metrics and leave you in the dark. Instead, we work collaboratively to create custom reporting dashboards that give you real-time visibility into claims progress. Our communication framework is designed to keep all parties informed—no guessing, no confusion.
Ready to enhance your claims process? Reach out today.