When it comes to claims sourcing, getting the right balance between price and quality is a key issue for insurance companies. Our client engaged Efficio to help its North American Property and Casualty business develop a new approach to claims sourcing, based on innovation and supplier performance rather than focusing solely on rates.

The goal was to drive down costs while delivering significant benefits to both our client and their clients – and the project exceeded all expectations.

Cost savings almost three times higher than target were achieved. At the same time, the project delivered a range of ‘soft’ benefits including significantly enhanced transparency, supplier performance and integrations. Most importantly, it has succeeded in transforming claims sourcing into an area of competitive advantage.


Our client is one of the world’s leading multinational insurance groups, with over 10,000 staff and underwritten premiums of around $10 billion.

The North American business was undertaking a major transformation program to drive growth while reducing costs, and had identified claims sourcing as a significant opportunity. While the client wanted to reduce claim costs, it also wanted to create more strategic value.

The challenge was to create new partnerships with strategic suppliers that encouraged innovation and improved performance. Based on their experience of best practice across multiple markets and clients, and their successful track record of working with other parts of this business, Efficio were engaged to help.

Efficio’s breadth of knowledge, expertise and rigorous approach was key to establishing a new performance-based allocation model. It has given us a new way of working with suppliers that provides real value to the business and improves outcomes for our customers. The results speak for themselves and we’re delighted with what we’ve been able to achieve with Efficio’s help.
Chief Procurement Officer


Efficio employed a fact-based approach with four key elements:

  1. They built a new ‘Total Cost of Claim’ view (which went well beyond supplier spend) by integrating the client’s claims data with vendor systems. This allowed the client to assess a range of other dimensions, including lead times, historical indemnity performance and customer satisfaction
  2. New performance benchmarks and best practice standards were established, using a ‘Voice of the Supplier’ approach which identified market innovators and leading performers. This sent a clear message to suppliers that performance and innovation were key. This was important in changing the perceptions of suppliers, who were initially skeptical as a result of aggressive rate-based negotiations in the past
  3. Efficio worked intimately with the business to model supplier integration and the impact of practices that impacted factors such as lead times, performance and purchasing decisions. This created a transparent framework for suppliers to bid on and propose new solutions
  4. Efficio then led the negotiations with suppliers, which included new performance commitments. Key to this was ensuring that hard savings would be delivered without impacting the total cost of claims and associated ‘soft’ benefits


The project achieved a 13% reduction in annualised spend in the categories addressed, double the original target.

As well as ‘hard’ cost savings, the transformation of the client’s claims sourcing approach delivered a number of other major benefits:

  • New ‘best practice’ supplier performance commitments and a transparent performance regime were established
  • Preferred ‘steering’ increased by 10p.p in key categories
  • Relationships with strategic suppliers were greatly improved and new, closer ways of working were established – for example, work allocation was optimised by integrating workshop information from key suppliers with front-line claims handlers
  • The client’s procurement team were upskilled, their credibility with the business increased as the function was seen to deliver real strategic value, and relationships with key stakeholders were enhanced. As well as exceeding the immediate objective of reducing costs, the project has created a more robust purchasing function and a foundation for ongoing improvements

Following the success of the project, the client has continued to roll out the approach in other categories.