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Claims Leakage Definition & How it Impacts Adjusters


As an independent claims adjuster, you're responsible for handling claims in a timely manner and helping insurance carriers manage their costs. If your claims are not handled efficiently, your clients may pay out more for each claim than they expect, putting valuable business relationships at risk. In this guide, we provide a claims leakage definition and explain how it impacts you as a claims adjuster.

What Is Claims Leakage?

In simple terms, claims leakage is the difference between what is on a claim versus what a carrier should have paid on the claim. This problem arises from missing critical data that helps determine the scope more accurately and in doing so prevents over-scoping the job and creating leakage.

Causes of Claims Leakage

Claims leakage typically has three main causes: human error, onerous processes that are thought to help manage costs but rather create loopholes, and a mismatch between a claims adjuster's needs and the technology they're using. Here's how each of these areas can contribute to claims leakage:

  1. Human error: People aren't perfect. No matter how careful you are, you're bound to make a mistake at some point. Claims leakage often occurs when claims adjusters and other insurance professionals rely on manual or outdated processes. A lack of training may also cause professionals in the insurance industry to make critical mistakes.

  2. Inefficient and onerous processes: Following inefficient processes may lead to inconsistency, making it more difficult to investigate claims thoroughly, catch duplicate claims or make decisions related to policy statements that aren't crystal clear about what's covered in unusual situations.

  3. Technology issues: Some claims adjusters don't have the right tools for maximizing efficiency. Outdated technology can also slow you down when it comes to investigating claims, following up with clients and taking care of your other responsibilities.

How Claims Leakage Affects Claims Adjusters

It's easy to see how claims leakage affects insurance carriers: Each carrier pays more than it should for every claim that isn't handled efficiently. But claims leakage also affects claims adjusters in several ways.

Impact on Professional Relationships

Insurance carriers like to work with independent claims adjusters who can help them keep your costs low. If you don't handle claims as efficiently as other adjusters, some of your clients may stop using your services. Even if a client doesn't drop you, claims leakage may affect the relationship, which means you'll have to work even harder to keep the client satisfied.

Increased Business Costs

Once you know that claims leakage is a problem, you need to do whatever you can to fix it. Depending on the cause of the inefficiencies, you may need to invest in new technology, hire a consultant to help you develop new business processes or bring on an employee to handle clerical work and other tasks that aren't directly related to claims handling. Although these steps can help increase efficiency, they can also increase your business costs substantially.

Fewer Professional Development Opportunities

If you're dealing with claims leakage, you can't spend as much time gaining new knowledge or developing new skills. Instead of taking classes or attending networking events, you'll be looking for ways to increase efficiency and prevent errors. The longer you go without making time for professional development, the more difficult it will be to advance your career.

Tips for Dealing with Claims Leakage

Since claims leakage typically occurs due to human error, inefficient processes and/or a mismatch between your needs and the technology you're using, the best way to deal with it is to examine all three areas of your business and determine what you need to change to increase efficiency. You may decide to make some or all of the following changes:

  1. Upgrade your computer system to reduce the amount of time it takes to handle a claim.

  2. Implement new processes for investigating claims to make sure they aren't fraudulent.

  3. Create a manual to document best practices in claims handling and make sure you follow each one when a new claim comes in.

  4. Invest in tools to reduce the average amount of time spent on each claim.


  1. A basic claims leakage definition is the difference between how much money a company pays for a claim and how much the company should have paid for the claim.

  2. Claims leakage typically occurs due to the use of inefficient processes.

  3. A high level of claims leakage can hurt your reputation and make it difficult to grow your career.

  4. It's possible to limit claims leakage by reviewing your internal processes and working to make them more efficient.

About OneClick Code

OneClick Code is a trusted data partner, dedicated to streamlining the code-sourcing process for all parties in the roofing industry while also increasing efficiency and transparency for all stakeholders in construction and restoration. They have the only platform to have blazed the trail for data automation of jurisdictional authority for building codes, permit fees, taxes, and manufacturer specifications required for any address nationwide. OneClick Code has been serving customers in the contracting, insurance, and claim adjusting fields by providing instant access to trusted roofing codes, in the click of a button. Offering unique reports that can be easily shared between all stakeholders in the roofing claims industry, OneClick is adding value to all parties and empowering customers to save time and money on every claim. Welcome to restoration intelligence, automated. To learn more, visit our website

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