Best Practices for Effective Insurance Contract Management

June 27, 2024 • Contract Management • 5 minutes

Navigating insurance contract management can be complicated, but it doesn’t have to be. Regardless of company size or the volume of contracts in your workflow, automated tools and systems can make your daily contract operations easy and efficient for all parties involved. Read on for best practices to effectively manage insurance contracts. 

What is insurance contract management? 

Insurance contract management is the process of drafting, negotiating, approving, and executing contracts with policyholders such as patients, employers, and healthcare providers. This process also incorporates safeguards to mitigate risks and maintain compliance.

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Why is effective contract management crucial for insurance groups? 

An effective contract management process is an essential part of the administration and oversight of contracts or legal agreements. Here are some reasons why this approach is necessary: 

Mitigates risks 

Proper contact management helps identify and manage risks, such as data breaches or violations of contract terms. With this guided process, you can set clear terms that meet regulatory standards, track deadlines, and monitor payout amounts. This way, you can make sure that agreements are unambiguous and enforceable — helping to prevent potential legal disputes. 

Helps ensure data compliance  

Health insurance contracts, for example, require an extra layer of compliance due to the handling of sensitive patient information and adherence to HIPAA regulations. Therefore, you should adopt a management platform that secures or encrypts this data, so you and your team can build internal processes that comply with standard regulations. 

Improves efficiency 

Contact management simplifies and expedites various tasks and workflows, including organizing and finding contracts, reviewing contracts, and creating templates. For instance, producing contract templates with accurate and consistent wording across departments can make editing processes easier and more efficient — which in turn improves negotiations with policyholders because contracts are reviewed and approved on time or without delays. 

Saves money and resources 

Once administrative tasks are automated, you’ll spend less funds, time, and staff capacity on them. Therefore, contract management can help save you money and resources by reducing the cost of processes such as patient intake or filing and organizing documents. These cost savings also come from minimizing common issues associated with these tasks like accidentally duplicating a contract and forgetting to cancel or renew it. In other words, automated workflows reduce the likelihood of  errors, so you don’t have to spend more money  fixing these mistakes. , 

Challenges in contract lifecycle management (CLM) for insurance companies

Variability

Just as you need to keep track of varying laws and regulations that govern insurance contracts, you also have to keep track of variable terms and conditions based on factors such as policy type, coverage limits, and deductibles. 

Scalability and growth

 As your insurance company grows, so will the number of contracts and policyholders you need to manage while maintaining efficiency and compliance. Needless to say, it can be challenging trying to meet these demands with outdated, manual systems. 

Regulatory compliance

In a heavily regulated industry, insurance laws and regulations vary by region and policy type. It’s no surprise that maintaining compliance with regulations like HIPAA throughout the contract lifecycle can be tricky and overwhelming. 

Audit trails

To meet regulatory requirements and internal audits, manually generating accurate audit trails and documentation throughout the contract lifecycle can deplete valuable time and resources. 

Contract management best practices for insurance companies

If you want to successfully manage your contract workflows, integrating automated technology is an effective and necessary solution. Insurance contract management software plays a pivotal role in best practices that address the challenges previously discussed.

Here are some practices that simplify the execution of a wide array of insurance contracts, especially at large volumes. 

Use contract management software   

From the initial drafting of numerous types of contracts to tracking deadlines and signatures, automation will get your team to the finish line more quickly and easily than any manual process. As you manage large volumes of contracts, you can leverage Concord’s contract management software to create an efficient and intuitive process with automated functionalities like e-signatures, automatic reminders, and real-time edits.

Create a central repository   

While some insurance companies are still clinging to outdated and disorganized storage systems, you can easily find and manage contracts with a central repository — eliminating the hassle of tracking contracts stored in multiple locations or platforms.  As your insurance company expands to serve more policyholders, storing large volumes of contracts on a single platform offers a more secure and scalable management solution. 

Monitor billing agreements  

Whether you’re receiving or paying out funds, carefully monitor different kinds of coverage policies and payout obligations while holding policyholders accountable to these terms. You can also use contract management software for financial services to simplify this process, helping to prevent issues like disputes or billing the wrong amount. 

Tracking audit trails: use version control 

Audit trails don’t have to be time-consuming. Easily manage this process with Concord’s built-in version control to help you track and manage any updates to your contracts — preventing unauthorized changes to edits, signatures, and information. 

Maintaining compliance: implement security measures 

We’ve already discussed the importance of compliance but another key component of meeting regulatory standards is the data privacy features that Concord offers. Security measures like encryption and access controls ensure contract compliance by preventing confidential information from leaking or being accessed by the wrong people. 

Keep assessing your contract management needs. 

As you evaluate your contract management needs, these best practices can serve as a guide for you and your team. By automating your workflows, you can increase efficiency and productivity as you execute contracts and build positive relationships with policyholders and stakeholders.

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