How much time and money is it costing to manage courier claims?
Have you ever taken the time to go through how long it takes for each loss or damaged parcel claim to be managed? And how much it’s costing you?
We hear a lot about the pain of managing courier compensation and claims. There is always a lot of eye-rolling and grimacing on calls when the topic is raised but the real shock comes when you dive into the details.
This has been a hidden cost for many businesses as often this is only a portion of the customer service’s roles and responsibilities. Unpick this and it starts to illuminate a real challenge in the industry - both for retailers and 3PLs. It’s time we start to highlight the time cost this unregulated approach to protecting the last-mile delivery process creates.
We know the time it takes to make a claim on shipping insurance can vary depending on the carrier, the complexity of the claim, and the efficiency of the process, however, there are some general estimates for the time involved that we can make to create a worse and best case scenario:
1. Gathering Documentation:
Time Required: 30 minutes to 2 hours
Details: This includes collecting necessary documents such as proof of value, proof of loss or damage, photos of the damaged item, original receipts, tracking information, and any other required documentation.
Note: We often hear that this can sometimes be the hardest part of the claim process. Gathering the right documentation and receipts with the exact itemised cost price attributed to the product that was lost can be much more complicated than anticipated.
2. Filing the Claim:
Time Required: 15 minutes to 1 hour
Details: Filling out the insurance claim form, which may be done online or through a paper form. The time depends on the complexity of the form and the amount of information needed.
Note: Many couriers only allow for a 2-week window to file a claim or you miss your opportunity. Are you one of the companies who starts a claims process for every shipment, just to protect their right to claim for items that might be lost or damaged in the future? The efficiency gains from removing this practice from your business alone could make a huge difference to your growth.
3. Communication with the Carrier/Insurer:
Time Required: 30 minutes to 2 hours (over several interactions)
Details: Communicating with the carrier or insurance provider, responding to any requests for additional information, and following up on the claim status.
4. Waiting for the Claim to be Processed:
Time Required: Typically 8 to 12 weeks, but can vary widely.
Details: The actual processing time varies depending on the carrier's workload, the complexity of the claim, and the specifics of the case. Some claims might be resolved within a few weeks, while others could take months.
5. Resolution and Payment:
Time Required: 15 minutes to 1 hour
Details: Reviewing the resolution, accepting the settlement, and handling any final paperwork or communication required to close the claim.
Total Time Estimate:
Total Active Time: 1.5 to 6 hours (excluding waiting time)
Overall Timeline: 8 to 12 weeks or longer for the entire process, including waiting for the claim to be processed and resolved.
So let’s put this time into a cost perspective:
We recently spoke with a customer who has on average 4230 problem shipments - so this is a real-life use case of what they used to deal with before Anansi:
Based on a general customer services per year salary of £25,000, and working on an hourly of £12.02
Best Case (1.5 hours per problem order): 6,345 hours
The salary cost to manage this would be approximately £76,267*
Worst Case (6 hours per problem order): 25,380 hours
The salary cost to manage this would be approximately £305,068*
*That does not include all the other costs of employment i.e. IT equipment, office space, benefits etc.
*And it doesn’t include the brand impact a lost or damaged parcel can have on the customer relationship.
And if you want to consider the wider implications of this lack of efficiency on profitability and growth, the courier compensation is often only paid out 15-25% of the time so 85-75% of this time is spent doing activities that will result in a zero-sum return.
It’s time for accountability. It’s time for automation and regulation.
Discover more about Anansi insurance here.
