The 5 Silent Cost Drivers Draining Efficiency in Insurance

Insurance organisations are under constant pressure to improve customer service, accelerate claims processing, meet regulatory requirements, and maintain profitability. Yet many organisations continue to lose significant time and money to operational inefficiencies that rarely appear on financial statements.

The KPMG South African Insurance Industry Survey 2025 highlights a clear industry trend: insurance organisations are investing heavily in digital transformation, AI-driven underwriting, automated claims processing, and workflow optimisation to improve efficiency and reduce operational costs. Why? Because many of the biggest expenses aren’t obvious; they’re hidden within day-to-day operations. (KPMG)

Here are five silent cost drivers that could be draining efficiency and profitability from your insurance business.

1. Document Searching: The Hidden Productivity Drain

Insurance companies generate vast amounts of information every day, from policy documents and claims files to regulatory reports and customer correspondence. When employees cannot quickly locate the information they need, productivity suffers.

Claims assessors searching for supporting documents, underwriters looking for policy history, and customer service teams navigating multiple systems all lose valuable time that could be spent serving customers.

The industry’s increasing investment in AI-driven underwriting and automated processes reflects a broader need to make information easier to access and use. Digital transformation initiatives are becoming essential for reducing the time spent searching for data and improving operational efficiency. (KPMG)

Common signs of this challenge include:

The longer it takes to find information, the longer it takes to serve customers, process claims, and make decisions.

2. Missed Deadlines: Small Delays, Big Consequences

In insurance, deadlines matter. Regulatory filings, claims service-level agreements (SLAs), policy renewals, and compliance obligations all have strict timelines.

Missed deadlines can result in financial penalties, customer dissatisfaction, reputational damage, and lost revenue opportunities.

This challenge is becoming even more significant as regulators continue to increase oversight. According to the KPMG survey, both the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) continue to release new guidance shaping conduct and solvency standards across the industry. (KPMG)

Areas commonly impacted include:

Manual tracking methods and spreadsheet-driven processes often make it difficult to maintain visibility across critical deadlines.

3. Duplicate Work: Paying Twice for the Same Task

Many insurance organisations still operate across multiple legacy systems that do not communicate effectively with each other. As a result, employees frequently re-enter the same information several times throughout a process.

Whether it’s claims information, customer details, policy data, or compliance records, duplicate work adds cost without adding value.

The introduction of IFRS 17 has highlighted the importance of better data management and process efficiency. KPMG notes that insurance organisations are increasingly focusing on technology adoption, automation, enhanced data management, and collaboration across teams to improve reporting and operational performance.  (KPMG)

The consequences of duplicate work include:

Every time information is entered twice, businesses pay twice for the same task.

4. Approval Delays: When Bottlenecks Slow Everything Down

Approvals are an essential part of insurance operations, but inefficient approval processes can create major bottlenecks.

Claims approvals, policy exceptions, compliance reviews, and underwriting decisions often move slowly when they rely on emails, manual follow-ups, or disconnected systems.

Interestingly, many leading insurance organisations are reporting operational efficiency gains through digital transformation and improved process management. Old Mutual, for example, highlighted operational efficiency improvements linked to digital transformation and cost control initiatives. (KPMG)

Common causes of approval delays include:

When a decision sits waiting for approval, customer service slows, operational costs increase, and employee frustration grows.

5. Audit Preparation: The Cost Nobody Plans For

Audits are unavoidable in a heavily regulated industry, yet many insurance teams still spend weeks gathering documentation, evidence, approvals, and compliance records manually.

As regulatory requirements continue to grow, so does the burden of preparing for audits.

The KPMG report highlights increasing pressure around compliance, data privacy, consumer protection, AI governance, and algorithmic accountability. Insurance organisations are expected to invest more in governance and record management to keep pace with evolving regulations.

At the same time, cyber and fraud risks continue to rise:

These risks make accurate records, strong audit trails, and accessible documentation more important than ever.

Common audit preparation challenges include:

When information is not readily available, audits become time-consuming, expensive, and stressful.

The Bottom Line

The biggest operational costs in insurance are often the least visible. Time spent searching for documents, missed deadlines, duplicate data entry, approval bottlenecks, and manual audit preparation quietly erode productivity and profitability.

The industry is already responding. According to the KPMG South African Insurance Industry Survey 2025, insurance organisations are accelerating investments in AI, automation, digital transformation, advanced analytics, and workflow optimisation to improve operational efficiency and strengthen resilience. (KPMG)

The question isn’t whether these silent costs exist; it’s whether your organisation knows how much they’re costing.

This is where VM Consulting helps insurance organisations turn strategy into measurable operational improvements. By implementing an AI-intelligent information management system, automating workflows, and securing documents, VM Consulting helps insurance organisations:

• Find critical policy, claims and customer information in seconds.
• Automate approvals and business processes to eliminate delays.
• Reduce duplicate data entry by connecting information across existing systems.
• Strengthen compliance with complete audit trails and version control.
• Stay audit-ready with secure, searchable records and automated governance.
• Give teams the information they need to make faster, better-informed decisions.

Rather than replacing existing systems, VM Consulting helps insurance organisations connect them, creating a single, intelligent layer where information is easier to find, processes are automated, and compliance becomes part of everyday operations instead of an administrative burden.

As insurance organisations continue their digital transformation journeys, those that combine the right technology with effective information management practices will be best positioned to enhance customer experience, strengthen compliance, reduce operational risk, and drive sustainable operational efficiency.

Source: KPMG South African Insurance Industry Survey 2025 – Up in the Air [Insurance PDF]