Despite reeling from the worst year in history for claims losses, pundits say the insurance industry plans to increase its spending on claims technology in 2006. For some, the idea of stepping up to new technology sounds like the perfect way to address inefficiencies that continue to plague claims processing. To others, it's yet another Band-Aid that may or may not be effective in solving what has become a hushed, off-the-record issue: claims leakage."Claims leakage is the difference between what you spent on a claim and what you should have spent," says one East Coast health insurance claims executive, who, like many sources interviewed for this story, asked to remain anonymous.

A more detailed definition of claims leakage is the preventable outflow of cash related to the claims settlement process. These preventable events include inefficient processing, improper payment, human error and plain, old poor decision-making, among others.

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