Claims leakage
Also known as Loss leakage, Claims overpayment
Claims leakage is money an insurer overpays on claims through avoidable mistakes, like a coverage call that was too generous or a recovery nobody pursued. On a typical book it runs 5–10% of everything paid out.
It is the gap between what a claim should have cost and what it did cost, once you set aside fraud and the genuinely hard calls. Most of it lives in ordinary decisions. A split that should have been 100/0 comes back 80/20. An estimate goes out without a second look. A recoverable claim closes and nobody flags it.
Where claims leakage hides
It is rarely one big error. It builds up from small ones that each look fine on their own: coverage read a little too broadly, a liability split off by a point or two, a reserve set once and never revisited, a recovery from an at-fault driver that nobody noticed in time.
How claims leakage is measured
Insurers usually size it after the fact. A sample of closed claims goes back to senior adjusters, who work out how much was paid versus how much should have been, then scale that across the book. The catch is timing. An audit tells you how much leaked last year, not what is leaking today.
How to reduce claims leakage
Leakage lives in decisions, so cutting it means getting more of those decisions right the first time. Check every claim against the same rules. Show adjusters how the book handled similar claims before, so splits do not drift. And flag a bad call before the money goes out, rather than in next year’s audit.
Example
A rear-end collision comes in. The other driver is clearly at fault, so liability should be 100/0 and the repair recoverable through subrogation. The handler is busy, settles at 80/20, and closes the file without noting the recovery. Nothing looks wrong on the claim. But the insurer just paid a share of a loss it could have recovered in full, and it will do the same on the next claim like it.
Mysa scores each decision on a claim while it is still open, so a call that would leak gets flagged before payment, not found in an audit months later.
Common questions
What is claims leakage?
Money an insurer overpays on claims through avoidable decision and process errors, such as wrong coverage, over-generous splits, or missed recoveries. It usually runs 5–10% of claims paid.
How much do claims leak?
Most industry estimates land around 5–10% of total claims paid, though it varies by line of business and by insurer.
Is claims leakage the same as fraud?
No. Fraud is deliberate. Leakage is unintentional overpayment from errors in how claims are handled. Insurers track and manage them separately.
How do you reduce claims leakage?
By making decisions more accurate and consistent where they are made: standard checks on every claim, visible precedent so splits stay steady, and flagging a leaking call before payment.