Why insurers may be paying repeatedly for decisions they have already made
By Drew Young, Founder, Veriscopic
Insurance organisations spend enormous amounts of time and expertise making consequential decisions. What they rarely measure is how much they spend reconstructing those same decisions later.
A claim is challenged. An underwriting decision is revisited. A delegated authority arrangement is reviewed. A complaint arrives months later. An audit asks why a particular course of action was taken.
The outcome may still be recorded. But the context that produced it can be scattered across claims systems, underwriting platforms, emails, documents, authority matrices, policy wordings, rules, approvals and the memories of people who may since have moved roles or left the organisation.
The insurer then pays a second time – not to improve the original decision, but simply to understand it.
The reconstruction burden
At Veriscopic, we call this Reconstruction Burden: the collective operational effort required to rebuild enough of the original decision context to understand what happened, what was known at the time, what authority applied and why the outcome was reached.
Individually, the activities involved rarely look extraordinary. Someone retrieves the file. Another person searches old correspondence. A senior specialist is asked what the practice was at the time. Operations locates an authority document. Legal checks the relevant wording. Technology may have to retrieve information from an older system.
That is precisely why the cost is easy to miss. It is distributed across teams, systems and budgets. Claims absorbs some of it. Underwriting absorbs some. Legal, compliance, operations and technology absorb the rest. No single function necessarily sees the full reconstruction bill.
Yet the organisation still pays it – in collective hours, delayed decisions, distracted specialists, repeated escalation and work that has to be done again because the original decision context was not readily available.
An operational problem before it becomes a governance problem
Reconstruction is often discussed only when something has gone wrong: litigation, regulatory scrutiny, a complaint or a disputed claim. But that risks missing the more immediate commercial issue.
An insurer does not need to be in court to incur Reconstruction Burden. It appears whenever a decision has to be reopened and the organisation cannot readily establish the state in which that decision was made.
That could be a claims handover, a referral back to underwriting, a bordereaux review, a delegated authority query, a quality-control sample or a customer escalation. In each case, the organisation may know the outcome while still having to rebuild confidence in the basis for it.
The important distinction is between preserving artefacts and preserving sufficient decision-state. A file can contain documents, notes and system events without making the decision itself readily understandable. The question is whether another appropriately qualified person can later determine what information was available, what rules and authority applied, what influenced the outcome and what happened next – without conducting a small investigation.
Measure it before trying to solve it
This is why our immediate focus is measurement.
Rather than beginning with another technology programme, insurers can start with a single workflow and ask a few practical questions: How often are past decisions reconstructed? How many people become involved? How much collective time does it consume? How many systems or evidence sources are touched? And, crucially, how much of that work could have been avoided if sufficient decision-state had been preserved when the decision occurred?
Those questions turn an abstract governance concern into an operational metric. They also make it possible to distinguish necessary professional review from avoidable reconstruction.
The objective should not be to eliminate scrutiny. Insurance decisions should be challenged when appropriate. The objective is to stop highly paid people spending unnecessary time rediscovering context the organisation once possessed.
Why this matters now
The issue becomes more significant as insurance decision-making becomes more distributed. A consequential outcome may increasingly reflect data from several systems, automated rules, model outputs, authority frameworks and human judgement rather than one person making one clearly documented decision in one place.
That can improve speed and capacity. But unless the relevant state travels with the decision, faster execution may simply create more decisions that are expensive to understand later.
The industry has invested heavily in making insurance workflows move forward. The next question is whether those workflows remain intelligible when someone needs to look backwards.
That is the opportunity behind measuring Reconstruction Burden. If insurers can make the hidden cost visible, they can identify where better decision-state preservation has a genuine economic return – before considering the additional benefits for auditability, governance and defensibility.
A consequential decision may take minutes to make. Reconstructing it can consume hours or days across multiple people.
Insurance already paid for the decision once. It should know how often it is paying for it again.
About the author
Drew Young is the founder of Veriscopic, which is examining Reconstruction Burden and decision-state replayability across consequential insurance workflows.
