Achieving Claims Excellence
As Property & Casualty insurance carriers continue to confront an uncertain post pandemic economic outlook, claims management is assuming vital importance in their business strategies.
Claims costs and expenses are the largest spend for insurers, accounting for a large slice of premium revenues driving high Loss Ratio’s. Companies that achieve claims excellence can obtain competitive advantage by increasing operational efficiency, as well as provide superior service to their clients.
In 2021 there is a real opportunity for the insurance community to upgrade their claims management capabilities, particularly as initiatives like Lloyd’s Blueprint 2 drive CEO’s and FD’s change transformation programmes. Advanced claims analytics, for example, can help carriers to leverage claims data to increase efficiency, improve resource allocation, and lower claim cycles.
A more strategic approach to technology investment can take advantage of a cost benefit analysis to drive initiatives that increase operational efficiency.
While change management is top of the list of C-suite priorities at the moment, claims management has not always been allocated adequate levels of strategic investment even though the claims landscape is highly challenging, with multiple processes and platforms. It remains the case today that complex, duplicative tasks are carried out, often with decades old, worn out legacy systems.
The answer to these challenges must surely be a senior leadership commitment to operational excellence, which can provide an advantage in an increasingly competitive market in which current incumbents and new entrants threaten to overturn the old order.
The new Lloyd’s directive to adopt a “data first” approach offers a partial solution whereby insurers can leverage data to deliver actionable insights about what drives loss and expense. That also needs to be followed up, however, with the business processes and IT infrastructure required to take advantage of these insights.
The outcome that a Head of Claims working with their CIO and other leaders in the business should aspire to is not just significant cost reductions, but also high-quality customer service and streamlined processes.
An effective operational excellence strategy can lead to more stable and predictable loss costs, efficient and foreseeable operating expenses, and improved loss and expense costs. These are all worthy objectives. As the insurance market, particularly in London, is coming to recognise, however, shaving a few points off your operating expenses is not going to cut the mustard in terms of delivering lasting claims excellence.
The real prize is a higher overall claim service ratings, significantly improved policyholder retention and employee productivity, increased reserve stability and improved regulatory compliance.