The competitive marketplace is a challenge for all lines of insurance, but a new report from New York-based Novarica notes that the workers comp line is particularly susceptible to ongoing pressure.
“New business growth is down due to increased business failures, and fewer new businesses being started. Rising unemployment is eroding payrolls and the workers comp’s exposure base,” notes Karlyn Carnahan, a principal in Novarica’s insurance practice.
Carnahan authored a study published today by Novarica called “Business and Technology Trends for 2010: Workers’ Compensation,” that looks at recent technology initiatives by workers compensation insurers and highlights top issues for 2010-2011.
“Competitive pressures drive price declines which eat into premiums above and beyond recession-induced exposure losses. All of this makes the marketplace intensely competitive, and technology-enabled performance is the key to competition.”
Top initiatives for WC carriers include core claims systems replacement, business intelligence – especially predictive analytics, portal functionality to provide self service capabilities both to agents and policyholders, policy administration system replacements, and document management upgrades.
Novarica’s research finds that workers compensation insurers are focusing on five key areas in their technology strategies:
1. Claims. Carriers who are using modern systems are rapidly gaining competitive advantages by improved efficiencies in claims handling, and improved data leading to better outcome management.
2. Business Intelligence. Predictive analytics tools for those who have sufficient data are becoming more popular, but these depend on having a solid data infrastructure in place.
3. Portals. Extending functionality to the agents and the consumers continues to rise in importance. It’s less and less about differentiation and more and more just the price to pay to be in the game.
4. Policy. Investments in core policy administration systems are key to operational flexibility in a rapidly changing marketplace.
5. Document Management. Despite the move towards structured data, paper and electronic documents are still the predominant information storage and transmission medium for many insurers, and gaining control over this area is critically important.
The report provides an overview of business trends and data, analyzes the players in the marketplace, and provides examples of over 20 recent technology initiatives by named workers compensation insurers. The report is available at Novarica’s website at http://www.novarica.com/report_wc_sector.shtml
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