Stamford, Ct. - The lack of IT budget and resources, and perceived higher priorities for spending elsewhere will no longer be a barrier for P & C carriers making major investments in claims technologies, according to a report released today from Gartner, a Stamford, Ct. research firm. In fact, tight profit margins and high operational costs, as well as consumer demands for quality service, are now driving insurers to address these problems, says the report's author, Kimberly Harris-Ferrante, who predicts that claims technology and process improvement projects will increase by more than 20 percent in 2006 among P&C insurers.
"In 2006, property and casualty insurers will significantly increase the investment in claims technologies and process modifications to support efficient claims processing," she says. "A focus on customer service, catastrophe planning, loss reduction and claims management will intensify."
According to the report, claims processing is fraught with problems. Most insurers face customer dissatisfaction, high claims-processing costs, high rates of claims leakage, and an inability to predict losses and prepare for catastrophic events.
As insurers look to resolve these issues, they will consider a range of opportunities to improve claims department processes.
Insurers will look to reduce the cost of claims adjustment activities, says the report. Other projects will expand beyond cost-reduction efforts to focus on process improvements, loss reductions and customer service improvements to improve customer retention.
The rise in claims technology investments and process modifications notes Harris-Ferrante, is largely due to innovation in the claims department being a competitive differentiator in the insurance industry.
"To fulfill customer service expectations and control claims costs, insurers -- especially Type A companies that are technologically innovative -- will significantly increase investments in their claims departments," she says.
To improve and streamline claims processes, insurers will consider new systems such as business intelligence, claims analytics and catastrophe modeling, claims administration and management, modeling technologies, business-rule engines, and workflow technologies.
Carriers will also renew their call-center infrastructures and adjuster network to ensure overall claims collaboration and workflow improvements, as well as increasingly use business process outsourcing (BPO) for activities such as overflow support following a catastrophe.
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