Stamford, Conn. — Nine out of 10 property/casualty claims officers said increased competition, consolidation and convergence are among the leading challenges facing their industry in 2008, according to a recent survey, conducted by Stamford, Conn.-based professional services firm Towers Perrin's claim management practice.
The claims officer survey also reported on key trends that are reshaping the industry, citing the rapidly growing importance of data analysis and technology, along with recruitment and retention of top talent, as key determinants of meeting business goals. In fact, attracting and retaining top talent is cited as the top priority for 82% of companies surveyed.
“Claims officers are all too familiar with the challenges of competitive pressures,” said Kathleen Cullen, Towers Perrin’s claim management practice leader. “Our survey looks beyond traditional competition and provides excellent insight into the emerging issues that are transforming the industry. The way the industry traditionally looked at itself has shifted from budgets and operational controls, to a need for more sophisticated approaches regarding managing claim performance and results.”
In all, 62 claims officers from property/casualty insurance companies of various sizes were surveyed in late 2007: 37% from companies with less than $200 million in written premiums, 31% from companies with written premiums of between $200 million and $750 million and 32% from firms with more than $750 million in written premiums.
Both commercial and personal lines companies participated:
- About half write a significant amount of business in commercial lines, with approximately half describing multi-peril as their primary line of business.
- Within personal lines, about half the participants write predominantly auto coverage.
Expense and cost management remains a top concern for all carriers, although better technology solutions and sophisticated analytics are getting more emphasis as competition tightens.
Secondary challenges vary by respondent demographic with larger carriers citing distribution and product management while smaller carriers and carriers that write smaller accounts cited regulatory issues.
Regarding priorities, 52% of claims officers pointed to the effective use of data and analytics as a main driver to meeting business objectives, ranking it second to attracting talent. This was closely followed by an interest in better ways to use technology in general (50%).
Focusing on the emerging trends and issues bringing change to the claims industry, nearly two-thirds (65%) of respondents chose sophisticated analytics, trumping the more traditional issue of escalating claim severity, which was identified by 50% of respondents. Increasing technology needs and reliance on software ranked as the No. 3 emerging issue.
Less than one-third of respondents cited increased business acumen needs as an emerging issue—a notable finding given that 68% identified technical skills and training as an approach to meet industry challenges.
“Claims leaders are looking for technical solutions to meet their increasingly complex business needs,” Cullen explained. “It is clear that investment in people and broader-based skill development is critical for sustaining and improving claim-handling fundamentals.”
Source: Towers Perrin
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