Mired in a prolonged soft market exacerbated by a sputtering economy, insurers have more incentive than ever to reduce their cost base.
With claims costs making up a bulk of an insurer’s spending, rationalizing the process has become a top priority, notes
The report says one of the benefits carriers will accrue by investing in modern claims technology is to make the process less labor-intensive. “Claims administration systems are aging. For many carriers, these solutions were installed twenty years ago or more. Older systems are quite expensive to maintain. The available resources to handle maintenance are shrinking as employees with skills in older code bases retire.”
Moreover, Novarica notes that older systems older systems were usually rooted in managing the financial side of claims rather than service, a potential albatross in an age of evolving customer expectations. “The quality of a carrier’s claims service heavily impacts the customers’ view of the carrier because other than the bill, claims are typically the only contact a customer has with a carrier – and a bad claim experience is one of the top reasons for non-renewal,” the reports states. “In today’s competitive environment, where retention is a critical imperative for carriers, claims handling is a major source of competitive advantage for property/casualty companies.”
The report lists the vendors that are active in the claims space and advises insurers what to look for when shopping for a modern claims system. “A well-developed claims system should integrate with policy administration and accounting systems to support coverage verification and disbursements. Additionally, if the system does not include robust modules to handle contact management, document management, and reinsurance, it should easily integrate to modules with that functionality. Tools providing easy access and navigation to the traditional functions handled by an adjuster are standard.