Protecting Growth and Clients Amidst the Unpredictable
In a time of reduced frequency, we typically see greater insourcing of claims management, and that’s certainly the case right now. How can claims organizations and individuals alike take greater control of our destiny?
Every profession has its challenges, and it’s no different for independent claims organizations. We all deal with unfortunate and unwelcome events that can be difficult for both claimants and claims adjusters. Knowing that we can assist claimants in dealing with their losses—as per the provisions of their insurance policies—helps. As one of our adjusters, Laurie Rasberry, said in the June 2012 edition of Claims Management, “We allow individuals to heal not just from the material aspect of a loss, but also from the emotional element of it, as well, and that is very rewarding.”
One of the biggest and probably best-known challenges our industry faces is the unpredictable nature of catastrophes. Last year set a record for insured losses: $105 billion worldwide, according to MunichRe. This year, the situation is quite different, at least to date—for example, the U.S. experienced insured catastrophe losses of $10 billion in the first six months of 2012, compared to more than $18 billion for the same period last year. And right now, the still-stuttering economy is depressing claims volumes still further.
In a time of reduced frequency, we typically see greater insourcing of property and casualty claims management, and that’s certainly the case right now, both in the United States and abroad. According to the data we’ve collected, large carriers in particular are outsourcing fewer claims than the industry average.
In addition, like all industries, we face changes in our market. One fundamental transformation we’re starting to see—one I’ve written about already but bears repeating—is a greater use of technology for claims management, which we expect to impact the types of claims that adjusters are asked to handle.
As the PwC Insurance 2020 report issued in January said, “Internet, mobility, and social networking have changed the game over the past decade and have created a new generation of customers who demand simplicity, speed, and convenience in their interactions.” This emphasis on simplicity and speed portends greater automation of claims processing, and that will mean fewer low-complexity claims for many independent adjusters.
Claims activity will no doubt continue to spike due to natural and manmade catastrophes and follow the ups and downs of the economy. This has long been an accepted part of the claims industry, but it makes it harder to sustain financial results, particularly as the market changes, too.
The question is, how do we—claims organizations and individuals, alike—smooth out those peaks and valleys and take greater control of our destiny? We need to develop new strategies that will protect client relationships and generate new business opportunities even in an unpredictable market. Here are a few examples:
Focus on high-complexity claims. While some carriers retain high-end claims in-house, the majority assign them to outside specialists. Independent adjusters can fill a critical gap in skill sets by focusing on highly complex claims that require specific knowledge and expertise to manage.
Develop processes and technology to streamline low-complexity claims processing. Independent adjusting organizations need to design new processes and adopt new technology to revolutionize the back end of claims adjusting, similar to the changes already firmly in place on the front end.
Become a better partner in data. Text mining tools, customized graphic dashboards that display real-time information, better access to secure data through private clouds—all of these are important elements of risk management that independent adjusting organizations can provide to clients.
Invest in training and education. Obtaining designations, finding a mentor, and following companies and experts on the Web can help adjusters stay current and further their knowledge and skills.
We have just entered the most active part of our U.S. hurricane season, so the ultimate impact that storms will have on frequency is still uncertain. But unless we as an industry want to continue an unrealistic dependence on unpredictable catastrophes and other factors that we cannot control, we need to develop businesses and careers that are, indeed, weatherproof.
Jeffrey T. Bowman is president and CEO of Crawford & Company, an independent provider of claims management solutions. He has been a CLM Fellow since 2012 and also serves on the board of directors of The Institutes, the organization that develops courses and confers the CPCU designation. He can be reached at firstname.lastname@example.org.