Study Says P-C Inefficiencies Cost Billions

By Michael Ha

NU Online News Service, May 19, 3:14 p.m.EDT?Property-casualty carriers can waste up to $10 onevery policy they write because of duplications, bottlenecks andoverreliance on paper documents, a study from a business-processsoftware firm has found. [@@]

According to the Exigen Group, based in San Francisco, suchinefficient business processes can force insurers to spend up to 30percent more on their processing claims, policies or customerinquiries than necessary.

The research was based on the analysis of business processes ofmajor personal p-c insurers that represent some 28 percent of theconsumer insurance sector and a total of 44 million policies, thefirm said.

On its Web site, www.exigengroup.com, Exigen isoffering a free guide to help insurers identify symptoms ofbusiness inefficiencies in their organizations.

It discusses and highlights common signs of cumbersome processesas well as specific symptoms that management teams can look outfor, such as what the firm calls the 'swivel chair syndrome,' wheredata from one terminal has to be manually retyped into another.

Among personal lines, auto insurance continues to be an areathat has many challenges, with significant business-processinefficiencies still intact, partly because of heavy-varianceacross states and the churn due to claims, said Mark Christiansen,vice president of marketing at Exigen.

Jim Logan, general manager of insurance at the firm, also notedthat inefficient business processes can slow the company down andsignificantly damage the overall health of the business. Butunfortunately, he added, "identifying inefficiencies andeliminating them is a complex task that spans multiple departmentsand, as a result, often gets delayed."

According to the study, insurers can save up to $16 million onevery $1 billion of revenue, by reengineering and automatingcertain processes. Furthermore, companies can save a further 18percent to 31 percent on the process cost by aggregatingtransactions over a single, fixed-cost infrastructure shared withother internal departments or even with other insurers, ExigenGroup said.