The insurance industry today “isexperiencing a level of business-model disruption that isunprecedented,” says Jamie Yoder, PricewaterhouseCoopers' (PwC)U.S. insurance advisory practice co-leader.

To deal with this rapid, roiling change, many insurers turn forhelp to outside consulting firms.

They're the external information source that insurers value, theones that get the call when expert business advice is required orwhen an unbiased perspective is needed before a make-or-breakdecision.

NU spoke with some of the top insurance consultants inthe industry and asked them about the differentiating factors thatmake their firms unique; what the primary and emerging concerns oftheir carrier clients are in 2012; and how the firms are addressingthose needs.

ERNST & YOUNG: RESOLVING RISK AND REGULATORYISSUES

When working with insurance clients, Ernst & Young (E&Y)relies on its solid foundation of industry knowledge, saysInsurance Advisory Practice Leader Dave Hollander. In its stable ofdomain experts are professionals specializing in finance and riskand regulatory issues, as well as others who focus on performanceimprovement across various areas.

Hollander cites three top concerns he's identified among P&Cclients: The first, he says, is determining how to make theirbusiness processes leaner and meaner.

“Coming out of the soft market, where things are arguablygetting better, virtually all of our clients are wrestling with howthey can continue to simplify their businesses and rationalizetheir expenses, such as streamlining operations and eliminatingredundant costs,” he says. “This is a dominant theme.”

A second top priority among insurers, Hollander says, istargeting ways to invest in themselves in order to improve theircompetitive position. Specifically, he says, clients are lookingfor ways to:

• Relate to customers faster and easier
• Continue with investments that will allow them to get superiorresults in claims, so they can improve their expense position,reduce any lost-cost overpayment and improve customer service
• Invest in the core life cycle of underwriting andpolicy-processing

When working with clients to help address these concerns as wellas other issues, E&Y employs several strategies.

First, says Hollander, “from a consulting perspective, we matchup client teams that understand the client issues veryspecifically. We also create internal-solution teams, focused onconcepts such as financial transformation or claimstransformation.”

Second, the teams try to break up what would otherwise be along, complex and risk-laden project into smaller pieces: A12-month project might be organized into 12 one-month “sprints,”Hollander notes.

This process, he adds, “allows us to introduce pieces ofsolutions sooner, which helps with the change-management processand how people accept the changes.”

Third, E&Y makes sure that it doesn't overcommit, addsHollander: “We deliver on what we say we will do, and we don'toversell while we are doing our work.”

This approach often leads to broader assignments, as clients getused to the process and like the results.

As an example, E&Y has been working with a Top 10 carrierfor a number of years. Some earlier engagements involved workingwith them in tax-consulting and regulatory-advisory capacities.

Subsequently, the client realized that another important needwas emerging around claims processing and technology.

“As a result of the trust we had built over several years, wewere asked to assist in introducing new technology to help them geta better result in claims,” says Hollander. “And as a result of thesuccess of this project, we have been asked to help themrestructure how they build business architecture in their otherlines of business related to revenue and growth.”

PWC: HELPING CARRIERS DEAL WITH“UNPRECEDENTED DISRUPTION”

PwC, says Yoder, takes an integrated approach to solvingclients' problems: “The difference between our integrated approachand our competitors' is that PwC [can deploy] multiple disciplinesand skills on the same team.

“For example, strategicmarketing, actuarial, enterprise risk management (ERM), predictiveanalytics, technology architecture and organizational-changemanagement dimensions all can be embedded aspects of an analysis orsolution,” he adds.

The top concerns for PwC insurance clients in 2012 and beyond?Improving the customer experience to differentiate themselves fromcompetitors; gaining greater global market share; and responding toincreasing regulatory developments head the list, says Yoder.

The firm, he says, helps clients create and implement short- andlong-term strategies to respond to these concerns.

“PwC takes a fact-based, hypothesis-driven approach with ourclients,” he explains, which allows the client to “quickly andeasily digest all of the dimensions of the opportunity or challengeand potential actions to address them. It also accelerates theprocess from strategy development to implementation and buildstighter alignment throughout the client organization.”

Yoder says PwC also is focusing its efforts on new methods forcollecting and analyzing data to help clients make better businessdecisions and better understand their customers.

TOWERS WATSON: POWERFUL, PROPRIETARYTOOLBOX

In addition to possessing a roster of experts in various serviceareas such as ERM, predictive modeling and reserving, Towers Watsonenjoys the advantage of offering its own software solutions, saysTom Hettinger, regional sales and practice development leader forP&C insurance brokerage and risk.

“We provide software products that are part of Towers Watson; wedon't have to coordinate outside contracts,” he says, which oftensaves the client time and additional expense because it doesn'thave to employ outside vendors—and the firm also empowers theclient with practical applications that can be used goingforward.

“We don't just provide answers; we also provide [clients] withthe tools to deploy on those solutions that they can use on aregular basis.”

When working with clients, Towers Watson first begins byfocusing on specific needs, says Hettinger. “Then we look aroundand see how those [solutions] impact other areas of theirorganization. That is, we develop solutions to make sure we areaddressing all of the different areas of risk” a client mayhave.

For example, Towers Watson recently helped to coordinate oneclient's reinsurance solution around its primary pricing needs.Towers Watson utilized its predictive-modeling team, itscat-modeling team and brokers.

“We did predictive modeling and competitive analysis andunderstood what the implications of these different risks were ontheir overall reinsurance structure,” he states.

In terms of client concerns, the biggest one Hettinger sees is adesire among carriers to better articulate to ratings agenciestheir methods for effectively managing risk.

To address this need, Towers Watson leverages many of theclient's existing decision-making processes and makesbest-practices recommendations such as “risk tolerance and appetitedefinitions; risk assessment and identification; and model stresstesting and validation” to help the client realign its practiceswith those that most appeal to ratings agencies.

DELOITTE: TALENTED TEAM

According to Rebecca Amoroso, U.S. insurance leader forDeloitte, the firm utilizes a multidisciplinary approach whenworking with clients.

“Our people work together to offer clients end-to-end solutions,so clients can get there faster,” she says. Another differentiator,as she sees it, is its talent pool. “I'm sure everyone says this,but we have some of the most talented individuals working for us. Iam always humbled by our people.”Some of these on-staff consultantsare former insurance-industry executives or regulators, she says,whose practical knowledge and technical expertise help Deloitteanticipate and stay on top of trends.

“We understand that our clients operate in adynamic environment, so we constantly reinvent ourselves and createnew and better solutions for clients,” she says.

These days, many carrier clients see the need to improve thecustomer experience as critical. “Everyone has[customer-improvement] initiatives under way, but they arechallenged because there is a lot of competition and the economy isstill a bit shaky,” she explains. Clients' customers, she notes,are demanding 24/7 communication via multiple vehicles.

In response, Deloitte helps clients develop processes for howthey can provide consistent service via these multiple platforms,including call centers and enhancement of carrier websites toprovide real-time quotes. “We have also done 'voice of theconsumer' surveys to help our clients understand what is oncustomers' minds,” she adds.

A second concern of Deloitte's clients is finding ways toincrease operational efficiencies, and in many cases that meansbringing in some new tools and phasing out old technology.

“We help clients replace legacy systems,” says Amoroso, but thefirm also aids in the replacement-systems' implementation—“not onlyfrom a technical standpoint but also making sure that it 'sticks'within the organization.”

Improving operations, including cutting costs while maintainingthe level of service its customers expect, is a perennial carrierconcern. Amoroso offers an example in which Deloitte helped oneclient build a predictive model for claims.

The carrier wanted to give its claims adjusters and claimsexecutives a tool to better pair the right resource with the rightclaim as early as possible. The idea, she recalls, was that if youhad more information and insight on a claim at first notice of lossor shortly thereafter, you could lessen the ultimate cost (bothloss and expense) of that claim.

“We first helped the client build the business case on what theywould do with this information and what they could hope to save,”says Amoroso. “We then helped them build and implement the predictive model, which helped them better manage and leveragetheir resources, such as identifying when they might need a nursepractitioner—earlier in the process or not at all—as well as how toidentify the claims that might be at risk for soft or hardfraud.”

The initial estimate predicted savings of about 8 percent, whichwas considered significant for this client. By the end of the firstyear, however, the savings have been in the double digits, Amorosoadds.