Property & casualty insurers have long valued the ability to save a few bucks through the efficient handling of claims, yet despite what many viewed as a core competency, investment in new claims technology usually came after other technology improvements were made.
A new study by Accenture, though, shows that insurers are paying more attention to their claims systems. “Accenture U.S. Claims Technology Survey 2012” maintains carriers are beginning to deal with the replacement of their aging systems, according to Michael Costonis, a managing director in Accenture Property and Casualty Insurance Services.
“The average p&c company is operating with basic and inflexible technology,” says Costonis. “Despite all the press, not everyone is operating on a new claims system. Even if they have purchased new claims systems, the ones they’ve purchased are either not up to task—a lack of flexibility—or they haven’t been upgraded.”
Two issues driving investment in claims technology include data and execution, according to Costonis.
“The first thing you note from the survey is that the predominant source of data analytics is offline data such as Excel spreadsheets and Access database,” he says. “Eighty percent of insurance companies are relying on those tools as their predominant source for analytics. That clearly shows companies are not taking advantage of what is out there.”
Carriers want to draw information from social media, predictive models, and location-based data, according to Costonis, but they can’t cease those advantages because their underlying claims systems don’t allow them to do that.
Costonis adds that another issue is the behavior of the systems insurers currently have in place.
“More than 80 percent report their systems do not support the changing of business processes without calling in IT,” he says. “You have a situation where carriers are not getting the data they need and an inability to change the business process. Those two things are creating pent-up demand to look at this differently. We believe you can improve the data environment and acquire more flexible and adaptable technology for your business.”
Another debate within the industry concerns the use of a core claims solution or investment in a suite of products that also includes policy administration and, in some cases, billing.
“We are starting to see the definition of the claims system expand,” says Costonis. “In the old days that meant the core claims processing system—the workflow adjusters were touching and the ability to process the claims. We are now seeing the definition include customer portals, agent/broker portals, the reporting and analytics environment, and mobile. All of those are wrapped into the broad definition of a claims system. The checklist has gotten much bigger. It’s not just a function point from FNOL to settlement.”
Costonis points out there is an increasing maturity in suite solutions in the market, which enhances that proposition, but he doesn’t believe suites are the predominant decision factor for insurers.
Claims staffing also remains a critical issue for insurers because so many of them had to cut the size of their staffs during the economic downturn.
“Unfortunately, claims was one of the areas that was hit hardest,” he says. “It’s a big workforce, so if you were looking for cost reduction you could see the logical leap to get some savings.”
Costonis believes carriers need to redefine the role of claims adjuster to get them to be in the forefront of managing the outcome of the claim and be more customer-facing.
“That requires taking the back-office work off their plate,” he says.
Costonis doesn’t feel insurers should expect someone coming out of a university to sit in a work environment that requires them to rekey information from one system to the next.
Technology plays a major role in terms of making the job easier and selling potential employees on the job.
“The user interface needs to look modern and the collaboration capability and the data environment need support,” says Costonis. “The tools that people have to operate on can do incredible things in terms of making it a job someone would want to do.”