The property and casualty insurance industry has been slow toautomate its practices and reporting structures.

Today's reliance on broad or uneven historical planning is beingreplaced with data-driven precision forecasting.

As advancements in technology and software solutions become morereadily available, adoption of precision reporting tools isbecoming easier and more cost-efficient than ever before, and canhelp companies with their day-to-day operations and in the event oflarge-scale catastrophic events.

Take the critical calculations and paperwork generated for lossadjustment expenses (LAE), loss reserving and overall riskmanagement strategies. According to A.M. Best, deficient lossreserves alone represent 44 percent of the cause of financialimpairment in the P&C insurance industry. Too often, thesefunctions are part of a massive manual "paper trail" that consumesenormous resources, fosters inefficiencies and slows financial andregulatory reporting. However, technology can assist in automatingand validating data.

Carriers considering systems to support the complexities offorecast modeling should consider the following:

1. Automation that supports efficiencies in day-to-dayoperations.

Vendor expenses and invoicing comprise a large part of lossadjusting, and automating these processes can help standardize andvalidate expenses and reports. Reporting should allow forindividual and global views of actual vs. forecasted expenses.Standardized invoicing also provides an easier method to accuratelyplan for and contain related costs.

Automating just this process can help expedite payments, managebacklogs and eliminate unnecessary late fees, providingopportunities for cost savings. And keeping vendors happy withaccurate and timely payments fosters loyalty, which may be criticalduring catastrophes.

2. Validation for accuratereporting.

There is a well-known saying for automated systems: "garbage in– garbage out." Information that is manually inputted can becompromised by inherent human error and analytical tools are notdesigned to "cleanse" data. If inaccurate data is entered into ananalytical system, the outcomes are not reliable. It is importantfor any system to have a validation component tied to invoicing,estimations and other business functions. Validation also allowsfor "red flagging" potential problems for additional analysis andresolution. More precision in forecasting models allows for bettermanagement of LAE, reserving and risk management over thelong-term.

3. The company's return on investment(ROI).

There are market forces at work that make the change to anautomated system a necessary and inevitable business practice. And,today's technology solutions are being developed to provide thespeed, accuracy, efficiency and rapid response that allowopportunities for businesses to plan for scalable growth.

However, upfront costs of a software solution are often seen asan impediment to onboarding a system. Be sure to look at thesatisfaction guarantee for the product and service provided, andhave realistic expectations for the investment. Seek solutions thatleverage current investments in technology infrastructure, whilecarefully navigating systems that require custom integrations. Mostsystems have a proven track record to support claims that abusiness will realize a tangible ROI. Also contact companies thathave implemented similar programs to see what challenges andbenefits they experienced during and after their installation.

Related: 8 trends in insurer digitalmodernization

Other considerations for implementing digital technology includerecruiting top analytical talent and addressing increased growthand vacancies as an aging workforce retires and competition foravailable talent increases. Instituting the right technology canprovide better support for policyholders, foster greater employeeefficiency and strengthen third-party relationships.

As consumer expectations increase, so does the manner in whichvendors and carriers meet them. The complex modeling for LAE,reserving and risk are critical elements in maintaining financialhealth for today's P&C providers. As the industry moves fromestimation to precision in modeling, effective data management hasbeen cited as a needed component to provide opportunities not onlyto maintain solvency, but also for future growth.

James Makris is the CEO of St. Petersburg, Florida-basedVIP Software, whichworks with property and casualty insurance firms. Connect with himon LinkedIn.