“Where there is smoke, there's fire,” is an oft-repeated adage. For the property/casualty claims industry, “Where there is pain, there is gain,” is probably the more appropriate way to put it. In 2004, property/casualty insurers paid $300 billion to cover losses and loss adjustment expenses. If better use of technology could save the industry just one percent of this total, the savings would be $3 billion!
Some claim costs are inevitable, but in many instances they can be reduced. Four factors that contribute significantly to unnecessarily high costs are: the legal system, the health-care system, adjustment processes, and compliance management. This article identifies those four specific areas of excessive cost and the root causes for the significant expenses they represent while making a recommendation for what can be done to reduce those expenses.
Cutting Legal Costs
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