Over the next decade, the insurance and TPA landscape willcontinue to evolve.

And while it is impossible to predict the top challenges thatwill face risk buyers, intermediaries, TPAs and insurers so farinto the future, it is interesting to gaze into the crystalball.

This was the topic of a panel discussion I participated inrecently featuring Charles Martin, managing director of Marsh; DaveNorth, president and CEO of Sedgwick, Inc;, and Scott Hudson,president and CEO of Gallagher Bassett Services, Inc. during the"2025 Outlook: Forecasts and Predictions from the CEO'sDesk" session at the Workers' Compensation EducationalConference in Orlando, Florida.

Here is a look at the top risk trends and challenges facinginsurers and their stakeholders over the next decade. Understandingthese will help buyers and intermediaries select insurance and TPApartners that can help them today and far into the future.

Buyers:

Insurance buyers will likely face three key market realitiesthat shape their risk programs:

Customer demands. Buyers will need to respondto their customers' increasing demands for simplicity, speed andconvenience. Before building new business processes and technicalinfrastructures to meet these expectations, buyers will need tofully understand the risk implications of potential technologiesand workflows, and how to manage and mitigate those exposures.  

The need for value. Smart insurance buyers willdemand even greater value from intermediaries in two importantareas: loss prevention and claims management. On the workers'compensation side, buyers will likely become even more interestedin how brokers, insurers and TPAs produce better outcomes forinjured workers given the potential continuation of medicalinflation, which the PwC Behind the Numbers 2017 predictedcould escalate above current levels. 

Data directs action. Big data is a sea changewhose waves will continue to be felt in 2025. Buyers will look tointermediaries, insurers and TPAs as data translators that addvalue by uncovering actionable information to improve riskperformance. The difference in 2025 will be the scale of dataavailable and the ever more sophisticated analysis required to findkey learnings that improve the performance of both programs andclaims.    

Related: Is the world getting riskier? Consumers andbusinesses disagree 

There will be new online choices for buying insurance andcompetition will require a better value proposition to close sales.(Photo: iStock)

Intermediaries:

Agents and brokers will also face key challenges in the yearsahead, including:

A smaller, more competitive market. New onlinechoices will emerge for buying insurance. At the same time, M&Aactivity will likely lead to fewer intermediaries, given the needfor scale, expertise and customization required to meet buyers'needs. With the narrowing of the market, intermediaries will lookto insurers and TPAs for help identifying and pursuing new businessopportunities.

New value prop. Greater competition willrequire stronger demonstrations of value. For example,intermediaries are in a unique position to deliver deeper insightsthrough predictive models to spot specific opportunities to improveperformance. Intermediaries will also add value by educatingclients on market trends and new innovations to manage the totalcost of risk, like wearable technologies that can positively impactworkers' compensation and general liability claims.

Changing focus. By 2025, a large part of anintermediary's success may likely come from helping buyers focus onvalue rather than price when developing insurance programs.Premiums will always be important, but are a narrow part of totalinsurance costs, typically about 20 percent when claims and otherassociated loss and adjustment costs are included.  

Related: Cover holders, risk takers meet inBaltimore

The increased use of data analytics and reportingcapabilities will increase claims performance. (Photo:iStock)

TPAs and insurers:

For their part, successful insurers and TPAs in tomorrow's risklandscape will focus on adding value to both intermediaries andbuyers. This value will stem largely from:

Data and analytics. This is already happening,as seen in the growth of sophisticated data analytics operationsembedded within some insurers' claims, product development andother functional areas. By 2025, successful insurers and TPAs willhave even more robust data analytics and reporting capabilitiesthat improve program and claim performance.

Consultative selling. At the account level,successful insurers will focus on a consultative sales process toidentify the total risks faced by a specific account and the bestways to manage and mitigate them. They will also deliver lossprevention services that improve safety to prevent claims, andclaims management that provides the best possible outcome when anaccident happens.

Education. Insurers and TPAs will continue toadd value by helping both intermediaries and buyers understand keymarket trends and issues from workers' compensation implications ofan aging workforce to the increasing demand in general liabilityclaims for life care plans.  

In order to maximize their opportunities and prepare for thefuture, buyers and intermediaries will need to identify insurancecompanies and partners who can help them manage the trends oftomorrow's market.

Debbie Michel is general manager of the area of LibertyMutual Insurance that provides a range of casualty products andservices to mid-size and national accounts throughbrokers. She is also president of Helmsman ManagementServices, Liberty Mutual's third-party administrator.