Most property-casualty insurers are failing to use technology and alternative sourcing to improve their claims function, reduce their loss ratio and enhance customer satisfaction, according to a new global survey.
Those findings were contained in a report released by New York-based consulting firm Accenture.
The firm said its study was based on a telephone survey of 104 North American and European property and casualty executives to identify high performance in claims operations and determine the extent to which insurers have optimized their operating models through people, process, technology and sourcing best practices.
While p-c insurers have improved their management of claims over the past five years, Accenture said, the North American insurance industry remains slow to adopt claims systems and processes that have long been proven to strengthen service, reduce costs and deliver significant returns on investment. According to the survey:
o Of North American insurers, less than half (44 percent) are currently using advanced claims segmentation. That technique categorizes claims by factors such as complexity, customer claim history and customer profile in order to streamline processing cycles and insure precise and accurate handling.
o Less than one-fifth (17 percent) employ advanced fraud-detection systems, such as data-mining tools that calculate fraud probabilities.
o Roughly one-tenth (12 percent) resolve customer problems on first contact, and the vast majority close less than one-quarter of their claims in a single step from their call centers.
o One-fifth (21 percent) do not currently make their first notice of loss data available to everyone else in the claims process.
o Fewer than half (47 percent) are identifying claims that have recovery potential in real time.
The survey suggested that process weaknesses combined with slow adoption and poor integration of technologies are significantly hindering North American claims management performance.
Nearly nine out of ten (86 percent) of those surveyed said their claims processing technologies are disconnected from core IT systems, such as policy-administration systems, product catalogues and central customer databases.
One-quarter (24 percent) said they are still using claims systems that are mainly manual and paper-based.
Less than half (45 percent) have integrated their claims systems with their first notice of loss systems.
Accenture said the lack of technology integration and persistence of manual processing results in claim files that are incomplete and difficult for employees to share and access during processing, reducing settlement speeds, increasing error rates, undercutting service quality and driving up costs.
On the positive side, the survey found areas of high competency in claims management among North American carriers as compared to those in Europe. In addition, while execution is slow, North American insurers appear to at least understand the critical strategic priorities for achieving higher performance.
Three-quarters (76 percent) of North American insurers offer 24-hour telephone customer support compared to less than half (47 percent) of European insurers, the survey found.
The poll also revealed that twice as many North American insurers as European insurers offer their customers online feedback on the status of their claims (29 percent vs. 15 percent, respectively).
More than three-quarters (69 percent) of insurers use some form of outsourcing to support their claims function compared to less than half (47 percent) in Europe, Accenture said.
When asked to rank strategic priorities for their claims operations, improving technology systems and segmentation capabilities rose to the top of the list among executives surveyed.
More than half (51 percent) cited the replacement of claims technology, and an equal number cited the improvement of data analytics to allow for greater claims profiling and segmentation as their foremost priorities.
Accenture said the survey was conducted between August and November 2006 and involved 49 respondents in North America and 55 respondents in Europe, including France, Germany, Italy, the Netherlands, Scandinavia, Switzerland and the U.K.
Three-quarters (74 percent) of the companies surveyed reported annual premiums of more than $1 billion; one-quarter (26 percent) reported premiums between $500 million and $1 billion.
The consulting firm advised that as rates drop, firms need to be competitive in claims handling by improving claims segmentation and assignment, information access and management, human performance, and organizational effectiveness.
Accenture noted that it has been tracking claims operations for nearly a decade and past research found that nearly half of the average claims professional's day is focused on activities that have no direct influence on the outcome of the claim.
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