Increased Competition Among Top Claims Mgr. Concerns

The majority of property-casualty insurance claim officers polled by a consulting firm said increased competition, consolidation and convergence are among the leading challenges now facing their industry.

The findings were contained in a recent survey conducted by the claim management practice of Stamford, Conn.-based Towers Perrin.

In an examination of key trends that are reshaping the industry, the survey found claim officers cited the rapidly growing importance of data analysis and technology, along with recruitment and retention of top talent, as key determinants of meeting business goals.

Attracting and retaining top talent is cited as the top priority for 82 percent of companies surveyed, Towers Perrin said.

Kathleen Cullen, Towers Perrin's claim management practice leader, said the survey found "the way the industry traditionally looked at itself has shifted from budgets and operational controls to a need for more sophisticated approaches regarding managing claim performance and results."

Sixty-two claim officers from property-casualty insurance companies of various sizes in commercial and personal lines were surveyed in late 2007. Thirty-seven percent were employed by companies with less than $200 million in written premiums, 31 percent from companies with written premiums of between $200 million and $750 million, and 32 percent from firms with more than $750 million in written premiums.

About half in the survey said they write a significant amount of business in commercial lines, with approximately half of those describing multiperil as their primary line of business. Within personal lines, about half of those participants write predominantly auto coverage.

Towers Perrin said expense and cost management were found to remain a top concern for all carriers, although better technology solutions and sophisticated analytics are getting more emphasis as competition tightens.

Secondary challenges vary by respondent demographic, the survey found. Larger carriers cited distribution and product management while smaller carriers and carriers that write smaller accounts cited regulatory issues.

Regarding priorities, 52 percent of claim officers pointed to the effective use of data and analytics as a main driver to meeting business objectives, ranking it second to attracting talent. This was closely followed by an interest in better ways to use technology in general (50 percent).

Focusing on the emerging trends and issues bringing change to the claims industry, nearly two-thirds, 65 percent, of respondents chose sophisticated analytics, trumping the more traditional issue of escalating claim severity, which was identified by 50 percent of respondents. Increasing technology needs and reliance on software ranked as the number three emerging issue.

Towers Perrin said it was interesting that less than a third of respondents cited increased business acumen needs as an emerging issue. The firm said this was notable "given that 68 percent identified technical skills and training as an approach to meet industry challenges."

Explained Ms. Cullen, "Claim leaders are looking for technical solutions to meet their increasingly complex business needs. It is clear that investment in people and broader-based skill development is critical for sustaining and improving claim-handling fundamentals."