Insurance Claims Technology: Moving off the Expense vs. Customer Satisfaction Tightrope onto Firm Ground: TowerGroup

August 2010, by Karen Pauli, Research Director, Insurance.

Insurance claims organizations are under tremendous pressure to find new ways to contribute to the improvement and stabilization of bottom-line corporate financial results. This has always been the case, but the convergence of unprecedented economic and business pressures requires new solutions. Expense reduction and customer satisfaction are nearly equal in importance to claims executives, yet they appear to be in conflict in practical terms. This TowerGroup Research Note provides a view of the technology solutions that carriers must adopt in order to meet expense and customer satisfaction goals.

The claims adjusting process is very complex. Claims executives frequently have an underlying group of business issues that affect them differently than do the high-level business drivers of corporate strategy. In Q4 2009 and Q1 2010, TowerGroup conducted primary research on claims operations to determine what business issues and processes were causing claims executives to look at their organizations for change opportunities. Expense reduction and customer satisfaction ranked very close together as business drivers that were leading claims technology purchasers to buy. Under the headings of expense reduction and customer satisfaction are business processes that claims management wants to address.

In broad terms, insurance carrier automation has tracked with product complexity. Commodity lines with strong data standards such as personal auto and homeowners insurance were the first to automate, starting with policy production and stat systems. Because of the combination of product commoditization in personal auto and homeowners insurance and high transaction counts, the financial justification for automating personal lines claims was not difficult to establish. Consequently, claims automation in personal lines is mature, many carriers having replaced legacy claims applications with modern claims technology. Specialty lines of business are just now gaining technology attention.

Claims organizations that fully adopt the core claims technology will be able to provide acceptable service and trim costs. However, in order to be an industry leader and to address the claims business issues that TowerGroup has identified as being processes that executives want to change, a carrier must obtain additional technology solutions.

At the end of the day, claims is a people business. This was a common attribute found in the TowerGroup claims study. Clearly, a human being does not need to be, nor should be, involved in each transaction. However, at critical points of interaction, a good number of individuals � agents, adjusters, lawyers, doctors, and others �can have a stake in that interaction. Real-time collaboration among all parties to a claim is vital to improve the performance cycle.

Read the complete report (posted with permission, 11 pages) including key findings here.

About TowerGroup

TowerGroup is the leading research and advisory services firm focused exclusively on the global financial services industry. For more than a decade, we have been providing the world’s top financial services, technology, and professional services companies with trusted advice and continuous, timely, and objective information. TowerGroup thoroughly understands the complexities of the financial services industry. With unrivalled industry experience and outstanding analytical prowess, our strong team of analysts and specialized advisors covers the business and technological issues impacting the entire financial services sector.