Implementation of new claims technology has the potential to improve the Property/Casualty industry's combined ratio by up to 7 points, resulting in an industry-wide increase of $25 billion in underwriting profitability.
Although claims is a core Property/Casualty (P/C) insurance function, it is a surprisingly low-profile part of most insurers organizations. Claims have a major impact on an insurers financial results as well as on its reputation with customers, intermediaries, and regulators. New technologies and business practices are giving P/C insurers the ability to reduce losses and loss adjustment expenses considerably. These innovations, and their impact on costs, are profiled in Celent's latest report, .
"Improving the business process and technology environments for claims should be a high priority for P/C insurers," says senior analyst Donald Light, author of the report. "Doing claims right can have a significant impact on insurers' financial results and market positions - an impact which can match or exceed that of higher profile sales and service initiatives."
The report describes a best-practices approach to building a business case for claims initiatives. This approach stands the traditional, and over-used, IT-centric process on its head, says Light.
Celent estimates that, in 2004, claims initiatives will account for 17% of total P/C new project IT spending, or approximately US$600 million.
The report provides a way for insurers and technology vendors to analyze the impact of claims initiatives on the components of the loss ratio: frequency, severity, and loss adjustment expense. It also gives a comprehensive description of types of claims process and technology initiatives.
Celent describes three categories of claims technology enablers: core claims systems, "inner-ring components" (electronic content management, business process management, and business rules engines) and "outer-ring" tools (e.g., integration and contractor management tools). Examples of leading vendors in each category are given.
The report concludes with specific recommendations for insurers looking to implement a best-practices approach to claims technology strategy.
The 25 page report contains 9 figures and charts.
A is available online.
of Celent Communications' Property/Casualty research service can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.
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