A large majority (85 percent) of claims executives at U.S. property and casualty (P&C) insurance companies see their claims systems as lacking the flexibility and modernity needed to address consumers’ evolving needs, according to an Accenture (NYSE: ACN) survey of U.S. claims executives.
“Today’s digital-savvy, mobile-enabled consumers expect seamless, real-time interaction with their service providers,” said Michael A. Costonis, a managing director in Accenture Property and Casualty Insurance Services. “For P&C insurers, that means reducing settlement times and enabling policyholders to interact with them about the progress of their claims when and where they want. A modern core claims system is essential to achieving all of these objectives.”
Also according to the survey, a large majority of executives (83 percent) believe their claims systems are not modern and flexible enough to allow them to change the systems’ behavior and business rules without intervention from the IT department.
“Codeless configuration is essential to any high performing claims system,” said Costonis. “By enabling claims handlers to more quickly and easily configure these applications, insurers can continuously improve their overall claims processes and their service to policyholders, while reducing costs.”
Among the survey’s other findings:
- Half (54 percent) of those surveyed say their core claims systems are more than five years old and almost one-third (32 percent) of respondents say they rely on more than five different applications to process claims.
- More than three-quarters (78 percent) of respondents say they are on a path to upgrade their claims systems; among these respondents, almost one-third (31 percent) say the last major upgrade was made more than three years ago.
- Two-thirds (66 percent) of claims executives surveyed think their claims systems are not optimized to collect and analyze the growing volume of data available - such as insights about consumers from social media and usage data collected by means of telemetry and Global Positioning System – which would enable them to refine and improve claims management.
- More than three-quarters (78 percent) of respondents say their claims organization is not equipped to manage new forms and level of risks such as cybercrime, terrorism, increased frequency of severity of natural catastrophes.
“While 92 percent of the claims executives we surveyed said they could reduce loss costs by increasing consistency in claims handling, most of them are not in a position to do so because their core claims systems are either too old or not adapted,” said Costonis. “While insurers are on a path to upgrade claims systems, most companies have not done so for more than three years. This suggests difficulties with the upgrade process, which could be alleviated using cloud computing on a Software as a Service basis.”
Top 3 priorities for investment in claims management: core system modernization and replacement, analytics capabilities and workforce
On average, insurers are planning to spend $17.5 million on claims systems over the next three years, with total expenditures expected to reach more than $2 billion within the U.S. P&C insurance industry. The top three priorities for investment are core claims system modernization and replacement (cited by 72 percent of respondents), analytics capabilities (49 percent) and workforce (49 percent).
The survey also reveals that almost half (48 percent) of respondents have already started to migrate their claims systems to the cloud or on a Software as a Service (SaaS) model, or are planning to do so in the next two years, or are currently discussing this option.
Also according to the survey:
- The most commonly used data are offline data, stored in Excel spreadsheets or Access databases, mentioned by more than three-quarters of claims executives surveyed.
- Recruitment of customer service professionals or customer service training programs and implementation of claims mobile applications for customers are the two most important initiatives that claims executives are undertaking to better address customers’ needs, mentioned by 59 percent and 57 percent of respondents respectively.
- More than two-thirds (68 percent) of claims executives surveyed say they are actively hiring claims professionals or are planning to do so in the next twelve months. Among these respondents, 26 percent are facing recruitment problems, particularly in hiring claims handlers (mentioned by 88 percent of claims executives with hiring problems).
“Claims systems are central to P&C insurers’ performance but the industry continues to struggle in this area,” said John Del Santo, global managing director of Accenture's Insurance practice. “There is significant potential for improvements, particularly in the areas of loss cost management and expense efficiency. Doing so will require a highly coordinated approach to claims operating models, focusing on people, processes and technologies.”
The survey was initiated by Accenture Property & Casualty Insurance Services to better understand the business challenges and investment priorities of U.S. claims executives, and the enhancements to core claims processes and systems that they believe are needed. Accenture Property & Casualty Insurance Services serves more than 70 P&C insurance clients worldwide, including the claims organizations at many of these insurers.
Accenture commissioned a survey of 50 U.S. P&C insurers. Respondents were C-level claims executives, including Heads of Claims, Vice Presidents of Claims and Claims Supervisors. Interviews were conducted by telephone in March and April 2012. Among companies participating, 16 had net premiums written (NPW) of more than $1 billion; 9 had NPW of $500 million to $999 million; and 25 had NPW of $100 million to $499 million.
Accenture is a global management consulting, technology services and outsourcing company, with 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.