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Conditions have never been better for insurers to consider increasing the amount of claim administration they outsource.

By Philip Porter | Updated on April 30, 2009

The U.S. property and casualty insurance industry took a punishing one-two punch to its financial condition in 2008. The deteriorating economy and expensive catastrophic events cut deeply into investment results and net income, causing underwriting losses and negatively impacting combined ratios.

Factor in increasing medical costs, which substantially impact some product lines such as liability and workers’ compensation, and the potential of additional regulation due to the current crisis in the financial services industry. Let’s not forget expense ratios that have been creeping up for most of the decade, too. Underwriting, acquisition, and general expense ratios as a percentage of premium were expected to reach 27.5 percent by the end of 2008, the highest since 1999, according to an Ernst & Young 2009 outlook for the property and casualty industry. Reversal of expense growth requires a focus on three critical operating areas, including adjusting expenses, Ernst & Young says. What does this equation add up to? Conditions have never been better for insurers to consider increasing the amount of claim administration they outsource.

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