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Emerging Technology Trends

A recent Novarica study found that improvements in claim handling was the second-most frequently cited initiative amongst P&C carriers looking to create competitive advantage.

By George Grieve | Updated on December 02, 2009
The P&C insurance industry generates top-line annual sales (net written premiums) ranging between $480 and $500 billion, depending on how you count the numbers. Roughly speaking, claim payments and expenses account for about 70 cents of every premium dollar. In other words, claim departments spend between $336 billion and $350 billion each year in managing and settling claims. This is a huge amount of money, and something insurers constantly try to reduce to improve the bottom line.

While the vast majority of this money is paid in claim settlements or indemnity dollars, it is not the intent of insurers to become more profitable or less costly by reducing customer settlements. Rather, the intent is to become more efficient in service delivery, much better at leakage reduction (including about $30 billion related to fraud annually), and quicker and more consistent in delivering settlement to insureds.

The ability to offer insurers reduced costs and improved service delivery is a huge revenue and market opportunity for technology and software providers. As a result, many innovative minds and vendor companies are finding new ways to apply technology to the claim process, a movement that continues to gain momentum.

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