ERNST & YOUNG: RESOLVING RISK AND REGULATORY ISSUES

When working with insurance clients, Ernst & Young (E&Y) relies on its solid foundation of industry knowledge, says Insurance Advisory Practice Leader Dave Hollander. In its stable of domain experts are professionals specializing in finance and risk and regulatory issues, as well as others who focus on performance improvement across various areas.

Hollander cites three top concerns he's identified among P&C clients: The first, he says, is determining how to make their business processes leaner and meaner.

“Coming out of the soft market, where things are arguably getting better, virtually all of our clients are wrestling with how they can continue to simplify their businesses and rationalize their expenses, such as streamlining operations and eliminating redundant costs,” he says. “This is a dominant theme.”

A second top priority among insurers, Hollander says, is targeting ways to invest in themselves in order to improve their competitive position. Specifically, he says, clients are looking for ways to:

• Relate to customers faster and easier
• Continue with investments that will allow them to get superior results in claims, so they can improve their expense position, reduce any lost-cost overpayment and improve customer service
• Invest in the core life cycle of underwriting and policy-processing

When working with clients to help address these concerns as well as other issues, E&Y employs several strategies.

First, says Hollander, “from a consulting perspective, we match up client teams that understand the client issues very specifically. We also create internal-solution teams, focused on concepts such as financial transformation or claims transformation.”

Second, the teams try to break up what would otherwise be a long, complex and risk-laden project into smaller pieces: A 12-month project might be organized into 12 one-month “sprints,” Hollander notes.

This process, he adds, “allows us to introduce pieces of solutions sooner, which helps with the change-management process and how people accept the changes.”

Third, E&Y makes sure that it doesn't overcommit, adds Hollander: “We deliver on what we say we will do, and we don't oversell while we are doing our work.”

This approach often leads to broader assignments, as clients get used to the process and like the results.

As an example, E&Y has been working with a Top 10 carrier for a number of years. Some earlier engagements involved working with them in tax-consulting and regulatory-advisory capacities.

Subsequently, the client realized that another important need was emerging around claims processing and technology.

“As a result of the trust we had built over several years, we were asked to assist in introducing new technology to help them get a better result in claims,” says Hollander. “And as a result of the success of this project, we have been asked to help them restructure how they build business architecture in their other lines of business related to revenue and growth.”

PWC: HELPING CARRIERS DEAL WITH “UNPRECEDENTED DISRUPTION”

PwC, says Yoder, takes an integrated approach to solving clients' problems: “The difference between our integrated approach and our competitors' is that PwC [can deploy] multiple disciplines and skills on the same team.

“For example, strategic marketing, actuarial, enterprise risk management (ERM), predictive analytics, technology architecture and organizational-change management dimensions all can be embedded aspects of an analysis or solution,” he adds.

The top concerns for PwC insurance clients in 2012 and beyond? Improving the customer experience to differentiate themselves from competitors; gaining greater global market share; and responding to increasing regulatory developments head the list, says Yoder.

The firm, he says, helps clients create and implement short- and long-term strategies to respond to these concerns.

“PwC takes a fact-based, hypothesis-driven approach with our clients,” he explains, which allows the client to “quickly and easily digest all of the dimensions of the opportunity or challenge and potential actions to address them. It also accelerates the process from strategy development to implementation and builds tighter alignment throughout the client organization.”

Yoder says PwC also is focusing its efforts on new methods for collecting and analyzing data to help clients make better business decisions and better understand their customers.

TOWERS WATSON: POWERFUL, PROPRIETARY TOOLBOX

In addition to possessing a roster of experts in various service areas such as ERM, predictive modeling and reserving, Towers Watson enjoys the advantage of offering its own software solutions, says Tom Hettinger, regional sales and practice development leader for P&C insurance brokerage and risk.

“We provide software products that are part of Towers Watson; we don't have to coordinate outside contracts,” he says, which often saves the client time and additional expense because it doesn't have to employ outside vendors—and the firm also empowers the client with practical applications that can be used going forward.

“We don't just provide answers; we also provide [clients] with the tools to deploy on those solutions that they can use on a regular basis.”

When working with clients, Towers Watson first begins by focusing on specific needs, says Hettinger. “Then we look around and see how those [solutions] impact other areas of their organization. That is, we develop solutions to make sure we are addressing all of the different areas of risk” a client may have.

For example, Towers Watson recently helped to coordinate one client's reinsurance solution around its primary pricing needs. Towers Watson utilized its predictive-modeling team, its cat-modeling team and brokers.

“We did predictive modeling and competitive analysis and understood what the implications of these different risks were on their overall reinsurance structure,” he states.

In terms of client concerns, the biggest one Hettinger sees is a desire among carriers to better articulate to ratings agencies their methods for effectively managing risk.

To address this need, Towers Watson leverages many of the client's existing decision-making processes and makes best-practices recommendations such as “risk tolerance and appetite definitions; risk assessment and identification; and model stress testing and validation” to help the client realign its practices with those that most appeal to ratings agencies.

DELOITTE: TALENTED TEAM

According to Rebecca Amoroso, U.S. insurance leader for Deloitte, the firm utilizes a multidisciplinary approach when working with clients.

“Our people work together to offer clients end-to-end solutions, so clients can get there faster,” she says. Another differentiator, as she sees it, is its talent pool. “I'm sure everyone says this, but we have some of the most talented individuals working for us. I am always humbled by our people.”Some of these on-staff consultants are former insurance-industry executives or regulators, she says, whose practical knowledge and technical expertise help Deloitte anticipate and stay on top of trends.

“We understand that our clients operate in a dynamic environment, so we constantly reinvent ourselves and create new and better solutions for clients,” she says.

These days, many carrier clients see the need to improve the customer experience as critical. “Everyone has [customer-improvement] initiatives under way, but they are challenged because there is a lot of competition and the economy is still a bit shaky,” she explains. Clients' customers, she notes, are demanding 24/7 communication via multiple vehicles.

In response, Deloitte helps clients develop processes for how they can provide consistent service via these multiple platforms, including call centers and enhancement of carrier websites to provide real-time quotes. “We have also done 'voice of the consumer' surveys to help our clients understand what is on customers' minds,” she adds.

A second concern of Deloitte's clients is finding ways to increase operational efficiencies, and in many cases that means bringing in some new tools and phasing out old technology.

“We help clients replace legacy systems,” says Amoroso, but the firm also aids in the replacement-systems' implementation—“not only from a technical standpoint but also making sure that it 'sticks' within the organization.”

Improving operations, including cutting costs while maintaining the level of service its customers expect, is a perennial carrier concern. Amoroso offers an example in which Deloitte helped one client build a predictive model for claims.

The carrier wanted to give its claims adjusters and claims executives a tool to better pair the right resource with the right claim as early as possible. The idea, she recalls, was that if you had more information and insight on a claim at first notice of loss or shortly thereafter, you could lessen the ultimate cost (both loss and expense) of that claim.

“We first helped the client build the business case on what they would do with this information and what they could hope to save,” says Amoroso. “We then helped them build and implement the predictive model, which helped them better manage and leverage their resources, such as identifying when they might need a nurse practitioner—earlier in the process or not at all—as well as how to identify the claims that might be at risk for soft or hard fraud.”

The initial estimate predicted savings of about 8 percent, which was considered significant for this client. By the end of the first year, however, the savings have been in the double digits, Amoroso adds.