Carriers considering systems to support the complexities of forecast modeling should consider the following:

1. Automation that supports efficiencies in day-to-day operations.

Vendor expenses and invoicing comprise a large part of loss adjusting, and automating these processes can help standardize and validate expenses and reports. Reporting should allow for individual and global views of actual vs. forecasted expenses. Standardized invoicing also provides an easier method to accurately plan for and contain related costs.

Automating just this process can help expedite payments, manage backlogs and eliminate unnecessary late fees, providing opportunities for cost savings. And keeping vendors happy with accurate and timely payments fosters loyalty, which may be critical during catastrophes.

2. Validation for accurate reporting.

There is a well-known saying for automated systems: "garbage in – garbage out." Information that is manually inputted can be compromised by inherent human error and analytical tools are not designed to "cleanse" data. If inaccurate data is entered into an analytical system, the outcomes are not reliable. It is important for any system to have a validation component tied to invoicing, estimations and other business functions. Validation also allows for "red flagging" potential problems for additional analysis and resolution. More precision in forecasting models allows for better management of LAE, reserving and risk management over the long-term.

3. The company's return on investment (ROI).

There are market forces at work that make the change to an automated system a necessary and inevitable business practice. And, today's technology solutions are being developed to provide the speed, accuracy, efficiency and rapid response that allow opportunities for businesses to plan for scalable growth.

However, upfront costs of a software solution are often seen as an impediment to onboarding a system. Be sure to look at the satisfaction guarantee for the product and service provided, and have realistic expectations for the investment. Seek solutions that leverage current investments in technology infrastructure, while carefully navigating systems that require custom integrations. Most systems have a proven track record to support claims that a business will realize a tangible ROI. Also contact companies that have implemented similar programs to see what challenges and benefits they experienced during and after their installation.

Related: 8 trends in insurer digital modernization

Other considerations for implementing digital technology include recruiting top analytical talent and addressing increased growth and vacancies as an aging workforce retires and competition for available talent increases. Instituting the right technology can provide better support for policyholders, foster greater employee efficiency and strengthen third-party relationships.

As consumer expectations increase, so does the manner in which vendors and carriers meet them. The complex modeling for LAE, reserving and risk are critical elements in maintaining financial health for today's P&C providers. As the industry moves from estimation to precision in modeling, effective data management has been cited as a needed component to provide opportunities not only to maintain solvency, but also for future growth.

James Makris is the CEO of St. Petersburg, Florida-based VIP Software, which works with property and casualty insurance firms. Connect with him on LinkedIn.