What keeps claims execs up at night? – Part 2

Yesterday, our experts shared that the talent shortage, increasing cyber risks, political uncertainty, balancing service and cost, rapidly changing technology and consumer expectations are some of the factors causing them concern. Finding solutions requires innovation and creativity, and many insurers are engaging their staffs to help solve these issues.

Addressing the talent gap

The industry has been aware for over a decade that a significant number of adjusters and claims professionals would be retiring in the near future, and that time is rapidly approaching. Some companies have created programs to capture institutional knowledge before it walks out the door, are cross-training their teams and identifying new technology to help mitigate the loss and a worker shortage. Our experts shared their insights on this challenge.

Murphy:  As with many industries, institutional knowledge is at risk when more senior members of the team retire, and I think smart businesses must have a plan in place for transitioning and training. One critical element is engaging the experienced claims professionals with the more junior staff members. We have initiated a mentoring program and supported training initiatives including ‘lunch & learns’ and round table forums where our senior claims professionals share their experience and observations on the market. The forum also allows junior staff members to share their observations, which creates a really interesting juxtaposition of traditional practices with the innovative ideas.

Hilyard:  I think there’s a lot here to discuss like having well-defined and coordinated strategies that address knowledge management systems, AI, machine learning, contemporary knowledge transfer capability, diversity and inclusion, generational awareness, talent management, succession planning, etc.

Woods:  By instituting a solid mentoring program within the company. Pair a tenured claims professional with a less experienced adjuster and allow that tenured professional to share that institutional knowledge and the knowledge that’s been learned outside of the “books.”

MacPhee: Despite best intentions, it’s difficult to capture institutional knowledge, and succession planning is often difficult to execute. But there are ways to lessen the blow. The most important solution is to implement robust career training, giving ample time to prepare before seasoned professionals retire.

Howard:  As the old adage goes, “If you fail to prepare, you are preparing to fail.” A detailed succession plan is critical. So is capturing the knowledge and experience of your departing seasoned leaders. Sometimes the hardest part of a plan is moving beyond discussions and transforming ideas into actions; create a meaningful plan for knowledge transfer and be deadline driven in executing the plan. Organizations should also be flexible in customizing succession plans for individuals based on their development gaps, and provide opportunities for individuals to practice thinking and reacting at the next level they must rise to, allowing them to grow.

Tied to the conversation of offsetting the impact of losing experienced claims professionals, insurers must be creative and think outside the box in considering how to engage retiring, or already retired, employees once they leave the company.

Hipp:  This has been a major concern of the industry for some time. Today, the concern is different than it was maybe 10 years ago. Then, the key challenge was how best to attract new talent to supplement an aging industry workforce. Now, the key question is how to secure talent that can immediately contribute to a much more digitalized world where traditional entry level work may be more automated, providing less basic learning opportunities in an increasingly complex technical environment.

A changing future

Change in the insurance industry is a given — new risks, new technology, changing expectations, policy updates and artificial intelligence and autonomous cars are just some of the factors that will affect insurance coverage and claims processing. Our experts identified several areas where they think the industry will see the greatest amount of change in the next several years.

Peck: Continued focus on diversity and efforts to better diversify in our workplaces will lead to further innovation by engaging different perspectives. It is a challenge that the insurance claims industry is acutely aware of but has not yet fully evolved to. We need to work harder on the ongoing execution of real diversity initiatives to effect change.

Technology continues to be the trend that affects every industry and, through various InsurTech efforts, influences ours as well. Automation of claims processes such as claim intake and triage expedite the identification of fast track claims where payments can automatically be issued, or assignment to the right technical adjuster is system-driven. As a result, the life cycle of non-complex claims continues to become shortened.

Skapof: The speed and pace at which the industry operates will change drastically, as we continue to rely on technology. Artificial intelligence, for example, will transform the claims process. Drone and imaging technology will enable us to assess damage more quickly. Finally, the introduction of new apps will enable us to file and settle claims more quickly.

Perrella:  A number of emerging areas — including, for example, coverage for cyber, additive manufacturing and autonomous vehicles — could change long-established legal norms. However, the extent and impact that this change could have on the claims industry is difficult to predict at this time.

Howard:  In the next three years, trends suggest that self-service features and Artificial Intelligence (AI) in the claims industry will be absolutely necessary to meet the needs of customers in an evolving and heavily digitized industry. The claims profession, at its core, is about delivering consistent, easy-to-do-business-with service, and technology will be an important tool to help deliver the customer experience promise in the years to come. Customers want both personalized contact and self-service capabilities, and they want to be able to switch between the two seamlessly. The self-service features of claims systems will enhance customers’ ability to change channels depending on their needs and even what piece within their claim experience that they are dealing with.

MacPhee: Consolidation in the market – at all levels – is also going to be a key factor in the evolution of the industry. We have seen this consolidation within the insurance market with mergers over the previous years and anticipate that that will continue. This isn’t limited to insurance companies, but is being seen throughout the business community, including loss adjusters and service providers, even ourselves. Like any company needing to adapt to changing market needs and new technology, sometimes the best move forward for the company is to combine forces with others.

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Opportunities abound

With change comes opportunities, and our experts are already identifying what they are and how systems can be implemented to expand their expertise to better serve their clients.

Hipp:  The greatest opportunity will lie where deep technical knowledge will be valuable — such as cyber risk and climate change, including their financial risk liability. These areas are highly technical and complex in nature and require significant legal experience, which cannot easily be replaced by automation.

Lyle:  Without a doubt, cyber is the single most prevalent risk facing small businesses today, and as such, it presents a host of opportunity for carriers. Our firm is already addressing this opportunity by taking a proactive approach to cyber risk, with coverage that complements and enhances standard business insurance, and cyber security and risk management apps that help prepare organizations and prevent loss.

Hilyard: New products will continue to emerge for new and changing risks, creating opportunity in areas such as cyber, catastrophic loss, autonomous vehicles, IOT, telematics, etc. Entirely new claims methods and expertise are developing and more will need to occur in the future as consumer preferences morph. The company(s) that can quickly illuminate these opportunities and respond most effectively will win.

Fisher:  There are two areas where I see opportunities:  cyber risks and climate change.

We are seeing more cyber claims being managed by a smaller group of insurers. Given the ever-increasing frequency of cyberattacks and data breaches, coupled with hostilities around the world, there is no sign of the risk slowing down. We will see a need for more capacity.

The other area is climate change. We are starting to see claims on the liability side where climate change is a factor in both allegations and claimed damages. Most of the claims are on the liability side but we are going to see these claims on the third-party side as well.

Underwriting these risks and devoting capacity will be an issue for the domestic, London and European markets for the foreseeable future.

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Preparing for the future while balancing the realities of today requires planning, effective leadership and an investment in both people and technology. The insurance industry is learning to adapt much more quickly as new risks and opportunity arise. Waiting until enough actuarial data is accumulated or not keeping up with technology means companies run the risk of being left behind or losing out to the competition. And as executives identify new risks and opportunities, the hope is that they are able to sleep better at night knowing that the future is a little more secure.

Want more insights like this? Then join us at the America’s Claims Executive event in Las Vegas, June 24-26.