As we finish the year and look back, it has been a busy and significant year in the claims world. Some massive global catastrophes strained market capacity at a time when results were already marginal in many areas. At the same time we continued to see the rise and rise of new technologies that will have a big say in how claims are managed in future. So in a firming market where tech is the new King, what were the 5 big things in our claims world in 2017?
- A rising market. In the back half of the year we saw the first signs of a harder market that isn’t likely to be just another false dawn. We saw some harder to place Insureds in the liability space have one or no markets to deal with, and others saw significant increases to their rates. Our property underwriting agent clients were fielding calls left right and centre….as the Marsh composite quarterly index confirmed that rates had risen more than 13.6% post June. This was the third consecutive quarter of price increases in the Australian insurance market. While harder markets are somewhat novel, the good thing from our perspective is that it tends to sharpen the focus on sound risk and claim management, and the conversations about how to manage claims move from after the placements to before, and quality of solutions becomes a key criteria.
- The new buzzword in 2017 was “Insurtech”. It may have been Cyber in 2016 as that market took off and matured, but in 2017 we were constantly seeing references to “insurtech”, or for the unitiated, new and potentially disruptive technologies. I read that three years ago there were 50 Insurtech start-ups looking to partner or disrupt the insurance space – this year there were 1200! One of the hottest plays was “Lemonade”, in the USA, who transact nearly all their business on line and claim to be able to settle a claim in 3 seconds. They also have a social conscience/ charitable angle which increases the appeal to today’s younger generation. Lemonade is fairly representative of the new wave of tech which is focused more in the consumer / retail space and designed for fast track (read the simple end) property underwriting and claims. While every start up is looking for the model that can disrupt the market, the reality is that most will need to partner with existing businesses to deploy their technologies – so while not many of the 1200 will ultimately succeed, the movement represents great opportunities for insurance companies to partner with these businesses and move headlong into the digital world.
- Clients are demanding enhanced risk information at their fingertips. We have also seen an emerging trend where clients want to facilitate information sharing through linking of systems. The aim is to increase efficiency and improve results while giving clients better and immediate access to important risk information. It seems the information barriers between client and provider are shrinking as providers try to supply seamless on-line integration of information sources.
- The claims space -and the TPA market in particular – is becoming more difficult to enter and more challenging to excel. As the demand for quality information and accountability increases in the claim space – and as insurers (both here and overseas, including Lloyd’s) respond to increased regulation by asking claims providers to do more – there is an ever increasing barrier to entry in the claims space, and a noticeable drift towards claims specialists managing claims. The days of opportunistic firms deciding to manage claims off the back of existing client base opportunities seems numbered…law firms, insurance brokers, underwriting agents and even some loss adjusters will find that without significant investment in systems and infrastructure, they will not be able to compete for claim management work.
- Results still depend to a large extent on the quality and training of your people. As far as the war for talent goes, we see the leadership space as key and it continues to evolve. We recognise that to attract the best talent, and to keep younger people engaged, we need to develop our leaders and the emerging leaders within the business. We have allocated significant resources in 2017 for training to build our leadership expertise and the depth of leaders in our business. This has culminated in a different approach to annual performance reviews. We now have fortnightly ‘feed forward’ sessions and the annual salary review is an easy and painless extension of that process. It is similar to the so called performance management revolution already in play at Deloittes and other progressive companies. A regular catch up – focused on ‘what you need to succeed’ – seems infinitely preferable to a quarterly or annual review process. It recognises the modern world (which moves a lot in a year!) and that most employees these days want regular feedback. It also gives our leaders a better chance to develop our next wave of emerging leaders through more regular interaction and planning. Which in turn produces better outcomes for our clients!
It has been a big year and we thank all our clients and our supporters for their assistance and support in 2017, and we wish you all a very happy Christmas and all the best for the festive season – and all the best for a big and exciting new year in 2018!