Technology is making inroads into claims handling at the high volume, low cost end. But, loss adjusters are still in charge when it comes to the larger, complex claims. Helene Dancer reports
Outsourcing is stretching across the specialist insurance domains. IT firms are now knocking at the door of loss adjusting by processing large volumes of low cost claims for insurers. But is this a threat to the loss adjusting profession, or can IT firms and loss adjusters work together to improve services and bring down costs?
Loss adjuster Crawford and Co's UK managing director Ian Muress says there has been a general sentiment in the industry that IT firms could help the industry function better.
He says: "It has been said in the adjusting community for years that a big technology or service company would come and sort the industry out." Muress suggests that the technology companies have failed to revolutionise the industry. "Insurers want to get back to talking to the loss adjusters," he says. "There is a swing back to a focus on value for money."
IBM's head of general insurance claims Imran Ahmed suggests that IT firms are vital for bringing down costs when dealing with large volume, low cost claims. But he suggests that looking across the spectrum of claims, most people see loss adjusting having most value for larger claims.
"There is an opportunity for technology companies to make an improvement in dealing with the smaller, less complex claims," he says.
"Technology is important where the business rules for handling a claim are fairly straightforward. Loss adjusting is best for looking at more complex claims. Most insurers hand over claims based on their value and complexity and IT firms are picking up the smaller ones."
Executive director of the Chartered Institute of Loss Adjusters (Cila) Graham Cave disagrees. "IT firms are not a threat, because they do not have the people who have the expertise or knowledge of the claims field," he says.
"The whole ethos of the institute is focused on claims and the knowledge of handling claims. We are aware of the huge number of people handling high volume low cost claims and have 1,000 members in our Society of Claims Technicians. This has been a great success in bringing qualified people to major insurance companies."
Muress says Crawfords has this expertise and is committed to investing in technology without losing sight of the core industry knowledge and experience. He says: "Crawfords believes that we have all the technology tools anyone would wish for. We don't need someone to reinvent the wheel. We need people who know claims and how to do the business they know best. We are comfortable with knowing what we are doing."
GAB Robins global technology vice president Barry Wetherilt echoes Muress's sentiments and takes the debate further. He says a partnership between loss adjusters and technology companies is key. " IT companies do not have the knowledge and we don't have the IT ability to do research and development."
Cunningham Lindsey's director of client relationships Kevin Larman agrees. "The IT firms have their own experience, which fits together with ours. The two fields are not mutually exclusive," he says. "The IT professionals are creating systems to bring the costs down. They offer a service to work with and provide a platform. We are working with IT firms with an insurance interest to see where we can improve our services. IT looks at the process and we have the expertise. Loss adjusters are pretty receptive to IT and need to embrace new technology."
Larman says there are many relevant developments happening in the IT field. "We have built our own inhouse system and have a claims database, which has been operational for five or six years," he says. "We are adding evidencing data to the database and enabling customers to access the data directly."
The loss adjusting profession has been challenged in the current hard market and many have had to be competitive to stay afloat.
Cunningham Lindsey commercial services director Mike Jones says technology is playing a part in facilitating a "seamless exchange of data between the adjuster and insurer".
He says: "A virtual claims department is created where the adjuster has online access to underwriting and policy information. The insurer is able to access online reports, correspondence and realtime reserve information either case by case, or for its entire portfolio."
Accenture insurance partner Mike Costonis said technology is essential to streamlining the loss adjusting process. He said there is a level of mediocrity in the industry and that Accenture is helping to "break the gridlock".
"We develop the technology and are actively working with loss adjusters and insurance companies," he says.
"It is not at the expense of one or another. Loss adjusters operate on a cost plus basis and need to operate on a low cost basis and with the proper technology, they can do that.
"Transaction costs are coming down and payouts are coming down. The challenge is that both insurance companies and loss adjusters have not spent sufficient time and effort looking at technology."
Costonis says it is a question of who gets there first. "We are working together and it is happening now. People who see Accenture as a threat are maybe loss adjusters which have been left behind," he says.