February 6, 2009

Without a hint of bias, US IT research and consultancy firm Gartner claims that Europe lags behind the States in its efforts to improve insurance claims technology.

Insurance Times, which found space for this jingoistic nonsense in its latest slimline edition, allows unchallenged Gartner’s blithe proclamation that UK general insurers will increase their spend on claims technology by 20% during 2009. This view, it turns out, is based on nothing more substantial than a survey of 40 life and general insurers across Europe conducted during the second quarter of 2008 ‚ that and the touchingly naïve belief that those interviewed within this inevitably heterogeneous sample a) meant what they said, b) understood the questions, and c) have not revised their plans in the last nine months.

Insurance Times can now reveal that insurers have realised they need to invest in claims technology: “as the recession deepens and fraud spirals*, new IT tools are more useful than ever.” Gartner, the paper declares, has concluded from its studies that “a highly competitive market, tough regulator, threat of the direct model and high cost of labour” are conspiring to dictate that “UK insurers need to find new ways to save money ‚ such as claims management technology.”

Gartner analyst and vice-president Kimberley Harris-Ferrante is quoted arguing that “Since customer service delivery was rated the top business problem among general insurers, they must now take a more aggressive approach and invest in re-engineering, legacy system management and technology augmentation to support mobile, adjuster and supply chain needs.” If insurers don’t do this, insists Haggis-Ferrari haughtily, higher claims handling costs will hit profits and insurers will lose customers because of poor customer service.

What of those research findings in detail? Without telling us how many of the 40 companies questioned were UK-based or whether these included life as well as general insurance firms, Insurance Times quotes Gartner’s bold assertion that 10% of UK firms are investing in call centre technology. For the sake of pretending that such statistics actually mean anything of any possible interest or relevance, let’s assume that fully half of those sampled were UK firms. We can hence deduce that two UK insurers out of 20 plan investing in call centre technology. The same proportion apparently intend “bringing in an entirely new claims system” ‚ ready presumably sometime in 2011 or 12.

A staggering 40% (or eight insurers) plan introducing “claims analytic tools to measure claims performance and better understand trends, costs and so on.” Twenty per cent of respondents (4 firms) said they would be investing in “a major claims administration system that focuses on financial aspects of the process, such as payment and reporting.” Thirty per cent (six) plan “new customer relationship management tools to help [them] find out more about [their] clients and improve their satisfaction levels.”

Forty per cent are “getting connected” and plan to “add links so everyone in the supply chain can access the process information, make notes and review others’ comments.” Meanwhile an oddly low 30% are spending money on fraud detection tools. Perhaps the other 70% already have something state-of-the-art in place or have outsourced to someone who does. Ah yes, 40% (eight companies) are apparently outsourcing their claims operations ‚ and thereby cunningly saving themselves the trouble of coming up with 21st century claims platforms, fraud detection tools, analytics, call centre functionality etc. of their own.

We then learn that 60% are intending to “keep their existing system but add web services and install different operating platforms. So how does that stack up alongside the 40% who are outsourcing and the 10% who are building an entire new system? Hang on a minute, under the heading  an all-new system,’ we then learn that 60% plan to “buy or build a new application to support claims processing.”

Confused yet? Probably the best thing would be get some expensive consultants in to gather a lot of information about your business and turn it into a judicious combination of fatuous truisms and incomprehensible jargon ‚ either that or you could outsource your claims to someone who actually knows what they are doing.

*Spiralling fraud, of course is the very worst kind. When fraud simply goes up and down it need not be completely intractable. But once it starts going round and round in circles you’re really in trouble. Just ask anyone at Lloyd’s.


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