Workforce Management Primary Claims Challenge for P&C Insurers

Chief claim officers with leading property/casualty (P&C) insurers ranked workforce management as their top claim-related challenge. Over three-fourths (76 percent) identified it as a top three business issue in a new P&C Claim Officer Survey conducted by global professional services company Towers Watson. More than half listed achieving financial results (54 percent), and effectively integrating and leveraging technology innovations (54 percent) as their next most pressing concerns.

Two-thirds said attracting and developing critical-skill workers was their top claim workforce challenge, while 59 percent cited maintaining employee morale as their next biggest challenge. “Insurers are responding to this dynamic in a number of different ways, most notably by revising claim processes, modifying job functions and leveraging technology innovations, where feasible,” said Brian Stoll, director, P&C practice, Towers Watson. Respondents reported a number of benefits achieved from claim technology innovations, such as leveraged automation to revise claim processes (68 percent) and improved execution of best practices using operational metrics (61 percent).

“Experienced and effective claim personnel are critical both to the organization’s financial success and franchise value to policy owners. This underlines the importance of providing market-competitive total rewards, ongoing development opportunities and a compelling value proposition to attract and keep the best performers,” said John Gayley, director and North American Insurance Industry leader for Executive Compensation, Towers Watson.

Claim Operation Management

Almost all carriers (93 percent) indicated they handle more than three-quarters of their claims internally. Yet in today’s transient claim staff environment, 71 percent said over half their claim staff began their development and training at other carriers while using different claim management practices. “This poses a true test for claim functions and requires additional training for new hires,” said Frank Ramsay, North American Claim Management practice lead, Towers Watson.

Seventy-one percent reported that their employees receive a minimum of 20 to 40 hours of formal claim training per year, and 95 percent of adjusters receive ongoing formal claim training, although, somewhat surprisingly, more than one-quarter (26 percent) of their direct supervisors and managers receive no ongoing formal training. “Mandatory training exercises for all supervisors and managers can improve claim handling, elevate performance and help new supervisors acquire necessary skill sets and competencies,” said Ramsay.

Even as respondents identified supervisors as critical in delivering superior claim results, the survey revealed that just over one-quarter (27 percent) of supervisors spend over four hours a day reviewing their direct reports’ files, and across the entire group, average 2.7 hours a day doing so. “Carriers need to ensure better claim governance, with appropriate oversight levels of frontline claim handling, so their supervisors spend more time on what’s most important to the company,” continued Ramsay.

Most companies (95 percent) administer some form of claim quality assurance every four months, on average. However, less than half (49 percent) hold formal meetings with all claim staff to discuss the results and plans to act on them. “If carriers just focus on the quality assurance score, the benefit of discovering and addressing inefficient processes is lost. A better solution would be to use the results to identify and act on claim performance improvement opportunities that could elevate the value of quality assurance,” concluded Ramsay.

Litigation Management

When it comes to litigation management, two-thirds of the insurers hire panel counsel for 100 percent of their litigated claims, with one-third utilizing a mix of staff lawyers and panel counsel. When asked how they handle specific litigation approaches, 64 percent of carriers said they typically assign their staff lawyers the liability cases and routine (non-conflict) cases, while the same percentage said panel counsel usually take on conflict cases and more complex, specialized litigation. (Respondents could select all that apply.)

Carriers disagree on whether a claim should be reassigned when it enters the litigation phase. Nearly four in 10 (39 percent) have their current claim adjuster continue to manage the file, with almost one-third (32 percent) referring new suits to a claim litigation specialist and one-fifth transferring control of the claim to defense counsel while maintaining adjuster oversight.

Claim handlers maintain responsibility for most activities on litigated files, although companies commonly share responsibility with defense counsel for case resolution and negotiation, as well as developing and setting strategy. Claim handlers often allow defense counsel to take the lead in developing the legal budget for individual claims.

Carriers also take varied approaches in evaluating the success of their litigation management. Insurers most commonly (71 percent) measure performance by comparing legal expenses across defense firms and over time. Nearly one-third (30 percent) said compliance and execution best practices are the most important factors in evaluating claim staff performance. Almost half (49 percent) rely on average loss plus expense as the primary factor to measure litigation results. Other companies track expense on litigated claims (22 percent) and loss per litigated claim (15 percent) separately.

About the Survey

This is the eighth installment of Towers Watson’s Property & Casualty Claim Officer Survey, which examined ways P&C insurers address claim and workforce challenges, claim operation management and litigation. Forty-one chief claim officers participated in the survey, which ran from June 4 through July 18, 2013. Respondents represent a cross section of small, midsize and large carriers. While there are more midsize carriers by premium volume, small and larger-sized carriers are also well represented.

Source: Towers Watson