It’s no secret that numerous property and casualty (P&C) insurers have consistently reported loss ratios in excess of 1.05 in recent years, spanning property, liability, and particularly auto lines. Various factors beyond the insurers’ control, such as complex technology, chip shortages, and a shortage of skilled repair technicians, contribute to escalating costs.
Utilizing technology is one of the most effective strategies for insurers to cut costs and enhance loss ratios.
Improving efficiency is an area where cost savings can be achieved. Insurers should first address outdated legacy core systems. While these systems might have been cutting-edge at some point, many are now inefficient and obsolete, necessitating numerous add-ons and plug-ins that may not seamlessly integrate. Conversely, systems developed from the ground up using modern technologies boast more features, require fewer third-party add-ons, and offer superior integration, facilitating enhanced data sharing.
Modern technology not only enhances efficiency but also fosters customer-friendliness. Virtual assistants utilizing conversational business intelligence simplify interactions for potential customers and insureds, assisting them in requesting a quote or filing a claim. This results in improved customer relations and increased retention – it’s far more expensive to gain customers than it is to retain them.
Automation of processes reduces manual workloads, enabling teams to concentrate on business activities rather than routine tasks. Augmenting staff and providing recommendations further aids in workload management.
Implementing risk ranking, scoring, and straight-through processing of policy applications upfront allows for better pricing for low-risk customers, immediate rejection of bad risks, and directed scrutiny by experienced underwriters for more complex applications. This approach significantly contributes to improving loss ratios.
Cutting-edge technology can streamline the claims process and optimize staff management. It facilitates risk scoring, identifies potentially complex claims, and directs them to experienced staff. Systems can detect fraud, recognize claimants with legal representation, propose settlements, and identify opportunities for subrogation.
Considering the cost of ownership, modern systems often prove more economical to operate and maintain while uncovering additional cost savings. They offer greater agility in responding to evolving business needs, ensuring faster and easier changes while enhancing reliability.
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