This article was produced in partnership with Gallagher Bassett
Supply chain challenges are continuing to prove a key problem for insurers due to the cumulative impact of disruptions on claims management processes – an issue that affects insurers in Australia more than many of its global peers.
A new survey by Gallagher Bassett, released as part of The Carrier Perspective: 2024 Claims Insights report, reveals that 62% of insurers worldwide reported challenges in 2023 around managing end-to-end claims resolution due to global supply chain problems. However, in Australia, there was an even higher uptick with 83% seeing related disruptions to claims.
“This indicates that many insurers will struggle to manage claim volumes effectively, especially in the event of a surge or catastrophic event,” said John White, Head of Sales and Client Services - General Insurance at Gallagher Bassett Australia.
White sees the outsize impact that supply chain snarls have on claims processing in Australia as underscoring the need for innovative solutions.
When strategies to cope with supply chain disruptions are compared between Australia and the rest of the world, the implementation of solutions has been more urgent in Australia.
This is perhaps due to the outsize impact that supply chain snarls have on smooth claims management in this part of the world.
Insurers here are implementing digital claims processing at a rate of 60% versus 54% globally. Likewise, 58% of insurers in Australia have moved to strengthen or repair supplier chain networks versus just 34% globally.
“Our survey reveals that 65% of surveyed insurers are prioritising technology solutions, notably higher than the global average,” said Joe Powell, Senior Vice President of Analytics at Gallagher Bassett.
There is also an increased focus on establishing cost-saving measures (60% versus 53%) and diversifying supplier bases (63% versus 44%) among Australian insurers than globally.
It seems that Australians are early adapters of digitalisation, although many firms are driven by the inherent operational efficiencies.
“The greater emphasis on cost-effective measures and integrating technological solutions is indicative of the country’s acceptance of new technology while maintaining a cautious investment approach,” said White.
The insurance industry in 2024 may be at a watershed moment as disruptions to the claims environment refuse to fade away in the post-pandemic environment.
“Insurers must be adequately prepared to tackle the challenges that lie ahead. The global economic environment remains uncertain, and there is an increase in catastrophic events,” said White.
Moves by insurers towards digital solutions represent a strategic effort to mitigate the impacts of supply chain issues, aiming to streamline operations, boost operational flexibility and improve the accuracy and speed of claims resolutions.
“By leveraging state-of-the-art tools and digital solutions, we can enhance the efficiency and accuracy of claims management. Our technology-driven approach includes advanced analytics, artificial intelligence, and automation to streamline processes and provide actionable insights.”
However, the transition towards a more efficient and technologically driven claims process does not come without its own set of challenges. A notable concern within the industry is the escalating cost of litigated claims.
The Gallagher Bassett survey shows that 40% of respondents in Australia are observing litigated claims settling at increased costs.
“Several factors could contribute to this, including increased regulatory scrutiny, evolving customer expectations, and increasing costs associated with reinstatements, and improving customer satisfaction, have prompted insurers to prioritise swift resolutions,” said White.
In response to continued claims inflationary pressures, premium rate increases are largely inevitable across most classes of insurance. More broadly, a continued economic slowdown can bring higher claims cost pressures for many classes.
In the face of these challenges, the importance of experienced claims management professionals cannot be understated.
“It is crucial for insurers to partner with experienced claims professionals and legal experts who can provide a comprehensive view of the upcoming hurdles and guide them in confidently overcoming them. At Gallagher Bassett, we don’t just manage claims; we create a seamless partnership, delivering unparalleled support.”
A collaborative approach is essential for navigating the intricacies of the claims environment, providing insurers with the expertise and strategic guidance needed to address the multifaceted nature of current challenges effectively.
“By embracing digital transformation, insurers can increase efficiency and cost savings, benefiting both themselves and their policyholders,” said White.
This perspective underscores the potential of technological innovation to redefine the claims environment, offering a pathway for insurers to navigate the complexities of the current landscape while delivering superior service to their clients.
A strategic emphasis on technology is part of a broader industry effort to enhance operational efficiency and improve the claims resolution experience for policyholders.
“Whether it be the ability to scale up resources and respond to events or adapt premium pricing to reflect increased risks and regulatory changes, anticipate market trends, or enhance digital capabilities, it will be more crucial than ever for insurers to position themselves as industry leaders in the years ahead,” said White.
“By staying proactive and adaptable, insurers can navigate through these changes and position themselves for success in the evolving industry.”
Gallagher Bassett (GB) is Australia’s leading provider of claims and risk management solutions for insurance carriers. GB is committed to providing solutions that reduce risk, improve efficiency, and deliver superior outcomes.
