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 UK insurers appear more interested in tackling than many of their global peers.
A new survey by Gallagher Bassett, released as part of The Carrier Perspective: 2024 Claims Insights report, reveals that 53% of UK insurers reported challenges in 2023 around managing end-to-end claims resolution due to global supply chain problems. While an even higher 62% of global insurers saw related disruptions to claims, it was UK insurers that led efforts to implement a number of strategies designed to ease supply chain problems.
Insurers here are implementing digital claims processing at a rate of 60% versus 54% globally. They are also more likely to be adjusting claims processing timelines, at 48% versus 45%, and enhancing communications about repair delays, at 40% versus 35% globally. Likewise, 35% of insurers in the UK have moved to collaborate with tech providers to improve real-time tracking versus just 23% globally.
“The greater adoption rate of these methods among UK insurers could potentially give the market players a slight edge in overcoming hindrances posed by supply chains,” said Gordon Vater (pictured left), managing director of Gallagher Bassett Technical at Gallagher Bassett in the United Kingdom.
Vater sees the global impact that supply chain snarls have on claims processing in the UK as motivating local insurers to explore innovative solutions more readily.
The pro-active stance of UK insurers may partly stem from the unprecedented period of difficulty during the pandemic. The more urgent levels of interest in strategies to cope with supply chain disruptions are perhaps due to the outsize impact that supply chain snarls can have on smooth claims management in this part of the world.
“Particularly across the UK insurance space, we are seeing more interest in these top two strategies: technology solutions (68%) and establishing cost-saving measures (55%) – [this is] notably higher than the global average,” said Vater.
The greater emphasis on instituting cost-effective measures and integrating technological solutions indicates a balanced regional approach to technology investments.
But there are still areas where UK insurers are behind the curve. Fewer UK respondents have made efforts to diversify their supplier base than global peers, for example.
“Insurers could differentiate themselves by re-prioritising this strategy,” said Vater.
“Collaborating with a proven claims and risk management partner recognised for its effective technology investments to expedite claims processing is beneficial. Additionally, entering a partnership could offer insurers the best digital infrastructure in the market, delivering actionable insights for an enhanced overall experience.”
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 world – the closure of Baltimore Port in the US is a stark reminder of the fragility of the system.
“Insurers must be adequately prepared to tackle the challenges that lie ahead. The global economic environment remains uncertain, and the continued threat of catastrophic events will present hurdles,” said Mark Garnham (pictured right), director of property and motor fulfilment for Gallagher Bassett Technical.
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.
“As the insurance sector continues to grow and transform, resilience, agility, and a forward-thinking mindset will be the keys to success in the coming year and beyond. The ability to adapt swiftly, anticipate market trends, and enhance digital capabilities will be more crucial than ever for carriers to position themselves as industry leaders in the years ahead,” said Garnham.
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 a high 74% of respondents in the UK are observing litigated claims settling at either faster or increased costs.
“Several factors could contribute to the rise in this sentiment, including the increased regulatory scrutiny, evolving legal landscapes that have prompted insurers to prioritise swift resolutions, and growing litigation costs,” said Vater.
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.
As insurers grapple with the challenges of managing litigated claims, they are turning to expert claims and risk management providers to assist with best practices in controlling costs within claims operations.
“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.”
A seamless partnership is key.
“[Our] dedicated cross-functional team focuses entirely on insurers’ unique goals and objectives, Lloyd’s of London syndicates, managing general agents, and alternative risk managers. We strive to build an integrated claims management programme that is aligned and tailored to each client’s specific business goals and internal operations.”
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 Garnham.
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. Strategies that leverage external expertise, data-driven insights, and generative AI, among others, can help carriers stay ahead of issues and gain advantages in overcoming complex supply chain issues.
“Overall, 2024 presents both opportunities and challenges for insurance carriers. By staying proactive and adaptable, carriers can navigate these changes and position themselves for success in the evolving industry,” said Vater.
Gallagher Bassett (GB) is the United Kingdom’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.
