Several factors are driving increased investment in claims management and expert services in the insurance industry, particularly within the property and casualty segment.
Harris Williams, a global investment bank, highlights in its report that businesses providing technical consulting, forensic services, and specialty engineering are seeing higher demand as insurers seek efficient solutions to handle a growing volume of complex claims and disputes.
Senior professionals at Harris Williams' business services group identified key trends shaping the sector, including rising claims volumes, the growing complexity of claims, and evolving M&A strategies. These dynamics are contributing to sustained demand for outsourced insurance services.
The volume and value of insurance claims continue to increase, underpinned by aging infrastructure, ongoing construction, and more frequent severe weather events. These factors are driving the long-term need for claims management and related services.
Harris Williams noted that the rising number of claims is challenging insurers' capacity to manage them effectively, especially as the claims environment becomes more litigious and complex. This is leading to greater reliance on third-party expertise in areas like forensic consulting, expert adjusting, and specialty engineering.
Outsourced providers offer the necessary experience and technical skills to manage costs and streamline processes. Maintaining these capabilities internally across regions can be costly, making outsourcing an attractive option.
According to Derek Lewis (pictured above), a managing director, insurance services such as forensic consulting are appealing to investors due to their steady demand and strong customer relationships.
“We're seeing growing investor interest in top companies in the sector with plenty of M&A opportunity remaining,” Lewis said.
Harris Williams said that leading service providers share several characteristics, including geographic diversity. A broad geographic footprint enables companies to serve national clients while ensuring they have the necessary resources on the ground where incidents occur.
In addition to geographic reach, service providers must have in-depth local expertise. Insurance claims often involve community-specific nuances, such as building codes and construction practices, that require specialized knowledge. This is particularly important for complex claims that necessitate on-site assessments of property damage.
Bryce Walker, a managing director, said that insurers are seeking providers who can offer specialized expertise and help avoid costly litigation.
“Those companies with deep experience in a variety of claims, buildings, projects, and insurer needs will continue to grow and take share,” Walker said.
As claims activity rises and disputes become more complicated, the reliance on third-party services is expected to grow. Harris Williams views the claims management sector as stable, resilient, and positioned for growth, with favorable industry dynamics supporting this trend.
The highly fragmented landscape of specialized providers presents opportunities for investors to build large, multi-service platforms. Pete Morgan, a director at Harris Williams, said that companies offering a range of services and broad geographic coverage are increasingly valuable to insurers.
“Leaders in the sector are providing more value for insurers as favorable industry dynamics continue to bolster demand for claims-related services,” Morgan said.
These trends, according to Harris Williams, are expected to continue driving investment in the sector as insurers seek to optimize claims processes and reduce risk.
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