U.S. P&C insurers at a turning point with claims management systems

U.S. property and casualty insurers surveyed by Accenture are expected to spend US$17.5 million, on average, over the next three years to upgrade and modernize their claims functions.

New York City-based Accenture’s 2012 North American Claims Investment Survey is based on phone interviews with 50 C-level claims executives in March and April 2012. Each respondent asked how much his or her organization plans to invest in its claims functions over the next three years.

About one in four (26%) said more than $25 million, 10% said $10 million to $25 million, 10% predicted $5 million to 10 million, 24% said between $1 million and $5 million, 6% between $500,000 and $1 million, 12% below $500,000 and 12% had no investments planned. All figure are in U.S. dollars.

In addition to management consulting, Accenture provides computer systems integration and services.

“When it comes to claims management systems, U.S. property and casualty insurers are at a turning point,” wrote Michael Costonis, executive director of Accenture’s Insurance practice, on a blog post Thursday. “Many insurers realize the need for modern and flexible systems-yet just as many (if not more) are saddled with outdated legacy systems that hinder business performance.”

In its survey, claims executives were asked which data they “most commonly use in the claims process” and which data they would like to use.

Four in five said they use offline data, such as Excel spreadsheets and Access databases, while 4% said they would like to use such data. Nearly three in four (74%) said they use structured data while 62% use unstructured data, such as voice, text, pictures and video. Nearly one in eight (12%) said they would like to use unstructured data while 8% would like to use structured data.

Usage rates dropped when Accenture asked respondents about their use of social media, predictive modelling and location-based data.

About a third (34%) of respondents said they would like to use predictive modelling tools (such as software from SAS Institute Inc. or SAP AG’s Business Objects tools) while 32% said they would like to. (Accenture is a SAP systems integrator).

One in five respondents said they would like their claims systems to use data from social media services, such as Twitter, Facebook and LinkedIn, while 40% reported they already do.  One in five said they would like to use location-based data from telemetry and GPS, while 34% said they already do.

“P&C insurers should be thinking about data collection and management as the foundation for advanced analytics,” Accenture concluded. “Analytics opens up a world of possibilities in claims, but only for those insurers able to collect and organize the vast quantities of data coming in from new sources such as social media, telemetry and GPS.”

Accenture also asked the claims executives to what extent their systems were was “modern and flexible enough” to allow changes in systems behaviour and business processes without the intervention of the IT department. Four in 10 respondents said “not at all.”

They were also asked to what extent their claims management system could integrate with other internal and external systems, such as a new policy system or third-party services.

Of those whose systems were less than three years old, 73% said to a great extent, 18% said to some extent and 9% said not at all. Of those whose claims systems were three to five years old, all said they could integrate with other systems (56% said to a great extent and 44% said to some extent). Of those whose claims systems were more than five years old, 22% said they could not integrate with other systems, 70% said they could to some extent and 8% said they could to a great extent.

Of the individuals surveyed, 18 were head of claims, 21 were vice president or equivalent of claims and six were the claims supervisor or equivalent.