Targeted Runoff Claims Strategies for U.S. To Become More Like U.K.

Targeted Runoff Claims Strategies
Another segment  is the runoff claims market. Since the 1970s, long-tail liabilities such as asbestos, environmental and pollution claims have been placed in the London market for runoff. Continental Europe also has a well developed runoff market, though typically runoff claims have been handled there as part of normal business processes, an approach that might be changing, according to a March 2009 PricewaterhouseCoopers survey of discontinued insurance business in Europe. In the British market, a number of specialized firms that offer services for runoffs-venture capitalists, consulting companies and loss adjusters among them-have emerged.

In contrast,  the U.S. runoff market has been synonymous with large-carrier insolvencies, liquidations or complete market withdrawals, and runoffs are often managed in-house. However, given the upheaval in the U.S. insurance industry and economy in general, the runoff market appears to be changing. Though government bailouts may prevent full-scale business shutdowns, to remain viable in the post-recession world, U.S. insurers will need to ruthlessly evaluate their lines of business and consider slashing all that are unprofitable in order to protect capital and surplus.

This is no  different from insurers deciding to withdraw from the Florida homeowners market in response to profit-draining risk in the coastal U.S. But faced with reduced investment income and a generally soft market, carriers are beginning to voluntarily withdraw from certain lines of business in local geographic areas.

With that  development, the U.S. runoff market will become more like the British market. Greater activity and the rise of specialists or specialty practices within larger firms will cater to the needs of runoff business: efficient file and data takeover, files review to identify potential issues such as under-reserving, assertive but fair claims handling to resolve exposures, and more frequent or more scrutinized reporting to insurers.

Greater Use of Field Technology
Not surprising  in a day when cost control is paramount, work automation and process efficiency are major issues in the industry. New technology that can optimize adjuster scheduling, capture information, and streamline claim operations has been introduced in the London market and is being implemented more often in the States.

Handheld mobile  applications can support field visits by capturing data, documenting instructions and producing estimates. Applications that include the diaries, skills and workloads of adjusters and that estimate travel times between appointments can improve the claims handling process. Software apps for handheld technology also allow clients to directly book adjusters during the first notification of loss, further facilitating the claims process. (workersxzcompxzkit)

Where’s It All Going?
Insurance carriers  are looking for strategic solutions to improve operational efficiency, data transparency and cost-effectiveness. Business-process outsourcing, specialization, and runoff strategies that use technology will go a long way towards helping them, but those and other strategies aren’t enough. Insurers say they also need partners with proven abilities to help them create more efficient organizations. Globalization of the industry and economy will increasingly demand a global approach to solutions.

Jeffrey T. Bowman is president and CEO of Crawford & Company, the world’s largest independent provider of claims management solutions with more than $1 billion in revenues and 9,000 employees based in 63 countries. He can be reached at info@us.crawco.com
Workers’ Comp Kit® Blog  thanks Mr. Bowman for his article, “Looking from the Outside In:  Global Trends Are Coming To The U.S. Insurance Market.”

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