Headwinds: facing into unprecedented challenges in Motor and Property Insurance Claims in Australia.
Get ready for an exclusive 4-part series on claims management insights.
Over the next few weeks, I’ll be sharing valuable industry knowledge and addressing the key challenges faced by insurers in claims management. But that’s not all – I had the pleasure of interviewing John Simpson, who is a renowned and innovative claims expert who has been a long-term associate at The Bridge International in Australia.
In this enlightening series, we’ll deep dive into four crucial themes that are reshaping the landscape of claims management:
1. Unprecedented Times: this week we’ll explore the current challenges that insurers are encountering head-on.
2. Claims Operations: buckle up for a holistic view of the entire claims lifecycle. We’ll dissect the process, uncovering hidden insights that can help you evolve your operations.
3. Supply Chain: rising costs and the hurdles faced by repairers have never been more apparent. We’ll dissect the current implications and identify strategies to mitigate these challenges.
4. The Future: get ready for a glimpse into the future of claims management. Technology’s pivotal role, including AI and automation, will take centre stage. We’ll unlock the potential for evolving your claims operations.
Unprecedented Industry Pressures: The Australian insurance industry is grappling with unparalleled challenges due to increasing event frequency and severity, a tightening reinsurance market, profitability struggles, escalating regulatory oversight, rapid technological advancements, and shifting consumer expectations. These trends are significantly impacting claims costs, operational capacity, margins, and talent acquisition efforts, thereby placing considerable strain on insurers.
1. Increasing Stress on Claims Managers & Teams: In the aftermath of the COVID pandemic, the current market conditions are creating a 'perfect storm' for insurance claims managers and teams. This phase is perceived as the most demanding and stressful in many insurance professionals' careers.
2. Multiple Challenges in Motor Insurance: Motor Insurance is facing immense pressure from numerous fronts such as inflation, longer repair cycle times, increased leakage, talent scarcity, and strains on repair and assessment models. Specific issues include capacity constraints for vehicle repairs, labour shortages, parts scarcity, increased technology, and compliance requirements, contributing to rising costs and friction.
3. Implications for Insurers & Customers: The overall inflation of claims costs will inevitably impact customers. Prior to the pandemic, the typical cycle time for a standard motor claim ranged between 3-5 days. However, due to current constraints, these times have significantly lengthened, resulting in an upsurge in claims costs that will ultimately need to be absorbed by customers.
4. Claims Costs & Compliance: The increased costs associated with parts and repair inflation in motor insurance, coupled with supply chain capacity and performance issues, are influencing overall claims costs. Additionally, regulatory oversight and intervention, new regulatory requirements such as GICOP and CHaaFS, are adding to the compliance pressures for insurers.
5. Changing Customer Expectations: Customers' service expectations are evolving, with a greater preference for self-service and specific settlement expectations. These changes require insurers to adapt their customer service models accordingly.
6. Workforce Challenges: A shortage of skilled labour and challenges in staff retention are contributing to the overall stress in the industry.
7. Property Claim Costs: The impact of building inflation and shortage of materials is causing a backlog in claims, extending settlement durations, and escalating claim sizes. Market uncertainty is also impacting internal valuations.
The insurance industry stands at the precipice of transformation, poised to revolutionise claims operations. By embracing innovation, leveraging technology, and reimagining traditional processes, we can provide unparalleled customer experiences.
Don’t miss out on this opportunity to gain a competitive edge in the dynamic world of insurance claims. Let’s embark on this journey together and create a future where claims operations become a seamless, customer-centric experience.
At The Bridge International we have benchmarked claims performance across the industry – if you want to know how your operation is performing and get insights into what can be done to improve your business, contact us to find out more: firstname.lastname@example.org