4 Ways Claims Professionals Must Adapt to the Digital Insurance Revolution

By: Martin Frappolli | September 23, 2019

Martin J. Frappolli, CPCU, FIDM, AIC, is Senior Director of Knowledge Resources at The Institutes, and editor of the organization's new “Managing Cyber Risk” textbook. He can be reached at [email protected].

The digital revolution underway in the insurance industry is affecting nearly every facet of insurance, and claims handling and management is no exception.

Telematics devices that transmit billions of pieces of data about driver behavior and their likelihood for an accident are gaining popularity at major car insurers. Drones are taking pictures and assessing damages to homes and businesses after major weather events.

Sensors at residences and commercial factories can detect when equipment breaks down and immediately alert insurance companies.

They are also able to assess damages and help claims adjusters get to the root cause of an accident more efficiently, quickly and safely.

Blockchain technology is also changing how insurers are notified of losses and how policyholders provide proof of insurance.

Nationwide is already leveraging a new blockchain-based tool developed by The Institutes RiskStream Collaborative that establishes proof of insurance instantaneously and with remarkable accuracy.

Technology is even changing the way companies interact with customers. Policyholders are demanding a higher level of digital service in the form of 24/7 access to their policy information and their claims manager, including the ability to make adjustments to their claims from anywhere via a mobile app.

Insurance company customer service call centers are even utilizing artificial intelligence-powered voice recognition software to answer customer questions when no one is around to pick up the phone.

While these revolutionary capabilities will change the way insurance claims managers and professionals perform their job functions, it’s not uncommon that some industry veteran’s first reaction is to recoil in horror.

Ultimately, new technology can bring efficiency to the core transactions in your claims work, if you are ready for it. Here are four ways claims professionals must adapt to stay ahead of the insurance digital revolution and use it to their advantage:

1) Become Familiar with Data

While advancements in data collection and management in insurance won’t require most claims managers to become data scientists, some familiarity with data sets and probabilities will serve your professionals well. As predictive analytics become more advanced and accurate, claims professionals will be expected to harness this information in their assessments.

There are countless online resources that can teach basics of navigating and maintaining spreadsheets, a skill that will put you ahead of the game as data continues to become a larger part of the claims management process.

2) Expand Analytical & Investigational Skills

Sensors at warehouses, factories and households are monitoring equipment and sending information to insurance companies that can be useful in determining the cause of an accident or breakdown.

As the sheer volume of data continues to grow, claims professionals will be asked to analyze data sets to determine the cause of an accident and whether or not the carrier is liable.

They may also be asked to review drone footage of damaged homes and property after natural disasters. Determining the relevancy and accuracy of this information, and understanding how it fits into the claims management process will require a new analytical and investigational skill-set.

3) Make Yourself Available 24/7

Like doctors, police and first responders, claims managers must always be ready when the call comes — trouble doesn’t just happen between nine and five.

Technological advancements have cut expected response times to the shortest they’ve ever been. Claims professionals also do not spend much time at their desks and are asked to go where they’re needed, whenever they’re needed.

With the rise of mobile apps, policyholders can file claims, ask questions and make changes to their claims at any time. Claims managers must be sure to keep chargers and spare batteries handy, and keep all technology, including hot spots and laptops, charged and ready to use to ensure that they can respond at a moment’s notice.

4) Service with a Smile

Now that technology has become ubiquitous in the insurance industry, claims professionals face an opportunity to differentiate themselves by adding a truly personal and humanized touch to their customer service.

When disaster strikes, policyholders want to know there’s a human being behind the technology, especially when they’re trying to cope in a time of crisis. There is still no substitute for talking to a human during emotional and stressful times.

To be truly successful in claims handling for decades to come, professionals will need to blend the best of both technology and a human touch to reach their full potential.

Claims managers must remember the training and experience that has made them successful so far, especially when it comes to customer service.

A Focus on Fundamentals

An insurance claims professional’s primary goals are to look out for the carrier’s financial interests, while honoring the promises made to insureds in their policies.

Balancing these often-conflicting goals requires the deft touch and experience only a human being can provide. Especially when training new employees, diving into data analytics and evaluating drone footage is like learning to run before you can crawl.

Knowing the policy inside and out, responding quickly and empathetically, and working with the carrier to provide the best possible outcome must always remain the care focus of the job.

While building your technical skill set to use new technologies to your advantage, don’t leave the fundamentals behind as the digital revolution continues to unfold. &

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.