Property/casualty insurers have made extensive investments in improving their claims systems and processes over the past decade, but capability levels still vary widely between companies with potential impacts to loss results, according to a new survey of more than 90 P&C insurers by research and advisory firm Novarica.
The report introduces the Novarica Claims Capabilities Maturity Model (NCCMM), which defines legacy, mainstream and leading practices across 20 different claims sub-processes, allows insurers to self-diagnose their maturity levels in each area in order to benchmark against industry norms and prioritize future investments.
“The claims process is not standardized across the industry—it varies by a number of factors, such as carrier size, industry sector, and technical capability,” said Karlyn Carnahan, a principal at Novarica and author of the report. “In addition, few insurers have Leading or Legacy capabilities across all 20 sub-processes – the average insurer in our study utilizes legacy capabilities in six areas, mainstream capabilities in nine areas, and leading capabilities in five areas, reflecting differing priorities and patterns of previous investment.”
The NCCMM gives insurers a framework to evaluate the maturity stage of their own claims capabilities, allowing them to benchmark themselves against their peers and to better assess possible future enhancements. The stages also demonstrate which processes are most highly associated with a better loss ratio.
“Correlating capability levels to loss ratio is an inexact science,” Carnahan said. “But it is clear within the sample that leading capabilities in workflow, document creation, use of software to support investigations, and multiple channels for FNOL are all associated with lower loss ratios—and significantly so in some cases.”
A free summary of the report is available online at http://www.novarica.com/claims_maturity_model/.
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