Always wise to study ACORD research. In this case identifying the profiles of "intelligent" insurers that form the top quartile of performers and escape combined ratios of 100 or more.
"From a strategic standpoint, the intelligent growers have an explicit strategic intent, the essence of which is resource allocation. “If your strategy is to have a really differentiated product or really understand consumers and deliver a superior experience or do all of it, are you allocating resources to get it done? They did.”
Insurance Journal Nov 24 2019 on the ACORD report
ACORD identifies the most successful as combining four interlinking strategies:
- Competing on price
- Creating customer intimacy
- Product Leadership
This links to the views of Paul Stanley CEO of 360Globalnet.
After a major strategic review with a large global insurer he summarised its challenges in transforming claims as typical of many incumbents:-
"Being limited by legacy and complex core systems to a piecemeal approach to strategy rather than an overarching strategy"
Even modern claims platforms constrain insurers from applying joined-up thinking. Why? - cost, time required to change and customise claims journeys,and inflexibility to concurrently tackle:
o Improving service
o Reducing OPEX
o Controlling claims cost
o Combating fraud
o Reducing the IT overhead permanently
o Delivering a back-to-back digital transformation
Time for overarching strategies that cover all aspects of claims operations and a claims management platform that delivers transformation for all categories of insurance, all perils and is "No Code" to allow the business to innovate, delight customers, collapse costs, motivate staff and continuously improve across the whole business.
Looking at improving the combined ratio to the goal ACORD sets-
Can you deliver these benefits today?
• NPS of 77% to 86% and rising
• 40% reduction in claims lifecycle
• Up to 70% in FTE call centre staffing over time
• Up to 45% reduction in OPEX
• 75% reduction in IT spend
• Net 30% withdrawal of claims by home claimants
• 25% improved anti-fraud results
• £2,500 ($3,200) saving per DRR claim
Time to look at 360Globalnet's solution and benchmark against other options
Especially as competition comes not only from other carriers. See "The future of insurance is happening without insurance firms" from The Economist and the words of AXA Chief Exec Thomas Burbellwho clearly sees the big tech giants Amazon, Facebook, Google, Apple as the competitive threat rather than Lemonade and other "disruptive" insurtechs.
Time for an overarching strategy answering why for all plans.
The worst performers had a 103.9 combined ratio. Pieroni discovered that the worst performers, or waners, actually spent more money than the average on underwriting but ended up with worse results. “It begins to indicate that intelligent growers had superior underwriting capabilities, not in terms of economics, but in terms of understanding the risk and then managing loss costs,” Pieroni said.