P&C Claims Overview 2020: A Pandemic, Riots, Hurricanes, Tornadoes, Wildfires...and A Looming Resourcing Crisis?
In many ways, 2020 felt like a constant catastrophe for the insurance industry, affecting every carrier. Going into 2021, the uncertainty around what types of claims firms will receive – and the volumes of those claims – continues to create a sense of unease within the industry. And on top of that, the way carriers are working has evolved as they strive to balance employee safety and productivity.
Plainly, the insecurities created by the events of 2020 will re-shape the way insurance carriers will operate in the future. In this article, we’ll take a look at what changes Property & Casualty (P&C) carriers saw in 2020, and what those mean for their workload and productivity.
Claims: fluctuating volumes and types
Both property and casualty claims have seen a significant fluctuation in volume, directly caused by the pandemic. Activity from natural disasters was high compared to recent years, but the most-felt impacts on the industry stemmed largely from retail businesses and personal lines consumers who have experienced financial hardship as a result of the pandemic. Let’s look at the different types of claim in turn:
Many carriers implemented a zero-inspection policy for property claims, partially to protect employees during the pandemic and partially so those employees could help with the growing volume of claims. Initially, having increased volumes of experienced staff working from home was seen as an asset – but in the end it actually presented an unexpected challenge. Employees who had been in the field dealing with complex claims now had to adjust to dealing with much lower-level claims that followed a routine, low-input workflow. This led to field adjusters overworking some areas of a claim and working slower than expected in others, with the result that carriers often didn’t achieve anticipated levels of productivity.
Although ‘normal’ casualty claim volumes actually reduced, the high volume of COVID-19 claims more than made up for it and created a massive spike needing immediate attention. Legal actions flying through the doors created major panic. Retaining the best outside counsel and re-engineering policies to control damage were the order of the day – as well as, of course, as finding the resources to cope with the enormous volume of claims in a timely manner.
Workers Compensation Claims
Due to layoffs and company closures, workers compensation claims saw a reduction of over twenty percent in some states. That reduced influx of claims left some firms looking for ways to occupy their employees. Some carriers moved towards a hybrid environment which enabled resources to be quickly reallocated to other areas. Some companies did nothing, with the result that under-utilized employees often voluntarily relocated to other departments or left for other carriers. Others responded to the low workload with redundancies.
Changing Ways of Working: Navigating the Office Shutdown
2020 was a wakeup call for organizations whose business continuity plans (BCP) had spent years gathering dust on a shelf in the compliance department. During the pandemic, many organizations sought to quickly adapt to the changing environment by implementing – or rewriting and then implementing – their BCP to keep the wheels of the organization turning. Some struggled to provide employees with access to systems and technology to facilitate home working, while others battled to keep their offices open.
WFM actually opened the door to a new world of opportunity for reduced workforce expense – but came with the challenge of how to effectively manage employees, both from a productivity and a wellbeing perspective. Companies continue to struggle to get a transparent view of how their employees are performing in their roles. A variety of solutions have been trialed, implemented and discarded. Some managers looked at reports in timekeeping, claim volumes, underwriting, phone calls, and other internal systems. Some only had the red, green, and yellow status indicators on instant messaging apps to guide them as to how effective their teams were being.
As a focus on productivity has intensified, many firms have realized that there is a direct connection between employee wellbeing and productivity. In short, happy employees work better than unhappy ones. But many carriers are finding, like organizations in every sector, that home working is blurring the line between work and personal life for employees; moreover, many people are missing the social networks that an office brings.
Time to Move From Reactive to Proactive Management
Insurance carriers still operating in 2021 have plainly managed to keep their business moving throughout the challenges of 2020. However, as what was initially a disruption to the norm now becomes the norm, those firms need to ask whether their results are in line with projections and moving at the right pace.
The answer, for many, is no. Early optimism about the potential of home working to reduce distractions for employees, and so achieve maximum output, has given way to the reality that home working brings its own distractions. Longer and more frequent meetings, constant instant messages, and family distractions as children stay home from school are all a part of the new norm. And often, those meetings and messages are taking place in a whole host of different tools such as Teams, Skype, Zoom, or Slack, forcing employees to learn a wide array of new tools and manage their time in each system effectively.
On top of this, firms that haven’t found ways to support over-worked employees – or to keep under-utilized employees busy – have lost specialist knowledge that they will need as we emerge from the pandemic. Firms need to act quickly to retain their talent, and attract new talent to the organization if they are to thrive.
The question is this: how can insurance firms align their resources with the needs of the business, getting the best from their employees while ensuring their well-being and work-life balance are protected?
Carriers these days have more than enough metrics, measurements, and compliance-related data about their people and their productivity. The challenge is how to bring all that information together and to turn it into actionable insight into what your organization is doing – and to do so in real time, to ensure maximum agility. This field of management process automation is essential for achieving business results in the new world.
As we head to 2021, it feels inevitable that the insurance industry is going to rapidly increase its data analytics capabilities. Doing so will enable carriers to forecast, plan, control, and review work and resources in a more reliable and agile manner than they could achieve in 2020. Active Operations Management (AOM), paired with innovative technology, will lead companies to stay ahead of the competition by transforming the effectiveness of people within organizations.
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“Awais Farooq is the US Insurance Practice Lead at ActiveOps, responsible for helping industry leaders drive measurable results in their organizations through truly innovative technology and management process automation. Awais has over thirteen years of insurance industry experience, both operationally and including serving as a trusted leader at organizations including State Farm, Chubb and Berkshire Hathaway Guard Insurance Companies.
Awais holds a Master’s degree in Insurance Management from Boston University. He holds the designations of CPCU, AIC-M, AIC, and LPCS, and is an active member of the insurance community where he serves as a mentor to professionals in various areas. He is also a founder and an advisor to a local youth group. When not in front of his computer, he enjoys spending time with his children and exploring local coffee shops.”
Awais Farooq, Insurance Practice Lead, ActiveOps