The insurance industry faced a paradigm shift last year, in transitioning to the ‘new norm’ of a blend of office and remote working. That direction of travel will continue as we go into 2022, with the omicron variant threatening to disrupt and accelerate the situation further.
The drivers for this industry-wide transformation were set back in early 2020, and any further shift is likely to be part of that continuum; aided by now tried and tested, enabling technology. The omicron variant will, of itself, not be a game-changer.
The global marketplace has seen a shift in the distribution of GWP, due to diminished exposures, more selective underwriting, the continuation of the introduction of more rigid terms and conditions, greater retentions (advancing the cause of both group and single parent captives) and more prescriptive wording.
The market now has a better understanding of their pandemic-related, contingent business interruption exposures. Consequently, insureds will also see higher deductibles, contracting coverage, and a greater onus on corporates to demonstrate effective risk management and loss mitigation.
The levers taken by insured corporates to make their businesses and supply chains more resilient will also receive greater scrutiny. As expert loss adjusters, with deep expertise, we can help with scenario planning, in order to understand and test how a policy will respond ahead of a future pandemic or other disruptive events.
Evolving market dynamics will likely impact conventions within the claims process, with insurers placing a greater burden of proof on claimant’s post-loss, amid concerns that financial hardship will spark an increase in fraudulent and exaggerated claims.
The disruption created by the pandemic will continue into next year, albeit at a steadier pace. The corporates (that Crawford partners with) have largely responded very well to the challenges they face, and have built in greater resilience, although the industry sectors worst affected by the pandemic – particularly leisure, hospitality, travel – are likely to experience further, meaningful disruption.
Digital transformation in underwriting, placement and claims processes is predicted to accelerate over the next 12 months, driven by customer demand. Corporates (and personal lines insureds) expect a progressive shift in the way we connect with them. Solutions need to be devised and executed more quickly so we must predict and act on our customers’ dynamic expectations. There will be “winners and losers” in this consumer-driven paradigm. Customers will quickly look elsewhere for alternatives if the outcomes and experience they are seeking are not realised.
At Crawford, an essential focus has been the execution of acceleration and advancement of our digital solutions (both at the desk and in the field) that simplify existing processes and provide better customers outcomes. We are aligned to the vision statements of our key clients who are truly becoming more customer-led businesses.
Insurer clients continue to research and invest in AI, automation and enabling data to understand and define what claims settlement processes can be further simplified and speeded up. They are empowering their claims handlers as a consequence to meet and often exceed their customer expectations. At the same time, they are also seeking to simplify their business operations to make better use of resources, predicated on digital solutions with embedded analytics and customised data services.
Proven digital platform-based models, as exemplified by Amazon and eBay, allows suppliers and buyers to transact with frictionless efficiency. At Crawford we are evolving our own digital-enabled platform that will streamline multi-stage claims processes from loss notification, via best outcome triage, into inspection, loss quantum and coverage evaluation (both from the desk and in the field) and restoration, thus bringing multiple service providers and capabilities into a single, market environment – we call this Crawford Digital Desk.
The market now expects more reliable and impactful data in support of clients' underwriting and claims management. Insights drawn from shared data enable better risk management and provides customers and their brokers with benchmark data, enabling them to select appropriate programme structures. A key Crawford goal is to be able to deliver a “best of class” benchmarking data service, based on deep analysis of the claims we handle.
Above all else our most crucial and valued asset remains our people, who consistently deliver solutions that are both expert and empathetically based. Our people are our key differentiator, offered in a global context.
However, reflecting both demographic challenges and “the war for talent” that we see in the marketplace we must have a ready state pipeline, with an ability to transition emerging talent into our more experienced, expert environment (Global Technical Services). To this end we have created academies and have successfully developed mentoring programmes – all within a diversity and inclusivity framework.
A challenge our insurer clients face is the need to meet a growing, regulatory requirement to understand the resilience, quality, and sustainability of vendor partners within their supply chain. In today's world of consumer power, there will be less tolerance of resource limitation and service degradation, even at times of surge demand. Our investment in digital solutions is all about ensuring we have the right tools and enablers in place, to enable our adjusting and claims handling community to be more consistent and to work smarter.
An observation from our pandemic experience is the changing dynamic in the relationship between brokers and carriers, particularly around coverage wordings (including conditions and endorsements) mainly emerging from the COVID-19 contingent business interruption coverage “debate”. The expertise of our adjusters means that we can play a value-add role in testing and understanding wordings particularly relevant to large corporate account programmes. The benefit is to ensure that when a claim does occur, the mindsets of an underwriter, broker, risk manager, and loss adjuster are understood and aligned.
In 2022, environmental, social and governance (ESG) issues will continue to gain importance. Crawford handles circa 1.6 million claims worldwide on an annual basis. With a sustainability focus, our insurer clients are starting to ask of themselves and us, as key partner, whether it is possible to understand the environmental impact of those claims. For example, when managing building claims, what is the carbon footprint of those in terms of the contractors we use; how do we measure and view sustainability?
In the social context, we anticipate the need to reconsider supply-chain risks in relation to forced labour (modern-day slavery), which are likely to impact lines such as D&O and marine cargo, as well as introducing enhanced corporate risk via shareholder activism and brand exposure. With potential penalties for non-compliance with anti-slavery legislation being stepped up, there will be greater regulatory weight and internal risk management attached to this risk. We see the claims management sector playing a more prominent role in addressing this emerging risk, through working with clients and their corporate insureds to better understand the resilience of their supply chains. Should the market come to view this as an insurable risk we are in a strong position to advise on how best to quantify loss, through impact modelling.
This article first appeared in Insurance Day.