The insurance industry is dynamic in nature and is characterized by rapid technological advancements, increasing customer expectations, and disruptive newcomers redefining the marketplace. All these factors force companies in this industry to focus on addressing challenges, growing top-line sales, bottom-line profitability, and competing in the immensely competitive landscape. Insurance companies have a lot on their plates and the industry is experiencing a rapid evolution. In this article, we have offered insights into insurance industry overview and insurance industry trends that are affecting market growth.
Claims processing companies have come a long way. The increasing innovation in operating models and strategies by top companies has spiked up the competition in the claims processing industry. Claims processing is all about an insurer fulfilling their obligation to receive, investigate, and act on a claim which has been filed by an insured. The operations involved in claims processing are heavily scrutinized to avoid fraud and unlawful claims. Recently, there has been a sudden growth in the adoption of automation that provides end-to-end solutions for insurance claims and reduces the occurrence of errors. Moreover, advanced technologies like IoT and wearable technology are finding their way into the claim processing industry. With the help of these technologies, companies can now get real-time insights into the potential risks. It doesn’t stop there, with capabilities such as predictive analytics, rule-based engines, link analysis, and social network behavior analysis, claims processing companies are more empowered now than ever before. (Source: Global Claims Processing Supply Market Intelligence) These advancements are highly sophisticated in terms of fraud detection and improving the efficiency of operations. In this blog, we reveal some of the top claims processing companies in the world:
Kohlberg Kravis Roberts
Kohlberg Kravis Roberts is a global investment company that manages multiple alternative asset classes, which includes private equity, energy, infrastructure, real estate, credit, and hedge funds. The company is focused on generating attractive investment returns by employing a high-quality workforce and pursuing the highest standards of excellence. It was founded by Henry Kravis, George R. Roberts, and Jerome Kohlberg Jr. in the year 1976, and is headquartered in New York.
The Crawford System of Claims Solutions offers comprehensive, business process outsourcing, integrated claims services, and consulting services worldwide. The company was founded in the year 1941 and is headquartered in the United States. It employs over 9000 employees and is operational in more than 70 countries worldwide.
York Risk Services
York Risk Services is a global provider of claims and risk management services. The company offers claims management services for categories such as automobile liability, general liability, property, workers’ compensation, product liability, inland, ocean marine, and professional liability insurance. Their customers include public entity clients, such as states, municipalities and counties, school districts, utilities, parks, risk pools and state colleges and universities. York Risk Services was founded in 1962 and is headquartered in New Jersey with additional offices worldwide.
Gallagher Bassett Services
It is one of the premier claims processing providers in the world. The company is dedicated to delivering the products and services that equip people, businesses, and organizations to make the most of their futures. It was founded in the year 1962. They currently have a workforce of approximately 10,000 employees.
Founded in 1853 in Hartford, CT, the company is committed to providing employers, individuals, and others with innovative products and services. Aetna, an American healthcare company primarily deals in consumer-directed and traditional healthcare insurance plans and associated services. These include pharmaceutical, dental, medical, long-term care, behavioral health, and disability plans.
The procurement market intelligence reports from SpendEdge offer a comprehensive cost and supply market analysis. This procurement report also offers insights into the major claims processing providers and sheds light on the major cost and volume drivers and procurement best practices to save costs.
Overview of the Insurance Industry
The insurance industry plays a pivotal role in the functioning of the economy, owing to the amount of premium it collects, the scale of investments, and the economic role it plays in covering potential risks. Amid tightening regulations and low investment yields, renowned companies in the insurance industry are planning to redefine their business models to achieve sustainable growth and enhance their profit margins. The firms operating in the insurance industry are further planning to tackle the mounting pressures by focusing on developing new products, sales channels, and coverage areas. The growth of the insurance industry can be attributed to factors such as rising standards of living and increasing insurance coverage needs.
Although the insurance industry is witnessing promising growth, several factors may hinder the growth of the industry. They include:
- Disruptive technology: With the relentless growth in innovations, new technologies are disrupting the traditional broker model. It is estimated that smaller companies are more vulnerable to technology disruption and responding to the emerging changes effectively. Moreover, insurance companies are facing the need to include foundational shifts in their operating models and underlying architecture to ensure flexibility and agility in their process.
- Aging workforce: The average retirement age of the employees has increased; therefore, it becomes a challenge for the companies a large group of employees retires at once. To keep pace with the growing demand, insurance companies should increase their investment in talent acquisition to ensure stability in leadership, production, and client servicing.
- Regulations: Prominent companies in the insurance industry are facing the need to operate in the fluctuating regulatory jurisdictions and comply with these changing rules. Consequently, organizations are facing the need to improve their capital requirement and transparency of their existing process while keeping in line with the compliance requirements.
While companies in the insurance industry are working towards the attainment of their goals, it becomes necessary for the insurance companies to keep track of their resources to stay relevant and updated with the technologies. To understand the growth prospects and stay on par with the changing consumer behavior, insurance companies need to keep track of their expenses through a robust spend analysis solution.
The Business Challenge and the Journey
A prominent insurance company wanted to counter the challenge of inefficient management and gain better visibility into the business spend. The insurance company also wanted to manage their organizational spend and identify critical saving opportunities. With the help of spend analysis, the insurance firm wanted to gain accurate, consistent, and detailed visibility and identify the savings opportunities to accelerate decision making. The primary concern of the insurance company was to identify the potential bottlenecks in terms of savings leak and purchasing overlaps.
To achieve sustainability in the solution offered, the procurement experts at SpendEdge carried out interviews and discussions with prominent stakeholders in the insurance industry. Furthermore, to identify insightful ways to analyze business behavior for the insurance company, the experts further compiled information from sources such as trade shows, company presentations, and industry forums in the insurance industry.
SpendEdge’s spend analysis solution helped the insurance company understand the current industry trends and find sourcing opportunities in the market. The insurance company was able to understand the current state of spend and devise a short-term and medium-term strategy to improve savings. In addition, the spend analysis solution also helped the insurance company improve the process efficiency and enhance their overall business performance.
Fundamental questions answered in this spend analysis for the insurance company include:
The spend analysis solution offered by SpendEdge assisted the insurance company to understand the latest industry trends and offer complete visibility into the spend. The spend analysis solution also offered insightful ways to the insurance company to access, organize, and analyze spend data and ensure that the contract practices are on par with the industry standards.
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Overview of the Insurance Industry
The insurance industry plays a pivotal role in the sustenance of the global economy by covering personal and business risk. Amid the variations in the growth rate, the insurance industry witnessed a considerable growth in the insurance premiums by an increase of 3.8% in 2015. Markets in Asia, North America, and Western Europe has been some of the major contributors towards this growth. Also, insurers are taking effective measures to re-orientate their offerings to rebalance their product portfolios and enhance their business offerings. Although the insurance industry is witnessing a promising growth owing to the increasing rates and reducing regulatory hurdles, several factors may challenge the growth of this market in the coming years. These include:
Relative advances in technology: New technologies may disrupt the traditional model of insurance. With rapid changes in innovations, insurers are under pressure to revise their internal operations and business strategies to stay relevant inspite of the competitors.
High penetration of cyber risks: One of the biggest challenges for the insurers is to assess the impact of threats on the company. As cybersecurity breaches can remain undetected for a considerable time frame, it will further affect the customers and other stakeholders. The growing concerns on the concentrations of cyber risk and further, the ability to offer real protection to the clients will affect the growth of the industry over the years.
Aging workforce: The average age of the workforce has increased, and organizations are witnessing a large number of retirees within a stipulated time. To counter this, prominent organizations are facing immense pressure to invest in talent and further manage age concentrations to ensure stability and maintain balanced production.
The Business Challenge and Journey
The client, a leading insurance company, wanted to draft a cost-model analysis model to identify the cost elements for the services rendered. The client also wanted to assess the impact of each cost driver on the overall cost of the services. Moreover, with the help of cost model analysis solution, the client wanted to point out the gaps that need to bridged to increase the uptake of costs. The primary concern for the client was to compare the costs of the services and efficiently utilize their resources to meet the needs of the target audiences. The cost model analysis should also focus on the comparison of models to improve the competitive position of businesses.
To help the client evaluate the potential costs and revenues, the cost model analysis experts at SpendEdge carried out an extensive research methodology comprising interviews and discussions with prominent stakeholders in the insurance industry. To gain a comprehensive edge on the costs, SpendEdge’s cost model analysis experts also compiled information across a wide array of secondary information including company presentations and industry forums in the insurance industry.
SpendEdge’s cost model analysis helped the company in the insurance industry effectively assess the impact of each cost driver on the overall cost. The client was able to collect data based on pricing through quantitative cost modeling and scenario-based cost modeling. The client was further able to recommend on the lowest cost mix and reduce insurance operation costs to the minimum.
Key questions answered in this spend analysis engagement include:
The cost model analysis offered by SpendEdge helped the client gain a comprehensive image of the cost developments in the insurance industry. The client was able to consistently reduce costs over time and enhance their operational efficiency. Moreover, the engagement also had a significant impact on the policy issuance, administration, and claims in the insurance industry.