The Cost of Claims
In the property and casualty arena alone, auto insurers paid 67.4 cents of every premium
dollar for claims according to a report by the Consumer Federation of America (CFA)
and the Center for Economic Justice (CEJ). The remaining $32.6 cents (plus investment
income from holding the policyholder's money) covered insurer expenses and profit.
Many of the statistics for Workers' Compensation claims are still distorted by the COVID-19
pandemic as more employees work remotely. In 2020 the average workers' compensation
claim was $41,353 and today most insurers and risk managers are experiencing an increase in
the severity of workers compensation insurance.
Increasing Claims Expenses
The recent surge in economic inflation has a dramatic impact on claim costs. U.S. consumer
prices rose to 9.1 percent in 2022, the largest increase in over 40 years. This was largely the
result of rapid increases in demand for goods, materials and labor – at a time when supply-
chain issues continued unabated. Insurer loss costs are expected to rise as well as the market
suffers from price hikes in construction materials, rental vehicles, and auto parts (among
others).
Rising Customer Expectations
Customer expectations are changing, and this is particular true for the claims process. When
it comes to meeting customer expectations, risk managers and claims leaders need to
consider these criteria – ease of use, speed and self-service.
Ease of use – Claimants want an intuitive user interface enabling them to submit their
claims through their preferred channel – mobile device, call center, agent, laptop, etc.
Speed – Claimants want a quick and speedy resolution to their claim.
Self-service – Claimants want self-service capabilities to track the status of their claim
online, obtain additional information and receive regular updates as the claim progresses.
MODERNIZING CLAIMS MANAGEMENT | 3
