Chief claim officers (CCOs) from U.S. property & casualty (P&C) insurance companies said loss cost containment and delivering superior customer service are their top claim operational goals, according to a new P&C Claim Officer Survey conducted by global professional services company Towers Watson (NYSE, NASDAQ: TW). Eighty-nine percent of the CCOs ranked loss cost containment as either their primary or secondary claim operational goal, followed by delivering superior customer service (71%).

Survey respondents also emphasized the importance of proactive claim handling. Eight in 10 (83%) of respondents said it is the most important driver in delivering effective loss containment, while the same percentage indicated proactive claim handling is also the primary factor in delivering superior first-party claimant customer service. Further, CCOs expressed that proactive claim handling is key for delivering superior allocated loss adjustment expense (ALAE) efficiency (69%), though they named effective litigation management (89%) as the top consideration for ALAE.

“Claim officers recognize the success of their organization comes down to people first and foremost — and that starts with the claim-handling staff,” said Frank Ramsay, Towers Watson’s North American claim management practice lead. “According to the survey’s findings, CCOs say their claim handlers have extensive technical expertise and experience, and generally are empowered by their supervisors to deliver superior claim results. However, claim organizations also have several competing priorities that take file time away from their claim handlers, which in turn detracts from their highest priority: managing the files they have been assigned.”

The survey identified the top barriers that claim handlers face to achieving superior claim outcomes on individual claims. Passive claim handling (77%) topped the list, followed by ineffective supervision (60%). In order to address the potentially damaging ramifications of passive claim handling, respondents emphasized the importance of empowering their claim-handling staff to settle most of their claim inventory within their own authority. The majority of CCOs (86%) said their claim handlers do not need additional permission to settle claims within their authority, and nearly three-quarters (74%) said most of a claim handler’s inventory falls within the handler’s settlement authority.

“Supervisors that empower their claim-handling staff to take charge of their claim inventories can really deliver value and reduce passive claim handling. As the survey results showed, passive claim handling is the top barrier to achieving superior claim outcomes on individual claims. Supervisors should actively work with claim handlers to address and eliminate the factors that enable passive claim handling, such as misplaced priorities and focus, overreliance on process and disengagement,” said Ramsay.

CCOs also revealed the primary challenges their claim handlers face in delivering superior claim outcomes. Respondents named insufficient understanding of leading indicators and metrics (46%), high levels of inventories and caseloads (43%), and lack of sufficient technical expertise (40%) as the primary challenges. “More investment is needed to ensure claim handlers have a better understanding of the metrics their companies deem important for managing cases and containing costs. Insurers should also make sure caseloads are reasonable so claim handlers can devote the necessary time and effort needed to actively look at claims rather than provide only perfunctory treatment,” said Ramsay.

About the Survey

This is the ninth installment of Towers Watson’s Property & Casualty Claim Officer Survey, which examined how insurers are benchmarking claim department performance and delivering optimal claim outcomes. Thirty-five chief claim officers participated in the survey, which ran from June 3 through July 11, 2014. Respondent demographics represent a good cross section of the U.S. market. While there are slightly more large carriers by premium volume, small and midsize carriers are also well represented. Over half the responding companies are predominantly commercial lines carriers.

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. With 15,000 associates around the world, the company offers consulting, technology and solutions in the areas of benefits, talent management, rewards, and risk and capital management. Learn more at towerswatson.com