Many financial officers of property and casualty insurance carriers are not confident in their controls and processes when it comes to independent adjuster spend. Why does this matter? Consider these statistics:
- Insurance carriers are spending $600 billion annually on third-party adjusting and claims restoration services.
- The claims leakage of an average insurer is typically 8-12% of claims costs and carriers have limited capabilities to reduce and control leakage.
- In a national survey of 300 P&C insurance carriers, 98% were unable to provide data around their third-party costs.
So, what’s the opportunity? While the responsibility may be on your claims executive to create efficient processes when it comes to reconciling independent adjuster (IA) invoices, the ultimate responsibility for loss costs, including LAE, lies with the financial officer. Technology that drives operational efficiency in claims is ranked as a Top 10 InsurTech trend; therefore, organizations should be using the latest software available to achieve better control over independent adjuster spend.
Case in point: our current BAP™ customers experience a 12% reduction in their adjuster costs from using our software, equaling more than $100 per claim. This translates to millions of dollars in savings that can be passed along in the form of rates to be applied to customers’ premium rates.
From a finance perspective, what does the functionality available with BAP mean for your business? It means you’ll have the means to gain control of claim development, reduce IBNR and improve forecasting.
- Reduce adverse claim development to improve loss ratio.
- Use data to understand why claims reopen so that reserve development can be better understood and controlled.
- Understand cost drivers in order to manage costs and standardize adjusting fees across the enterprise.
- Use data to better forecast incurred loss adjustment costs to reinsurers and other company stakeholders.
How do you get there? Our software puts the controls and processes in place that allow carriers to:
- Reconcile independent adjuster invoices automatically to avoid overpayment, eliminate human error, ensure accuracy and reduce headcount in the claims department.
- Allocate independent adjuster costs to the claim file and document all invoices within the claim file for audit compliance and more transparency.
- Make more timely payments to independent adjusters and meet insureds’ volume demand during a catastrophe. Attract the industry’s leading IA firms by offering quick cash flow for completed work and ease of doing business.
- Leverage the investment of your current loss estimating systems, i.e. Xactware or Symbility, to increase efficiencies and reduce ultimate loss costs.
- Deploy leading edge IA management controls to bring value to your reinsurance partners in the event of a catastrophe.
How does it work? Your partnering IA firms use our Invision™ software to auto-populate independent adjuster invoices based on predetermined fee schedule rules programmed into the application, then submit invoices to you, the carrier.
BAP then processes invoices instantly and either flags them for inconsistencies or marks them “ready for payment” within minutes, through integration with estimating tools, and without the need to integrate with your CMS. BAP reduces the need for human invoice processing by 88%. And you’re ready to cut an accurate check, just like that. In addition to the potential mass savings on current claims leakage, the ability to pull data on demand for detailed insight into your IA spend is invaluable.