Watch Our EXPERT PANEL VIDEO

Expert Panel: Leveraging Technology to Drive Innovation and Strengthen Partnerships.

Doug Janich

Good morning. Welcome to drone flying 101. Just seeing who’s paying attention. Come on in. If you’re in the back, there’s plenty of seats up front. My name’s Doug Janich. I’m one of the marketing managers with Xactware. I’ll be introducing our moderator, then let him run the rest.

Just one housekeeping before we get started. There are surveys in the back. We’d love to get your feedback. If you’ve been on the app, if you go into the actual session, you’ll see the session. There’s a button for surveys. If you actually fill that out within the app, then you can do that by any session you attend. Feel free to go provide any feedback there.

Our discussion here is a panel discussion, obviously, about how industry experts leverage technology to drive innovation. Our moderator, John Langowski is a product advisor with VIP Software. He has more than 26 years of property and casualty industry experience. His career evolved from a mail clerk in an underwriting department to being the executive claims leader of one of the fastest growing national PNC carriers in the country. His successful brand building of the various companies for which he has served included assignments such as turnaround situations, startup departments, claims software design, mergers and acquisitions, cross-functional leadership, and developing his staff to become leaders and achieve results.

John, take it over.

John Langowski

Thank you. [inaudible]. There’s a big boon on my head here, so if I’m swatting flies it’s the mic.

Welcome. Good morning. Again, my name is John Langowski, and on behalf of VIP Software, welcome to our panel discussion. I’d like to start off first with introducing our panelists, my esteemed colleagues Tony Triola, you see down here. Quin Netzel in the middle, and Jeff Schmitt.

Tony has about 25 years here in the PNC industry. Tony is currently at Liberty Mutual. He’s been at Liberty Mutual since 2013. Tony is currently the Director of Strategic Partnerships at Liberty Mutual. Some of his responsibilities are innovation support, program development, and strategic partner alignment across the enterprise. He’s focused on new ways to do old things. He has successfully worked with industry partners to develop new processes aimed at making the entire industry better. Thank you Tony, welcome.

Tony Triola

Thanks for making me sound so good.

John Langowski

Sure.

Quin. Quin has almost 30 years of experience in the industry. He’s been a claims professional for about that long and he’s held senior leadership positions within the industry. That includes insurance carriers, claims service companies, as well as consulting firms. Right now, Quin is an associate partner with Aon Ward. He meets with executives at top PNC companies to talk about departmental organizational efficiencies and financial performance. He has held positions there within the industry, such as chief claims officer for Louisiana Citizens, chief operations officer for Florida Citizens, claims officer at Renaissance as well as national account manager for State Farm. Quin, welcome.

Quin Netzel

Thank you.

John Langowski

Rest yourself there. Jeff. Jeff has over 20 years in the industry. Jeff started at Farmers and during his several years at Farmers he served as supervisor. He left Farmers to jog the NCA Group, where he’s spent the last 16 years of his career. He’s held such positions at the NCA Group such as vice president of claims, vice president of business development, and director of [inaudible] insurance. Now since the merger of Worley and NCA Group, he’s now the vice president of Worley. His responsibilities include sourcing, directing, and evaluating opportunities with new and existing business partners. The [inaudible] Worley strategic growth initiative. Thank you Jeff, welcome.

Jeff Schmitt

Thank you.

John Langowski

Innovation. Talk to you a little bit. Everybody sees the title of our discussion today is leveraging technology to drive innovation. Really that’s what we’re hoping to get from the last two days here at this conference. Really innovation is just defined as new themes and methods. We’ve learned a lot of new themes and methods here over the last couple of days. We thought we would target today’s discussion on technology driving do themes and methods, innovation, with regards to expense management, financial performance for both the independent adjusting carrier, as well as the independent adjusting firm, as well as the insurance carrier.

Report came out last year, a paper on technology and insurance industry. In that report, about 80% of carrier executives feel that the number one external factor impacting our industry now and in the future is technology. The majority of us feel that technology is here, and it’s going to change us whether we want it to or not. Now that same report, those same carriers, they’ve invested less than half percent of the revenue of profit, revenue, so a whole year they get collect premium and all their investments revenue, only half percent they’ve invested in innovation technology. Most of that money that they’ve invested in on incremental innovation. Innovations is just upgrading stuff that they already do that they already have.

The survey came out and it said, hey, we know it’s a big issue out there, technology, innovation. We’re just not investing a lot of money in it. Keep that thought in mind as we continue down the road here and we’re going to prove a point.

Another recent industry paper came out and talked about something that a lot of us call leakage, but we’ll call improvement opportunity or IO. What is leakage, or improvement opportunity, IO? It is simply defined as minimum estimate of overpayment of claims, which we could have avoided or mitigated if we had applied best practices or better practices.

Right now, insurance carriers could really drive down risk cost, ultimate risk cost, by minimizing leakage or minimizing improvement opportunities, IO, which we’ll call it today. How about independent adjusting firms? Independent adjusting firms, they can also drive down that IO. Right? If they separate themselves against their competition they can become a superior organization. Right now, driving down improvement opportunity or leakage as some of us know it, is one of the top strategic initiatives in the industry both on the carrier side and the independent adjusting firm side.

Right here our panel of speakers are going to give us different perspectives from the independent adjusting firm and the independent adjuster perspective, as well as a carrier perspective. First we’re going to start with Quin. Quin again is from the Aon Ward Group. They do a ton of industry consulting and research, so Quin is going to give us some information to give us a baseline for our discussion today. Quin. Now Aon has conducted studies with regards to how insurance companies embrace or use technology to drive innovation. What can you tell us about some of the philosophies or themes out there with regard to that?

Quin Netzel

When we conduct an assessment of a company’s claims operation, we look at things like their lost cost, how are they doing with regards to managing their staff costs, their independent costs, the cost of all the claims programs and technology that roll up under the claims department. Then we look at the activities and the behaviors of the adjusters that are driving improvement opportunity or leakage. Then finally we evaluate the customer service component. Inevitably, as we’re going through the process, we discover opportunities for improvement and we make suggestions and offer solutions to carriers.

You hear carriers talking all the time about technology and it’s an important factor for their future existence. When it comes time to actually implement or deploy or accept a solution, they’re very resistant or very slow to move if they adopt it. We did a survey of about 70 claims executives last year. What we found out is a very small percentage of them consider themselves to be innovative or market leading. Only 12% of those executives considered their organization to actually be market leading. Fifty eight percent considered themselves to be average, go along with the flow. We’re doing some things here and there but we’re not really putting our neck on the line to deploy new technology that has not been proven. What was really surprising was the 30% of carriers that said, hey, we’re conservative. We’re going to sit back and we’re going to wait until the market tries and tests this technology before we employ it.

For everybody in that 12%, they’re going to see a lot of opportunities to one, differentiate themselves in terms of the services they provide, and also how they perform financially.

John Langowski

Let’s stick with the financial. You guys also, Aon Ward Group has also done some analysis and research on the leakage improvement opportunity. What are the findings right now? How are we doing as an industry on how much we [inaudible]?

Quin Netzel

On average, on the profit line of business, we’re seeing about 8 to 10% leakage or improvement opportunity on daily plans. That escalates, obviously, in the event of a catastrophe and can be as high as 13 to 15%. We also find that carriers who actually employ some of the new programs and technologies have the ability to reduce their improvement opportunity by four to six points, and can achieve improvement on their loss adjustment ratio by two to four points. There’s definitely a correlation between implementing programs and reducing leakage on the company’s bottom line.

John Langowski

To put that in context, if my average claim cost is $10,000 on a daily plan, I’m overpaying about $1,000 [inaudible].

Quin Netzel

Right.

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