What Drives Claims Outsourcing

The P&C insurance industry is facing several major challenges, including a $6.3 billion net operating loss during the first half of 2022. According to A.M. Best, U.S. P&C net income was $31.4 billion, down 18% compared with the first six months of 2021.

Climate-related risks, loss trends, staffing shortages, inflationary medical costs, fraud containment and social inflation trends are top claims challenges in 2022, making for a complex and turbulent time.

Medical cost inflation is over 5% on average in 2022, on top of decades-long cost increases, especially for emergency services, medications, diagnostics and surgical procedures.

Insurers are experiencing pressures from all sides, including labor shortages, in which claims are one of the most highly affected areas. Meanwhile, efforts to automate claims for efficiency and cost reduction are growing across the industry as insurtech innovations fueled by venture and private capital shift attention toward claims.

Claims organizations are facing high turnover rates while losing seasoned and experienced talent as the workforce ages. This talent drain has a disproportionate impact on more complex claims, such as injury cases involving attorneys.