National Report
Monday, August 5th, 2002 Auto Liability Litigation PropertyInsurance companies could save $30 billion annually through aggressive focus on claim costs, according to management consulting firm A.T. Kearney. Improvements in underwriting alone will not close the performance gap in an industry where return on equity has been very low over the past five years, Kearney maintains. “Cost performance must be addressed, and our experience with P&C insurance clients shows that transforming the claims process, for instance, could generate cost efficiencies from 12 to 25 percent,’’ said Stefan Spohr, a principal with A.T. Kearney. “Extrapolating savings of 12 percent to the overall industry claims cost would shave 10 points off the U.S. P&C sector’s projected combined ratio of 120 in 2001.’’ The U.S. property and casualty insurance industry is suffering from sagging investment returns and unprecedented claims from the Sept. 11 terrorist attacks, Kearney said.
