The risk management world keeps getting smarter about risk management. We’ve got more sophisticated tools and better data analytics. That means more precise measurement of what’s happening. That, in turn, means more accurate predictions of loss and sustainable premium levels.
Can we prove it? You could argue that the proof is in the fact the dramatic loss events of recent years have not produced dramatic reactions by underwriters. We’ve been expecting a modest upswing in the market, and that’s what we’ve been getting. In our new Marketplace Realities report, we predict more of the same.
So, in advance of RIMS 2013, when the industry is gathering and our profession will be looking for trends beyond the obvious, we decided that in our spring update to the 2013 Marketplace Realities series we’d put a little more focus on an area of risk management that is not quite as predictable these days: claims and claim trends.
Key Trends from the Report
We asked several of our leading claim experts in North America to highlight some trends. The response was a mixed bag – and the result may be more interesting to those of us on the front lines of risk management and loss.
In property, for example, we see on one hand a potentially ominous sign – increased use of legal counsel by insurers in complicated claim scenarios. And yet at the same time, we’re seeing quite a wonderful trend – a noticeable effort by insurers to issue advance payments as part of the settlement process.
In casualty claims, use of technology may bring some welcome efficiency. On the flip side, we see concerns that retention of talent at carriers and TPAs may have an opposite impact on the claim process.
In D&O, we again see contradictory currents. Frequency and severity of traditional D&O class actions, as well as financial crisis claims, are down. Yet, M&A-related cases are up, and we may see further increases brought about by the Dodd-Frank bounty program and by greater enforcement of anti-corruption legislation around the world.
What does it all add up to? As usual, that depends on the nature of your individual risk, your industry and your risk management approach. We urge all risk managers to spend some quality time with their risk advisers this spring. Perhaps this is a good moment to take a closer look at what’s going on in the claims side of the risk management equation.