Upload
summit-professional-networks
View
287
Download
2
Tags:
Embed Size (px)
Citation preview
Industry Opportunities, Obstacles, and Perspective:
Taking Stock of the Claims Industry
Michel Finschi
Chief Operating Officer – Claims
XL Group
Insurance
Key Areas of Presentation
The Claims Value Proposition
Claims Moving The Industry Forward
(Re)Insurance Industry Relevance
Disruptive Technologies
Resource View
3
The Claims Value Proposition
Clear Insight to Risk Management
Uncover New & Emerging Risks
Pinpoint New business Opportunities For (Re)Insurers
Customer Retention
Claims Tell Stories
4
Claims Moving the Industry Forward
Balance external & internal challenges with limited resources
Master these challenges and move the industry forward, with Claims
as a key value proposition
Use of Technology is Paramount
Data turned into information and resulting in better decision making
Claims – better service, outcome, vendor management and resource allocation
Underwriting – discipline and opportunities
Brokers – powerful partnerships
Clients – by giving customers what they want, when they want it, costs reduce
5
6
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Global GDP
P&C Premiums as % of GDP
Industry Relevance
Source: see Appendix, reference no. 1. 6
Relevance
7
Succeed to reverse this trend and we will see our value in the
economy grow.
Fail to reclaim our space, maintaining insurance relevance and we
will see continue decline.
(Re)Insurers must address emerging risks, innovate, create
new products, and provide insurance buyers with the coverage they
want, the services they want and when they want it.
Source: see Appendix, reference no. 2.
$5 million vs. $400 • Price of the fastest supercomputer in 1975 and an iPhone 4 with equal performance
300,000 miles driven • by Google„s autonomous cars with only one accident (human error)
85 % drop in cost per watts • of a solar photovoltaic cell since 2000
16 % potential share • of solar and wind in global electricity generation by 2025
2-3 bn more people • with access to the internet
8 Based on ‘Disruptive technologies: Advances that will transform life, business, and the global economy’ by McKinsey Global Institute, May 2013
Disruptive technologies will transform life, business
and the global economy
9
2010
2020
International Data Corporation, http://www.statista.com/statistics/224384/installed-base-forecast-of-3g-wireless-subscribers/
= 165 Million Users
Disruptive technologies will transform…
9
10
INDUSTRY FACTS
1998 1st Cyber Liability policy issued
>$1 Billion Current Cyber Liability coverage (Est. 2012 GWP)
31 Carriers offering Cyber Liability coverage, up from only 12 in 2008
72% Exposed companies that do not purchase Cyber Liability policies
Cyber Liability
Source: see Appendix, reference no. 1. 10
11
JPN US EU
Supply Chain / Linkage
Source: see Appendix, reference no. 1. 11
Market View Summary
12
New industries, new technologies, and businesses reveal new risks
New opportunities for insurers for new products and new services
Claims is at the center of customer value
We are challenged by technology to modernize claims processes,
and to innovate: innovation does not need to be a new Product
Industry relevance is at risk; this is also an opportunity
13
U.S. P&C Capitalization
U.S. Energy Sector Capitalization
Based on total shareholder equity Russell 1000 Energy Index vs. Russell 1000 Insurance P&C Index, December 2011
5x
Capital – Strength
13
Lower investment earnings
14
-1.8
%
-1.8
%
-2.0
%
-3.6
%
-3.3
%
-3.3
%
-3.7
%
-4.3
%
-5.2
%
-5.7
%
-7.3%
-1.9
%
-2.1
%
-3.1
%
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
Per
sona
l Lin
es
Pvt P
ass
Aut
o
Per
s Pro
p
Com
mer
cial
Com
ml A
uto
Cre
dit
Com
m P
rop
Com
m C
as
Fidel
ity/S
uret
y
War
rant
y
Sur
plus
Lin
es
Med
Mal
WC
Rei
nsur
ance
**
*Based on 2008 Invested Assets and Earned Premiums / **US domestic reinsurance only Source: A.M. Best; Insurance Information Institute. Robert Hartwig, Ph.D., CPCU President & Economist Insurance Information Institute
Capital – Exit of undisciplined capacity
15
16
Underperformers: exited the U.S. P&C market or been acquired
Interest Returns: low yields eliminated inefficient competitors
Threat: sheer capitalization of other industries
Industry Outlook: profitability to remain strong; however, growth
levels to remain sluggish
Based on Journey III: The Next Frontier in Property and Casualty Insurance, McKinsey & Company
Capital
Regulation
• USA • Continued encroachment of federal regulations and/or laws upon the state regulatory system
(e.g. Medicare).
• Regulators are increasing resources, and sophistication in audit and regulatory compliance.
• Medicare has forced insurers and service providers to adapt to the new regulations (i.e. systems,
collaboration, training).
• European Union: • Moving toward unified rules for financial services, including but not limited to Solvency II,
• Directives on insurance mediation,
• Review of pension funds, and an insurance guarantee framework.
• Insurance companies do the right thing, and must remain proud of the industry„s
positive impact to society.
• Increased regulation: ultimately, it will likely drive our industry to produce less return,
which will result in fewer companies that the world depends on.
17
18
Industry is disciplined, efficient and innovative
OR
Continues to “hope“ that the invisible hand of market economics will
offer all reasonable measures of self-correction and continued
prosperity for the industry for years to come.
Dynamic Environment – conclusion
19
Invention: the creation of an idea or method or product
Improvement: a betterment to the above
Innovation: doing something different
Innovation demands a temporary surrender of comfort / security
Risk is essential
There is no growth or inspiration in staying within what is safe and
comfortable
Innovation is not about the $ you have…
… it is about the talent and
… how they are led
… and how much they GET IT.
Innovation
IT costs of complex systems often outweighed the benefits
Acquisitions, leading to different processes on different systems
Localized resolution of infrastructure and processing problems
IT enabled innovation starts to impact commercial / specialty lines
Integrated information management and analytics use information
from and improve decision making in various functions (UW, Claims,
Risk Management)
Predictive modeling tools will drive better outcomes
20
Information Technology
21
Underwriting : which risks to write, which to avoid, strategy, structuring of transactions, rate adequacy
Human Resources: skills required (functions & levels), develop and reward people; make or buy decisions
Capital Management – buy back stock or keep extra capital for new businesses or future catastrophic losses, what is the most efficient use of reinsurance
Claims – settle or litigate, TPAs or in-house; reserve adequacy, predicted vs acutal claim outcome; outcome vs speed to closure; triage (no / low / high touch)
Analytics (insights and foresights)
Results Will Improve When Decision Making Improves
Use of Analytics Will Improve Decision Making
• Effectiveness of decisions improves
• Consistency in decision making improves
• Creates a framework for assessing effectiveness of decisions
• Provides feedback for further improvement
The development and use of analytics will require us to do things
differently
Analytics
22
Talent Management
Deemed a foundational pillar of top performing companies*
Former underperformers have turned to strong results by adding
talent*
Technology and capital have the ability to level the playing field for
entrants; however, only people truly create the advantages
P&C business is far more complex than most casual observers
realize
The industry struggles to attract top-tier talent, and should strengthen
the talent pool*
We need to make the insurance industry “cool.”
23 *source: Journey III: McKinsey&Company
24
XL’s response: Fast Fast Forward
Rebuilt our claims systems, built a global claims platform, a very
powerful body of information and insight that lowers the costs of
claims handling
New technology so that risk managers have a constant view of claims
on a real time basis with us.
Big value added and creates super-sticky relationships between XL,
our clients, brokers and partners
Won awards along the way…
Recruiting specialized expertise to build upon these capabilities
Deeply embedding analytics in every underwriting business
24
25
RECLAIM
25
Appendix 1. Speech by Mike McGavick, CEO XL Group at International Rendez-Vous of Insurers, Reinsurers, Brokers and Reinsurance Consultants in
Monte-Carlo, 2012. See also Insurance Journal, September 17 2012, “Re/insurers Increasingly Less Relevant to Global Economy: XL CEO
McGavick.”
2. Keynote speech by Mike McGavick, 2012, European Insurance Forum, Dublin. See also Insurance Journal, May 29, 2012, “How Relevant Is
Insurance? Asks XL CEO McGavick.”
3. Cyber Liabilities: Advisen Productivity & Insight for Insurance Professionals: “Cyber Liabilities, Insights Conference October 18, 2011.“
4. McKinsey & Company: “Disruptive Technologies: Advances that will transform life, business and the global economy.“ May 2013
5. Most Costly World Insurance Losses: sources: Swiss Re Sigma 1/2011; AIR Worldwide, RMS, Eqecat; Insurance Information Institute.
6. Journey III: McKinsey&Company, “Journey III: The Next Frontier in Property and Casualty Insurance, The Challenge of Profitable Growth.“
January 2011.
7. Capitalization US P&C. See reference 1, above.
8. Celent: “Perceptions and Misconceptions of Big Data in Insurance.“ April 24, 2013.
9. XL to Politicians: See video „XL to Politicians: Don„t Tread on Us.“ January 7, 2013. http://www.propertycasualty360.com/2013/01/07/xl-
ceo-to-politicians-dont-tread-on-us
10. Smartphones: International Data Corporation, http://www.statista.com/statistics/224384/installed-base-forecast-of-3g-wireless-subscribers/
11. A.M. Best; Insurance Information Institute. Robert Hartwig, Ph.D., CPCU President & Economist Insurance Information Institute
26
Legal Disclaimer
In the US, the insurance companies of XL Group plc are: Greenwich Insurance Company, Indian Harbor Insurance
Company, XL Insurance America, Inc., XL Insurance Company of New York, Inc., XL Select Insurance Company,
and
XL Specialty Insurance Company. Not all of the insurers do business in all jurisdictions nor is coverage available in
all jurisdictions.
The information contained herein is intended for informational purposes only. Insurance coverage in any particular
case will depend upon the type of policy in effect, the terms, conditions and exclusions in any such policy, and the
facts of each unique situation. No representation is made that any specific insurance coverage would apply in the
circumstances outlined herein. Please refer to the individual policy forms for specific coverage details.
27