Technology-Based Industrialization of Claims Management in Motor Insurance

1 Introduction Over the past years, German motor insurers have been facing growing competition from in-and outside the industry (e.g., car manufacturers, automobile clubs) (Kaeslin and El Hage 2008). Together with a growing pricing pressure on insurance premiums, their combined ratio increased from 94. At the same time, motor insurance is the class of business with by far the largest volumes within property and casualty insurance with a total of 20.4 billion Euros in premiums (German market in 2008). This indicates that cost savings and efficient process improvements in claims management business processes have a great impact on the key performance indicators of insurers. However, over the last years, earned premiums were decreasing while motor insurers were unable to decrease costs to the same degree. The main reasons why cost savings are hard to achieve include the late involvement of insurers after car accidents, the limited integration of business partners such as repair shops, and improper information about the case circumstances (Kaeslin and El Hage 2008). According to several studies (Accenture 2002; Bieber and Hoberg 2007; Mueller and Kuefner 2003), earlier and more detailed information about motor insurance claims could enable pro-active claims management and shorten the average claim life-cycle from setup to close as well as decrease the average costs per case. In addition, an early notification simplifies the integration of business partners for settling a claim and enables the insurance company to benefit from volume discounts , for example, by routing their customers to authorized repair shops. However, according to a study by Kaeslin and El Hage (2008), at most 7.5 % of all motor insurance claims are managed pro-actively. The untapped potential was investigated by Accenture (2002) during an analysis of 12,000 settled claims and led to the estimate that cost savings of up to 15% are possible, while further studies indicate similar results (Bieber and Hoberg 2007; Mueller and Kuefner 2003). This