If anyone needed further proof of the impact legacy claims are having on carriers, it came in our recently released global insurance industry whitepaper. Based on a survey of 150 insurers across North America, the United Kingdom, Australia, and New Zealand, The Carrier Perspective: 2024 Claims Insights explores six key market challenges facing carriers and, not surprisingly, many respondents expressed concern about the toll legacy claims are having on business profitability, financial health, and operational efficiency.
Fortunately, it’s not all bad news, with the survey also revealing how Gallagher Bassett’s (GB’s) dedicated Legacy Practice Group is helping lower durations to closure by leveraging experienced teams of claims professionals that provide quality claims handling service.
The legacy claims challenge
At a time when carriers are looking to invest in growth opportunities and strategic initiatives, many carriers are instead being forced to dedicate much-needed resources to managing legacy claims. Our survey found 62% of the carriers in North America say the issue is posing challenges, citing legal fees, administrative expenses, and other related costs eroding profit margins and impeding their ability to adapt to changing market conditions.
The numbers tell the story. From 2019 to 2023, the average cost of settled litigated claims in North America soared by up to 30%. Looking at specific areas, significant average cost-to-settle increases for the same period were seen in:
- Automobile bodily injury by 30%
- General liability bodily injury by 23%
- Workers’ compensation by 16%
The same period also saw rises of up to 17% in the average cost-to-defend settled, litigated claims, albeit at a slower rate than the cost of settled claims.
The good news
Amid such concerns, there is cause for optimism as our survey showed proactive carriers are tackling the issue head-on by implementing strategies that accelerate legacy claims resolution. This includes 37% of carriers who are looking to engage claims and risk management partners as a primary strategy.
This option is certainly paying off for those who have partnered with GB. The survey found that legacy books managed by our dedicated Legacy Practice Group saw lower durations to closure, with average days to conclusion ranging from 20 to 34% less than benchmark figures depending on coverage type. Such results reinforce that proactive claims management strategies, such as outsourcing, are pivotal for carriers wanting to mitigate the impact of legacy claims and maintain a competitive edge in the market.
Legacy claims is just one of the top-of-mind challenges identified in The Carrier Perspective: 2024 Claims Insights. Download the whitepaper to learn more about this and other pressing issues, including the integration of AI into claims processing, the rise of hybrid working, and the need to adjust to the new world of climate change and ESG.
To learn more about how you can leverage legacy claims handling best practice, visit our dedicated solution page for more information.
