Crawford experts explored why the cost of claims is increasing in the U.S., taking in claims inflation, labor changes and an increasingly litigious landscape.
A discussion featuring Robert Fleckenstein, executive general adjuster, USA and Douglas Dick, AVP technical lead at Crawford Global Technical Services at the recent Crawford Technical Claims Forum highlighted the key factors driving claims costs in the region.
A global issue affecting the U.S. is inflation, Dick explained. “Inflation is a hot topic across the market and an umbrella issue which trickles down to affect supply chains, material costs and labor costs.”
Fleckenstein highlighted that in some markets such as construction, labor is at an inflection point, noting that 40% of people in skilled trades in the US are over 45.
He added: “However, fewer than 9% of workers aged 19 to 24 are entering the trades and an additional survey conducted in rural areas across the country learned that under 16% of high school graduates this year, enrolled in vocational or trade schools.”
The supply versus demand equation for labor is driving higher claims costs. Dick noted an average of a 17% increase in labor associated costs for repair work for losses such as water damage.
Labor, plus the increased cost of materials, is feeding dramatic claims inflation which can vary state-by-state while an uptick in litigation is also affecting claims.
Fleckenstein noted: “We were able to identify that there's been an overall record 47% increase in insurance-related case filings for 2017 to 2021. That's a five-year period to be compared to 2022 when there was an individual 30% increase in just one year.”
Despite the difficult landscape, Crawford GTS has a deep bench of adjusters who are equipped to handle these current market conditions.
Dick commented: “Where our adjusters get to add value is through building teams that are composed of a range of experts through Crawford resources or bringing in outside resources as well with our vendor partners.”
He added: “What's always helpful is to partner with and open strong lines of communication between underwriters, actuaries, claim employees and your suppliers and service providers so that we can always be fully up-to-speed on the latest market trends and developments.”
The effective application of technology can also help to mitigate claims costs and reduce the duration of the claims cycle.
Dick told attendees: “One thing that’s quite relevant here is the way technology can be used to help reduce the scale and the lifecycle of a claim which can certainly help combat some of these unexpected or challenging inflationary impacts for claims.
“By leveraging technology and the resources and innovations available in the marketplace, it enables us to report more information more quickly in detail on a claim, to potentially mitigate the loss, and also mitigate the loss adjusting expenses.”
The pair impressed the importance of data collection and analysis to help monitor trends and manage claims costs. Fleckenstein noted: “Accuracy is always a challenge at any level of our ecosystem. Pushing for accurate and valid data is something that we're always encouraging our partners to do as well.
“There’s lots we do to demonstrate partnership: including engaging and having events, staying close to trends, maintaining really meaningful and rewarding business relationships, and being on the frontline of these changes.”
