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The property and casualty sector has suffered steep and unambiguous losses in recent years – better resource management could be the solution the industry is looking for. Brian Nordyke and Jonathan Schwartz are featured in this Property Casualty 360 article looking at how better resource management could help property casualty insurers.
While most sectors of American insurance have recently experienced minor to moderate volatility, property and casualty has suffered steep and unambiguous losses, prompting industry leaders to reevaluate their business models.
P&C underwriting losses ballooned to $26.9 billion in 2022, according to Verisk. That’s the largest underwriting loss the industry has seen since 2011. Even with instability in Eastern Europe, inflation and supply chain bottlenecks, this falloff in revenue was sharper than analysts had predicted; more than six times the $3.8 billion underwriting loss in 2021. Unwriting losses also were reflected by a decline in net income — shrinking from $62.1 billion in 2021 to $41.2 billion in 2022.
It’s tempting for P&C insurers to react reflexively to these losses by reducing labor costs. However, this approach is often the wrong one to take, resulting in loss of talent, slowing down an organization’s growth potential once risk profiles change and macroeconomic conditions improve.
Instead, as part of a broader strategy to control costs, they should consider an alternative approach to labor that will improve how they deploy their labor force, increase efficiency and future-proof their organizations. This can be achieved by improving how their internal resources are allocated.
Resource Management Smarts
Poor resource management is not unique to P&C companies. Before getting into P&C specifics, let’s ground our conversation in a recent survey of 39 companies, conducted by the Resource Management Institute (RMI). Their study concluded that there are divisions of resource management ripe for big gains in efficiency. In RMI’s third survey, they concluded that forecasting and capacity planning, along with developing a skills inventory, continue to be areas that can be improved on. Governance was another area where significant upgrades could be made.
Another survey by RMI, designed to better understand how effectively corporations are managing their human resources, looked into factors that prevent the efficient use of resource management tools. They found that 54% of organizations have no access to real-time project KPIs, and nearly 35% of project managers formulate resource plans using Excel. Moreover, 77% of survey respondents had not yet put in place resource management software, which would provide a way to generate “what if” scenarios.
Many of those surveyed expressed distrust and frustration with their current state of digital resource management tools. While this all sounds a bit technical, what it boils down to is, even if companies had such digital tools, they weren’t necessarily getting the most out of them.
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