Why the Future Is Now – AI’s Inescapable Role in Modern Claims Management

Posted on May 15, 2025 by Marc Lanzkowsky

What was once hypothetical is now inevitable. AI is actively transforming claims processing, fraud detection, triage, customer engagement, and much more. For forward-thinking claims organizations, the challenge is no longer whether to adopt AI, but how to do it quickly, responsibly, and at scale.

The property and casualty (P&C) insurance industry is no stranger to change. From paperless processing to mobile FNOL and predictive analytics, we’ve seen waves of innovation reshape how we work. But today’s transformation is different. Artificial Intelligence (AI) isn’t just another tool—it’s a seismic shift in how claims are managed.

The Industry Is Moving—Fast

According to a 2024 survey by the Ethical AI in Insurance Consortium (EAIC), only 14% of P&C insurers are currently leveraging AI for operational decisions. However, 66% plan to integrate AI into their operations this year, indicating a significant shift towards AI adoption in the industry. Risk & Insurance

A 2025 survey by Roots Automation reflects this momentum, revealing that nearly 90% of insurance executives express a positive opinion about employing AI, with 67% “strongly in favor” of adopting it in claims. This growing C-suite confidence is propelling the industry forward at an unprecedented pace. roots.ai

Proven Results from Early Adopters

Early adopters of AI in the insurance sector are already witnessing tangible benefits:

Sedgwick: Implemented generative AI to expedite claims processes, aiming to reduce resolution times and enhance overall efficiency. Sedgwick
CURE Insurance: Leveraged Cloverleaf Analytics’ platform to enhance claims risk assessment and fraud detection, leading to more efficient claims processing. Cloverleaf Analytics
Gallagher Re: Reported that 63.4% of global InsurTech funding in Q3 2024 was allocated to AI-focused solutions, underscoring the industry’s investment in AI technologies. Gallagher

These examples highlight the practical applications and measurable outcomes of AI integration in insurance operations.

It’s More Than Efficiency—It’s Survival

AI isn’t just about reducing workloads or automating tasks. It’s a response to evolving customer expectations, increasing claim complexity, and growing pressure on loss adjustment expenses. And the longer organizations delay adoption, the wider the gap grows between early movers and everyone else.

Competitors are settling claims faster.
Customers expect real-time updates and transparent processes.
Regulators are starting to ask hard questions about bias, privacy, and governance.

The time for tentative pilot programs is ending. This is a leadership moment.

Want to explore what successful AI adoption looks like? Request a copy of our full white paper for detailed case studies, benchmarks, and implementation strategies. https://lanzko.com/contact

4 AI Myths Holding Claims Teams Back

Posted on April 23, 2025 by Marc Lanzkowsky

In our line of work, myths can be more dangerous than mistakes. They slow progress, fuel hesitation, and prevent claims teams from embracing tools that could make their lives easier and their outcomes stronger. Nowhere is that more true than with Artificial Intelligence. Despite proven use cases and mounting industry adoption, AI in claims still faces serious skepticism. Let’s set the record straight—one myth at a time.

Myth #1: “AI will replace adjusters.”

This is probably the most common fear—and the most misguided.

The truth? AI isn’t coming for your job. It’s coming for your busywork. Think copy-paste, form-fill, and sorting PDFs. Not human judgment, empathy, or strategy.

Reality check: 77% of insurers are already using or testing AI, and not one reported cutting adjuster headcount in Conning’s 2024 survey (Risk & Insurance). Even Lemonade—famous for its two-second claim bot—relies on human adjusters for disputes and negotiations (Insurance Times).

Let’s be clear: AI handles the mundane so adjusters can focus on what matters—coverage decisions, customer experience, and settlement strategy.

Myth #2: “Only the big carriers can afford AI.”

Ten years ago? Maybe. But today’s AI is plug-and-play, not build-from-scratch.

Thanks to cloud-based APIs and usage-based pricing, even mid-size and regional carriers are embracing AI—and seeing results fast.

Proof point: 65% of carriers (large and mid-market alike) are already piloting large language models in claims ops (Risk & Insurance). One federal benefits agency processed over 115,000 claims in just three months using Hyperscience, achieving 96% accuracy—without a core system overhaul.

Start with one pain point. Pay for only what you use. Scale when you see the ROI. That’s how smart transformation begins.

Myth #3: “Regulators won’t allow AI—it’s too risky.”

This one stems from a misunderstanding of the compliance landscape.

In fact, the National Association of Insurance Commissioners (NAIC) adopted an AI Model Bulletin in 2023. It doesn’t ban AI—it outlines how to use it safely and transparently.

The bulletin calls for:

Transparent data use
Explainable models
On-demand audit trails

So compliance isn’t a roadblock—it’s your roadmap. Choose vendors who log every decision and make model logic understandable, and you’ll satisfy both regulators and your internal risk team.

Myth #4: “AI means a multi-year core-system overhaul.”

Not anymore.

Modern AI is designed to coexist with your current tech stack. Low-code tools, REST APIs, and orchestrators like n8n can have you up and running in weeks—not years.

Take this real example: Hyperscience plugged directly into an existing mailroom workflow, hit 99% automation, and saved $45 million annually—with no core upgrade required.

So keep your legacy system. Let AI do the grunt work around it. Innovation doesn’t have to mean disruption.

Don’t Let Myths Block Your Momentum

It’s time to stop seeing AI as a threat and start seeing it for what it is: a force multiplier. When used correctly, AI makes claims professionals more efficient, more focused, and more impactful.

Curious where AI fits in your claims shop? DM me or grab 15 minutes on my calendar. Let’s separate fact from fiction and find your first best use case.

5 Ways to Future-Proof Your Claims Operation

Posted on April 1, 2025 by Marc Lanzkowsky

Is your operation built for the future—or stuck in the past?

Let’s be honest: many claims operations are still playing catch-up. They’re overburdened by legacy systems, siloed teams, and reactive thinking. The pace of change in claims—driven by rising litigation costs, AI disruption, and shifting customer expectations—demands more than incremental fixes.

I’ve spent the better part of two decades helping organizations move beyond patchwork solutions. Whether building a specialty claims operation from the ground up at Arch or integrating InsurTech and data-driven optimization at Healthcare Risk Advisors, the lesson is always the same: future-ready claims operations are built, not bought.

So how do you build one? Here’s a proven framework based on what’s worked in the real world.

1. Build for Resilience, Not Just Efficiency

Yes, automation matters. Yes, cost reduction is essential. But the organizations that thrive are the ones built to adapt—especially in the face of disruption. At Arch, we reduced expense costs by 40% in the primary casualty space. That wasn’t just about slashing spend—it was about realigning the operating model to be flexible and scalable.

Key takeaways:

Design flexible workflows that adjust to staffing shifts and CAT events
Develop surge-ready staffing models, including trusted third-party adjusters
Prioritize business continuity as a strategic, not just operational, initiative

2. Let Data Drive the Conversation

At HRA, we embedded analytics directly into daily operations—turning data into decision support. Real-time dashboards showed us what was working, where bottlenecks were forming, and where to intervene.

Claims departments need to move beyond end-of-quarter reporting and start using analytics to:

Spot reserving issues early
Trigger escalations based on predictive risk signals
Monitor performance by claim type, jurisdiction, or legal partner

If you’re not actively surfacing trends and acting on them in real time, you’re not using your data—you’re warehousing it.

3. Modernize Collaboration Between Claims and Counsel

This is where future-proofing often fails. Claims and legal teams operate on parallel tracks—and that disconnect can tank outcomes.

Instead, leverage AI-assisted early case assessments and shared data environments to improve collaboration:

Use predictive analytics to align on likely outcomes before litigation begins
Share structured claim data with counsel to reduce ramp-up time and focus strategy
Establish outcome-based billing models that align incentives around resolution, not hours

As a consultant I would with to redesign legal departments to better align with claims—yielding not only improved collaboration but real, measurable savings. The future isn’t about outsourcing more—it’s about working smarter together.

4. Lean into AI (But Keep It Human)

I’ve seen firsthand what well-deployed AI can do: process medical reports in minutes, flag litigation risks before intake is complete, and handle routine claims faster than most adjusters can open a file.

But here’s the nuance: AI supports judgment—it doesn’t replace it.

Future-ready organizations are:

Using explainable AI to recommend, not dictate, decisions
Embedding AI into triage, reserving, and settlement strategy
Training staff to challenge, refine, and validate AI insights—not follow them blindly

Done right, AI becomes your second brain—not your replacement.

5. Create a Culture That Can Evolve

Technology is table stakes. What separates future-proof organizations is culture.

At every stop in my career—from Zurich to launching Lanzko Consulting—I’ve emphasized the same principle: change doesn’t come from systems. It comes from people who are empowered to act on what those systems reveal.

What does that look like?

Empowering claims leaders to challenge entrenched processes
Aligning KPIs across departments to encourage cross-functional thinking
Building internal transformation teams that continuously assess and adapt

Change isn’t a one-time initiative. It’s an ongoing discipline.

Final Word: Future-Proofing Is a Verb

The truth is, you’re never “done” future-proofing. The litigation landscape shifts. Regulatory pressures mount. Customer expectations evolve.

But if your operation is data-fluent, tech-enabled, people-focused, and adaptable—you’re ready. And readiness is the real competitive advantage.

So ask yourself: Are you evolving by design—or reacting by necessity? If it’s the latter, now’s the time to act.

5 Key Insights Every Counsel Status Report Must Deliver for Claims Examiners

Posted on February 20, 2025 by Marc Lanzkowsky

Get to the point! Claims examiners are juggling more responsibilities than ever, with less time to do them. Meanwhile, legal counsel, striving to be both transparent and thorough, provide numerous updates throughout a claim’s lifecycle. But how often do these reports actually help claims professionals do their jobs better?

In claims management, success requires strategic case management, not just routine updates. Effective counsel reports should provide clear, concise, and actionable insights—not unnecessary detail or vague summaries.

Why Counsel Reports Need to Evolve

Most counsel reports check the compliance box but fail to aid in managing litigation effectively. Examiners often receive boilerplate updates with recycled case history and little real insight.

What claims examiners actually need:

Clear case trajectory – What has changed, what hasn’t, and how does it impact claim strategy?
Analysis, not summaries – Focus on how new developments affect liability, causation, damages, and valuation.
Actionable recommendations – Instead of listing motions, highlight next steps and required actions.
Efficiency and brevity – Keep reports concise yet substantive, delivering only what is necessary.

When done right, counsel reports become strategic tools—guiding claims professionals toward proactive, informed decision-making.

5 Elements Every Counsel Report Must Cover

To ensure optimal case outcomes, reports should follow a structured, action-driven format. Every status report should answer these five critical questions upfront:

1. What’s This Case About?

Claims examiners manage high caseloads. Give them an immediate snapshot—don’t make them dig through files. Provide:

A concise case summary (just a few sentences).
Key legal and factual issues impacting liability and damages.
The current litigation decision point (settlement, defense, or further investigation).

2. What’s New Since the Last Report?

Stick to substantive updates that show case progress and strategy shifts. Avoid repeating past details. Address:

Significant developments since the last update.
Discovery, depositions, expert reports, or court rulings that impact the case.
Any shifts in case valuation due to new evidence.

3. Has Anything Changed That Impacts Strategy or Value?

This is the heart of the report—claims examiners need your assessment, not just facts. Provide:

Liability updates – Has new evidence shifted fault assessment?
Causation analysis – Do new medical reports, expert findings, or testimony affect the argument?
Damages evaluation – Has the potential payout increased or decreased?

4. What’s Next?

After outlining past developments, give a roadmap for what’s ahead. This fosters collaboration and keeps claims aligned with litigation strategy. Include:

Upcoming deadlines, motions, depositions, or mediations.
Key decisions required in the next phase.
Any budget or strategy adjustments based on recent developments.

5. What Does Claims Need to Do?

Be direct—if you need something, ask for it. Address:

Required approvals or actions from claims.
Justification for requests (e.g., expert retention, budget modifications, additional investigation).

Transforming Legal Reports into Strategic Tools

A well-structured report benefits everyone:

✔ Claims professionals get clear, actionable insights, reducing follow-ups and delays.
✔ Legal counsel stays aligned with claims strategy, ensuring cost-effective litigation.
✔ Case outcomes improve through data-driven decision-making.

Counsel reports should be more than just updates—they should be decision-making tools. By focusing on new developments, impact analysis, and next steps, legal reporting shifts from passive updates to proactive case management.

How does your organization ensure counsel reports provide the right insights? Let’s discuss in the comments below!

Turning the Tide: Transforming Litigation Management from Conflict to Collaboration

Posted on January 26, 2025 by Marc Lanzkowsky

In the first article of this series 5 Fatal Flaws in Litigation Management, we examined the persistent “us vs. them” mentality that often separates insurance carriers from legal counsel. This division undermines collaboration, increases costs, and delays claim resolutions. But what if the solution lies in redefining the dynamic—not as adversaries but as collaborative allies striving for shared success? It’s time to rethink litigation management and embrace a partnership approach.

Charting a New Course: Building Bridges in Litigation Management

Transitioning from an adversarial stance to a collaborative partnership requires purposeful changes in culture, communication, and strategy. Consider this industry guideline as a starting point:

“Adjusters should maintain control of the claim and actively manage the claim with the goal of successfully concluding it.”

This principle underscores the importance of adjusters remaining engaged while empowering counsel to execute strategies aligned with the carrier’s objectives. Let’s explore actionable strategies to foster this partnership.

1. Cultivating a Culture of Collaboration

At the heart of a strong carrier-counsel relationship is mutual respect and shared objectives. Here’s how carriers can foster this culture:

Set Shared Goals: Collaboratively define case outcomes, such as settlement timelines or trial objectives. Aligning from the outset creates a unified direction.
Acknowledge Expertise: Recognize and integrate counsel’s specialized knowledge of legal intricacies and jurisdictional nuances into claims strategy.

2. Clear Communication: The Key to Alignment

Consistent, transparent communication bridges gaps and ensures alignment. Many industry guidelines recommend regular updates to keep all parties on track:

“Attorneys should provide concise case updates, strategy outlines, and key decision points requiring adjuster input.”

Here’s how to take communication to the next level:

Standardize Communication Protocols: Define expectations around response times, reporting formats, and escalation points.
Leverage Technology: Use secure platforms to share real-time updates, analytics, and case documents.

3. Empower Counsel While Maintaining Oversight

Micromanaging legal teams often leads to inefficiencies. Instead, empower counsel with clear boundaries:

Conditional Autonomy: Allow counsel to independently settle claims within pre-defined thresholds.
Actionable Budgets: Work with attorneys to create detailed budgets aligned with case goals and monitor them in real-time. Budgeting is a great way to learn more about the case and have an open discussion about strategies.

4. Align Incentives to Drive Outcomes

Fee structures and performance metrics play a pivotal role in fostering collaboration. Consider these strategies:

Alternative Fee Arrangements (AFAs): Explore options like flat fees or success-based bonuses to reward efficiency and results.
Performance Metrics: Regularly evaluate counsel based on case duration, cost-effectiveness, and client satisfaction.

5. Adopt Decision Point Frameworks for Strategic Clarity

Decision frameworks like Decision+™ integrate legal counsel into a structured process, streamlining decision-making at critical junctures. Such frameworks ensure alignment on choices like settling, litigating, or pursuing further investigation.

“The decision-making process at each juncture demands a careful evaluation of the evidence, potential outcomes, and broader implications.”

Why Collaboration is Worth It

Reframing counsel as strategic partners unlocks measurable benefits:

Cost Savings: Reduced inefficiencies and legal expenses.
Faster Resolutions: Eliminated delays and accelerated case progression.
Higher Client Satisfaction: Streamlined, effective claims handling benefits insureds directly.

The question isn’t whether collaboration can help but how we can implement it effectively.

Join the Conversation

We’ve outlined strategies to foster collaboration between carriers and legal counsel, but every organization’s challenges and successes are unique. Now, it’s your turn:

What’s your biggest challenge in fostering collaboration between carriers and counsel?
Have you implemented any of these strategies, and what results have you seen?
Are there other approaches that have worked well for your organization?

In the final article of this series, we’ll dive into specific tools and frameworks—like advanced analytics and technology platforms—that support collaborative litigation management. Until then, share your insights in the comments below. Let’s learn from each other and drive meaningful change in litigation management.

5 Fatal Flaws in Litigation Management: Why Immediate Change is Crucial

Posted on January 13, 2025 by Marc Lanzkowsky

With over 25 years of experience in the insurance industry, I’ve had the unique opportunity to see both sides of the litigation management equation—first as a defense attorney representing carriers, and later as a claims professional hiring counsel to protect insureds. Despite decades of advancements in technology and claims practices, one critical aspect has stubbornly remained unchanged: the strained dynamic between insurers and their legal counsel. The pervasive “us versus them” mentality continues to undermine collaboration, inflate costs, and prolong claim resolutions. Instead of fostering a true partnership, the focus has often shifted to controlling defense costs, leading to rigid oversight rather than meaningful teamwork. Yet, I firmly believe this doesn’t have to be the case. True collaboration—where counsel and claims professionals align around shared outcomes—isn’t just a lofty goal; it’s a necessity. The question is, are we ready to move beyond surface-level cooperation and embrace a partnership that truly delivers value?

Over the next few articles, I will delve into the persistent challenges plaguing litigation management and introduce practical solutions to bridge the gap. While these insights may seem straightforward, the fact that these issues persist underscores their complexity. This article serves as the starting point, outlining the problems.

I will be exploring solutions to this problem and present the Decision+™ approach—a framework designed to accelerate decisions and reduce payouts, which fosters genuine collaboration, leverages innovative strategies, and embraces technology to transform litigation. Together, we can break free from outdated practices and create a more efficient, collaborative future. Stay tuned for the solutions ahead.

Problem 1 – The Carrier-Counsel Divide

A key issue in litigation management is the lack of alignment between carriers and counsel. Many industry guidelines emphasize the importance of adjusters maintaining control of claims during litigation:

“Adjusters should proactively handle the claim in litigation and not abandon the claim to defense counsel just because the claim is in litigation.”

Despite these guidelines, adjusters often relinquish control once litigation begins, treating attorneys more as external agents than as integral members of the claims team. This hands-off approach results in a leadership vacuum, leaving attorneys to manage cases without the benefit of a cohesive claims perspective or strategic guidance. The outcome is a reactive process with limited opportunities for meaningful collaboration, hindering both efficiency and effective resolution.

Left to navigate cases independently, attorneys often make decisions that are technically sound but disconnected from the carrier’s broader objectives. The lack of alignment can lead to:

A focus on litigation tactics over settlement strategies increases filings, prolonging cases and driving up costs.
Overuse of depositions and document requests without clear plans inflates expenses.
Without guidance, attorneys may prioritize billable hours over efficient resolutions, conflicting with cost-containment goals.

The carrier-counsel divide highlights a critical need for stronger integration and alignment. Without a unified approach, inefficiencies persist, and opportunities for timely and effective case resolution are missed. Building a true partnership based on shared goals and open communication is essential to overcoming these challenges and ensuring better outcomes for all stakeholders, especially the insured.

Problem 2 – Costs and Outcomes

The disconnect between carriers and counsel has significant financial and operational consequences, driving inefficiencies that disrupt the claims process. Ineffective collaboration exacerbates three critical issues:

Delayed Resolutions: Without streamlined decision-making, claims linger in litigation for extended periods, escalating frustration and costs.
Escalating Costs: Poor coordination often results in prolonged lawsuits that inflate expenses without delivering meaningful value.
Erosion of Trust: Lengthy litigation leaves policyholders feeling overlooked, undermining trust and damaging the carrier’s reputation.

Efforts to address these challenges through communication mandates and litigation plans have had limited impact, largely due to the entrenched adversarial mindset between carriers and counsel. The ongoing emphasis on cost control rather than collaboration continues to perpetuate inefficiencies and dissatisfaction for both sides.

Problem 3 – Culture and Billing

At the core of the carrier-counsel division lies a systemic issue: the culture of litigation management within the insurance industry. The dominant focus on cost containment often overshadows the need for collaborative, outcome-driven relationships. Industry guidelines frequently emphasize the importance of aligning legal strategy with claims objectives:

“Attorneys must align with the overall claim strategy and obtain adjuster approval for significant decisions such as filing motions, hiring experts, or pursuing depositions.”

However, in pursuit of cost control, the industry has swung to extremes, implementing stringent billing guidelines and complex coding requirements. While these measures aim to rein in expenses, they often have unintended and counterproductive consequences:

Administrative Overload: Attorneys spend an increasing amount of time ensuring bills meet approval standards rather than focusing on meaningful casework. This adds layers of bureaucracy, detracting from substantive progress on cases.
Micro-Management of Tasks: Carriers frequently require pre-approval for even routine tasks as a cost-control measure. Instead of fostering open dialogue about case strategies, these conversations often occur indirectly through billing systems, reducing opportunities for collaboration.
Frustration and Distrust: Restrictive guidelines leave counsel feeling stymied and claims perceiving attorneys as billing-focused, eroding trust and hindering teamwork. Attorneys may feel undervalued or constrained, leading to a transactional relationship where both parties operate defensively. This dynamic discourages proactive problem-solving and reinforces a mindset of minimal compliance rather than genuine partnership.

The cultural divide stems from viewing attorneys as cost centers rather than strategic partners, limiting their ability to craft solutions and drive effective resolutions. This compliance-focused relationship stifles innovation and collaboration, leaving carriers with higher costs and delays, and attorneys constrained by rigid controls. Breaking this cycle requires shifting from cost-control to a value-driven approach.

Long-standing issues—misalignment, cultural divides, and inefficiencies—have persisted throughout my three decades in the industry. Change is a necessity.

Problem 4 – Misaligned Priorities and Increased Documentation Demands

A critical issue in litigation management arises from a lack of understanding between claims professionals and legal counsel regarding their distinct roles, responsibilities, and external pressures. While both aim to achieve favorable outcomes for the insured and the carrier, their differing methods, priorities, and incentives often clash, undermining collaboration and amplifying inefficiencies.

Legal counsel, incentivized by billable hours, dedicate significant time to documenting their work—efforts that may not always align with the carrier’s broader goals. Meanwhile, claims professionals focus on efficiency, striving to resolve cases swiftly and cost-effectively while also managing mounting scrutiny from internal auditors, regulators, and compliance teams. This dual burden of efficiency and oversight has increased demands for meticulous documentation at every step, creating friction between the two groups.

The disconnect manifests in several ways:

Documentation Overload: Attorneys feel encumbered by frequent requests for detailed reports, while adjusters grapple with the pressure to justify their decisions to superiors, auditors, and regulators, often in real time.
Strategic Misalignment: Attorneys, concentrating on legal nuances and litigation risks, may lose sight of broader claims strategies. Conversely, adjusters, preoccupied with timelines and audit compliance, may overlook critical legal considerations.

The lack of alignment between claims professionals and legal counsel creates a cycle of inefficiency, with each side constrained by competing demands and priorities. This misalignment not only hampers collaboration but also detracts from achieving timely, effective outcomes for all stakeholders. Bridging this gap requires a shared understanding of roles and a commitment to aligning strategies with overarching goals.

Problem 5 – The Impact of COVID-19 on Staffing and Collaboration

The COVID-19 pandemic further intensified these challenges by introducing new pressures on both claims departments and legal counsel. Remote work, staff shortages, and increased caseloads have forced both sides to “do more with less,” often under strained circumstances. The demands for enhanced documentation and compliance have only grown in this environment.

For claims professionals, staffing reductions and remote operations have disrupted workflows, resulting in delays in decision-making and reduced capacity for active oversight of litigation. Attorneys, meanwhile, have faced similar staffing challenges, coupled with court backlogs, increases in nuclear verdicts and procedural changes that demand additional effort to navigate. The combined effect has heightened existing tensions, as both parties feel overburdened and under-supported.

Key impacts of the post-COVID environment include:

Increased Scrutiny: Carriers face higher demands from regulators and auditors, requiring extensive documentation and justification for claims handling and litigation decisions.
Reduced Collaboration: Remote work and virtual communication tools have made it harder for claims professionals and attorneys to engage in the face-to-face discussions necessary for building trust and aligning strategies.
Burnout and Attrition: Both claims and legal teams are experiencing high turnover rates, leading to a loss of institutional knowledge and continuity, further complicating the alignment of goals and strategies.

As noted, the COVID-19 pandemic has intensified challenges in litigation management, with remote work, staffing shortages, and increased caseloads disrupting workflows and straining resources. These pressures highlight the urgent need for a more adaptable, collaborative approach. Prioritizing clear communication and shared strategies is essential to building a resilient framework for effective litigation management.

Looking Ahead

The problems outlined in this article underscore the urgent need for a fundamental transformation in litigation management. These long-standing issues—misalignment, cultural divides, and inefficiencies—have persisted throughout my three decades in the industry, now intensified by post-COVID pressures. While these challenges are significant, they are not insurmountable. Addressing them requires a deliberate shift in mindset, where carriers and counsel move beyond entrenched adversarial dynamics to foster trust, mutual respect, and alignment around shared goals.

At its core, this transformation is about reframing the carrier-counsel relationship as a partnership, one where both parties are aligned around a common purpose: achieving fair, efficient, and value-driven claim resolutions. It is only through collaboration and open communication that the full potential of this partnership can be realized, benefiting insureds, carriers, and counsel alike.

Future articles will explore actionable solutions, innovative strategies, and frameworks like my Decision+™ approach. Together, we can break free from outdated practices and transform litigation management into a strategic advantage. Stay tuned for the next steps toward meaningful change.

5 Actionable Strategies for Emerging Trends and Challenges for Claims Departments in 2025

Posted on January 2, 2025 by Marc Lanzkowsky

It’s been an interesting year and 2025 is shaping up to be another exciting year for the insurance industry. As 2024 ended we saw some interesting market trend reports from leading consulting and industry firms. As the insurance landscape evolves, claims departments face a range of new trends and challenges. Drawing insights from recent industry reports and past discussions on best practices, we will explore the key dynamics expected to shape claims handling in 2025, along with 5 actionable strategies for adaptation.

Rising Costs and Litigation Severity

Claims departments are grappling with the escalating costs of litigation, driven by trends such as social inflation and nuclear verdicts. The Marsh McLennan MMA Q3 2024 Market Trends Report highlights how litigation funding abuse contributes to rising claim costs, particularly in casualty markets:

“Nuclear verdicts, driven in large part by litigation funding abuse, are a significant factor in the pace of change in the casualty market”.

The McKinsey Global Insurance Report further emphasizes how inflation and rising costs are straining claims operations:

“ Corporate legal defense spending on class action lawsuits in the United States increased by 8 percent in 2022 and by 5 percent in 2021. This leads to higher claims costs and ultimately has a negative impact on affordability across the industry “.

Digital Transformation and AI Integration

The integration of AI and digital tools into claims operations has become essential for enhancing efficiency. As noted in the PwC Insurance 2025 Report:

“ Insurers still lack speed and agility due to inherent complexities such as legacy systems and traditionally siloed operations. A fresh approach to digital is needed to drive a competitive advantage that can be sustained. “

Similarly, the Global Insurance Report highlights the potential of AI to transform claims processes:

“Generative AI will enable carriers to rethink and innovate the end-to-end value chain”.

Climate Risks and Natural Disasters

The insurance sector faces increasing pressure from climate-related risks, with severe weather events becoming more frequent. According to the MMA Q3 2024 Report:

“ The flood protection gap is widening. Since the 1990s, the cost of flood damage has roughly doubled each decade. The federal government issued two disaster declarations for floods in 2000. As of October 22, 2024, it has issued 66. “.

The PwC Insurance 2025 Report reinforces this trend by underscoring the criticality of sustainability in claims management:

“ The growing threat of climate change poses systemic physical and transition risks, with direct implications for the insurance industry “.

Customer-Centric Claims Models

With customer expectations shifting, transparency and efficiency in claims handling are more important than ever. The PwC Insurance 2025 Report highlights the rising trust gap in the insurance industry:

“In a world in which trust in businesses and governments is declining, trust in financial

institutions is near an all-time low….Trust is fundamental for insurance, and insurers clearly have a much bigger role to play in our society and economy than just protecting risks. .

Incorporating customer-focused technologies into claims processes can address these challenges:

“ Continued rapid advancements in digital and analytics capabilities, from inside and outside the industry, have put many players under pressure. We’ve seen a sharp increase in digital efforts and adoption in areas like distribution, operations, and claims. However, insurers still lack speed and agility due to inherent complexities such as legacy systems and traditionally siloed operations. A fresh approach to digital is needed to drive a competitive advantage that can be sustained. “.

Operational Efficiency Amid Economic Pressures

Economic uncertainties, including inflation and volatile interest rates, demand innovative approaches to operational efficiency. As stated in the Global Insurance Report:

“ Profitability challenges were acute across markets as inflation increased. Net combined ratios grew between 2021 and 2023, most notably in the United Kingdom (where combined ratios and inflation increased by 16 percentage points and 17 percent, respectively), the United States (five percentage points and 12 percent, respectively), and Australia (three percentage points and 13 percent, respectively)”.

5 Actionable Ways to Future-Proofing Claims Departments

As the insurance industry navigates 2025, claims departments must evolve to address emerging challenges while seizing opportunities for innovation. From managing climate risks to adopting AI and digital transformation, success lies in adaptability and forward-thinking strategies.

By investing in technology, fostering customer-centric models, and leveraging data-driven insights, insurers can stay ahead in a competitive market. Building on themes explored in previous Claims Spot articles, the following suggestions aim to address 2025’s challenges while enhancing operational efficiency, customer satisfaction, and resilience in claims departments.

1. Prioritizing Accurate Reserving and Trend Analysis

In “The Critical Role of Timely and Accurate Practices in Claims Management”, the importance of consistent reserving and trend analysis is emphasized as foundational to claims operations. This remains critical as we approach 2025, where accurate reserves will play a pivotal role in navigating increasing claims severity and unpredictability.

“Think of reserves as the financial shock absorbers of the insurance world. When set correctly, they help cushion the impact of claim payouts, ensuring stability and solvency”.