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By CYRIL TUOHY, managing editor of Risk & Insurance®

Risk & Insurance® Managing Editor Cyril Tuohy spoke with Jeffrey T. Bowman, CEO of Crawford & Co., about the long-term growth prospects of his company in a marketplace with little growth and a shrinking overall claims pie.

A. It's true that we're going through some challenging economic times, as we all are here in the United States, and the insurance industry itself is going through a lot of changes. But I've been in this industry a long while and I've seen plenty of ups and downs. I believe Crawford has great potential ahead of it. In this kind of economic climate, our clients are looking to manage risks more carefully than ever. The best way we can help them is by continuing to provide quality claim services and more data analytics that help them manage their loss costs. To do that, we pay attention to technology that helps us improve our performance, to adjuster training, to innovation, to our infrastructure and costs--everything that goes into giving clients the best possible claim services.

Q: Clearly, you're a well diversified company.

A: We think so, and that's by design. We can't just rely on weather for our revenues. Diversification assists us in having a glide path toward consistent revenue gains and operating earnings.

We're a claims solution company with a great many services, so last year we introduced the Crawford System of Claims Solutions, a simplified way of presenting our business to our clients. We divided the way we describe our offerings into three categories--claim services, business process outsourcing and consulting--and we offer a variety of products and services in each of those areas. And we're diversified geographically, too; 40 percent of our business is done outside the United States. So we feel like we're positioned very well.

Q. What does the fact that insurers' desire to improve claims handling and control costs mean for claims administrators? Is that an opportunity? Where do you see a lot of growth coming from?

A. We think there is considerable opportunity for claims administrators and TPAs, especially those who can meet client needs in several key areas. One of those is analytics. The demand for data is, frankly speaking, quite inspiring. With every conversation we have, internally or with clients, analytics comes into the discussion.

Second, we expect business process outsourcing to be a significant growth area for us. That has become a very attractive option for a number of clients, particularly with start-up companies or international insurers looking for business in new areas. They are about underwriting or case management and don't necessarily want to build a claims infrastructure.

The third major opportunity we see is in the area of high-value, complex claims, which are handled by our Global Technical Services unit. Clients need specialized adjusting services and highly trained adjusters for certain types of claims so they can get their businesses running and minimize interruptions, especially in this economy.

Q. Does tracking claims online using wireless 24/7 and embarking on the "once and done" strategy for claims under $25,000 tie into Crawford's strategy? If so, how?

A: If you can get agreement with clients about fast-tracking claims under a certain dollar amount, we have technology in a number of our operations that can assist us with those types of claims. Based on service-level agreements, adjusters can use hand-held technology to do a once and done assessment. Europe and Canada are more accepting of that process, but it is gaining more traction in the U.S.

Q. Proper first notice of loss (FNOL) handling has always been important as a matter of course, but is it more critical now than in the past?

A. I think FNOL handling has always been and will always remain critical, but I don't think any more so now than in the past. Proper handling from the start is key to setting up a claim for successful management and conclusion. That's one of the many reason why adjuster training and professionalism is so important to us. In the U.S. claims handling tends to get somewhat commoditized, and one of the things I'm working on is to make claims a better profession.

Q.What do the coming changes in technology, the nature of the changing work environment, and the new demographics mean for the claims adjusting industry such as yours?

A. Technology is clearly playing a part across the entire spectrum of claims. It is changing the way we deal with claims in terms of effectively being able to segment data and triage claims on the receiving end. We're able to provide a more efficient process and transparency back to the client: Do I have right adjuster on the claim? What is the adjuster saying to the insured?

Handling claims now is a team game. Insurers have significant funds at stake. Lots of people have a slice of a claim and they want to know what's at stake. It is tremendously important for an adjuster to keep everyone informed, ensure that the policy is adjusted properly and provide data on performance. Technology helps facilitate those efforts.

Because it's so vital to our success, we've made a number of significant technology investments in the past few years. For example, we developed a command center here in Atlanta for the property/casualty business, but we're going to take it to our Broadspire clients as well.

Q. The Broadspire acquisition was a big merger when it was announced a few years back.How has that acquisition fit into Crawford's overall business plan? Do you have any other plans to develop that part of the workers' comp side of the business?

A. The Broadspire acquisition was the largest in Crawford's history and it was a very strategic move to grow our workers' compensation business. Broadspire is the third largest TPA in the workers' comp market and we estimate we have 9.6 percent market share. We believe that we have a growing reputation for providing quality, customer-oriented services.

That being said, the economy certainly has provided some challenges to everyone in the TPA business, but we feel we're making significant progress. We're growing revenue organically and, in particular, we're trying to penetrate the unbundled medical management services market.

Broadspire actually is the industry's fourth largest case management provider, and we can provide significant peer review, ergonomic assessment, chronic pain management, elder care specialist services and other managed care services. In addition, we're expanding Broadspire globally. We have opened Broadspire operations in the UK, Holland, Canada and later this year in Singapore and Australia.

Q. Is the claims business a more difficult business in which to survive today than a decade ago?

A. It's not necessarily more difficult, but a lot of the things that we've already talked abou--the economy, technology--bring about new challenges. There's more compliance and regulation involved. You need scale as a corporation to be able to deal with those issues, which is where we feel we have a compelling business case for our clients.

Q. Crawford's model of an independent integrated claims solution isn't universally adopted in the industry. Why is independent adjusting an advantage to clients?

A. There are two great advantages to clients. The first is immediate infrastructure. We can offer claim services under any number of scenarios that are advantageous to carriers and self-insured employers. The second great advantage is financial flexibility. Clients are looking to switch from fixed to variable costs in terms of claims handling. We bear all the costs of employment, hiring, training; clients use our adjusting services as necessary and don't have to deal with all the fixed costs of an adjuster workforce.

Q. What are clients telling you is most important to them?

A: Data and analytics are huge. Operational efficiency and quality claims handling are essential. In the end, clients are looking for a positive outcome of the claim.They want technology that is easy to work with at an acceptable price.

Q. Is the independent TPA model here to stay?

A. We expect the independent claims administrator/TPA model to grow in the next decade. To stay relevant to our clients and make sure we are financially successful for our employees and shareholders, we've identified four strategic goals: grow our position as the world's largest independent provider of claims solutions, improve working capital management, implement innovative solutions that drive quality and results, and become a premier employer.

October 1, 2010

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