InsurTalk: Navigating claims inflation with Manjit Rana, GM Insurance – UK, EMEA & APAC at Clearspeed

Ewa Banaś: Welcome to another episode of IT Insights InsurTalk, a series by Future Processing featuring interviews with insurance leaders about what matters to the industry. Today, we are discussing the challenges insurance leaders face when managing claims inflation, as it significantly impacts both the profitability and sustainability of insurance companies. My guest today is Manjit Rana, GM Insurance at Clearspeed and a renowned thought leader in insurance innovation.

Manjit, before we dive into the topic, I know insurance wasn’t the first thing you did career-wise. Could you share a bit about your background?

Manjit Rana: Growing up, I wanted to be a fighter pilot. During the Falklands War, I was actually at Biggin Hill going through the officer selection process. Long story short, I decided against it, set up an Asian fashion business, graduated university, and eventually ended up working for an insurance broker software house, which is how I entered the insurance space.

Ewa Banaś: That’s a fascinating story! Looking at claims inflation, what would you describe as the biggest challenges the industry faces right now?

Manjit Rana: Claims inflation is a massive challenge, and many factors are out of our control. For instance, car parts are becoming more sophisticated, meaning vehicles often have to go to main dealerships rather than local “Mom and Pop” shops, which is more expensive. Additionally, the rising cost of living is impacting labour rates and material availability.

We are now spending significantly more than expected when premiums were originally calculated. In the motor sector specifically, companies have been operating at an average combined operating ratio (COR) of 110%, meaning they spend £110 for every £100 collected in premiums. That is simply not sustainable.

Ewa Banaś: Does this impact all lines of insurance differently?

Manjit Rana: It impacts virtually every line because of third-party impacts. A rise in labour costs affects everything from vet services and airlines to building repairs. Furthermore, the cost of parts and transportation – driven by increasing fuel costs – affects everything from car repairs to fixing a household boiler.

Ewa Banaś: Was it possible to foresee this growth in costs?

Manjit Rana: I don’t think anyone could have foreseen the war in Ukraine, which had a massive impact on supply chains and utility prices. Similarly, COVID-19 caused a shift to remote working and changed consumer expectations regarding digital speed.

These events also changed consumer behaviour. For example, people staying at home more might feel they are less likely to be burgled and may question the need for contents insurance, yet accidental damage claims in the home may rise because people are there longer. It is a big industry involving millions of people, making it hard to predict how everyone will react.

Ewa Banaś: What role does technology play in mitigating claims inflation?

Manjit Rana: We are facing a labour shortage due to Brexit and people retiring out of the industry. We need to make more efficient use of our most valuable resource: people. Technology and automation can handle mundane, repetitive tasks that require less thinking.

While AI and workflow automation add massive value by checking receipts or managing processes, we still need humans to provide empathy during the claims conversation. Unless someone is a fraudster, they have gone through a bad experience; we owe it to them to make the process as fair and easy as possible.

Host: How can insurance leaders foster a culture of innovation?

Manjit Rana: We need to move away from what I call the “petting zoo” innovation model, where insurers just “buy a ticket” to look at new tech like it’s an elephant or a giraffe. Often, innovation scouting is done in isolation from actual business challenges. We need to understand the top challenges from team leaders first.

Innovation should be a service department, similar to HR. In many companies, innovation is siloed in a “sexy room” with bean bags, leading others to think it’s not their job to innovate. We also need to look outside our own industry. For instance, we should see how the car manufacturing or healthcare industries are evolving and how that will impact us. We need more people who are good at “connecting those dots”.

Host: It sounds like the perspective needs to change from the ground up. Looking five years ahead, how do you see claims inflation evolving?

Manjit Rana: Change is certain. I believe we need to rethink insurance products entirely. Currently, we are just “digitising last year’s pathways” rather than truly innovating.

In the future, car insurance might evolve into a journey-by-journey subscription model. If a consumer swaps their car weekly through a subscription, they won’t want to go to a price comparison site every time. The insurance needs to be embedded. We might even see insurers owning the “mobility ecosystem” themselves.

Finally, as an industry, we have talked about prevention compared to cure for 15 years, but we haven’t seen fundamental progress. We must focus on preventing claims from happening in the first place, or someone else from outside the industry will do it for us.

Ewa Banaś: Thank you so much for sharing your insights and background today. And thank you to our audience for listening to another episode of IT Insights InsurTalk.