Claims has not received as much attention as many front-end processes when it comes to investment, even though it is the moment of truth on which long-term policyholder loyalty can be built
Recent advances in technology have opened up new opportunities for claims managers with greater visibility of data to make more informed decisions to help reduce cost and improve the customer journey of a claimant.
With this in mind, Post, in association with Marklogic, brought together representatives from the claims arena to address how digital processes can transform the way claims are handled.
Toni Meeking, claims account manager at RSA, said bringing claims into the 21st century is a multi-stakeholder task and essential as insurance buyers’ expectations increase.
“Our customers and the businesses they own are innovating all the time, so we need to be able to keep up with our customers as well,” Meeking said.
“The same goes for any of the parties that we link with: the suppliers, third-party administrators, and the loss adjustors. We all need to be raising the bar and looking at how innovating in the claims space can improve our ability to trade, from both a customer service and financial perspective.”
Jennie Gibson, claims performance analyst at Ecclesiastical, added that as customers’ lives become increasingly digitised, expectations for a fast, efficient and tech-savvy claims environment are increasing.
It’s not just about meeting customer demand however. Gibson said there is an overwhelming business case for two aspects of trade that would be impacted through digitising claims.
“First, we’ve got the customer and the customer experience, and the technology we use for meeting customer expectations, in terms of every other aspect of our lives is digital. Why wouldn’t reporting an insurance claim be?” she asked.
“Then you’ve got the performance management side. It’s only through analysing claims data and providing that analysis back to the rest of the business that we can get accurate insight into our total performance. A better claims environment would have a huge potential impact on the entire business.”
Think big, start small, move fast
“Because claims are much more complex, it’s falling behind,” explained Vicki Heslop, head of customer claims for personal lines at Covéa. “It’s so much easier to digitalise the front end and the sale side, which makes it cheaper and faster to do. The claims journey is vastly different and the customer needs are different.”
Heslop said the complex nature of claims makes it impossible for an insurer to modernise the entire process in one go. “Claims is so complex that if you try to do everything in one go, you’ll be waiting for a very long time. By the time that’s delivered, you’ll want to change it.”
David Melvin, head of robotic process automation and cognitive automation capability at MS Amlin, added: “We’re talking about disrupting the whole existing model, we’ll never solve it in one go. Our business has had to adopt a mantra of: ‘you start small, you think big and you move fast’.
“The challenge that companies face is that they try to crack it all in one go. It needs to be broken up into manageable chunks and if it fails, it fails fast, and you move on.”
The business case is readily agreed upon, as are the benefits that a modernised claims process would have for customers. However, the siloed nature of most insurance businesses makes achieving this challenging, said John O’Neill, specialist projects director of Sedgwick.
“One of the challenges we face with IT developments is the gated processes that you have to go through,” O’Neill said.
“We have to continually make the business case and face the finance gate, the security gate, all sorts of checks and balances, put in place for good reason, but all slowing down and holding up any drive for modernisation.”
“We need to find a way these gates can be accelerated a little bit so we can shorten those development cycles and fail faster, so we can move on to something that’s going to lead us to that success.”
Lee Watts, head of technical claims at Allianz, agreed with O’Neill and added insurers’ archaic IT infrastructure and legacy systems as an issue.
“This is particularly a challenge for the larger traditional insurers,” he said. “The systems are embedded and complex. It takes a long time to build a business case and get IT mobilised into making such a change. You’re looking at two to three years in terms of mobilising the business before any solution is reached.”
“Modernising claims sounds quite simple, but when you’ve got legacy systems, by the time you’ve made the changes, the world will have moved on and then we’re back to square one.
“You could end up building a solution that’s redundant by the time the project is completed.”
These challenges, while hard to overcome, must not distract claims professionals away from the need to modernise, said Kristian Feldborg, co-founder of insurtech Policy Castle.
“I’d rather have a three-year old redundant system than a 30-year old one,” Feldborg said. “I’m working with a bank at the moment where we’re updating a solution from 1984. Doing something is always better than doing nothing, in my opinion.”
With Solvency II, whiplash reform, the senior managers regime, the Civil Liability Bill, the discount rate and the General Data Protection Regulation, the insurance sector is no stranger to changes in government policy or financial regulation.
John Pyall, head of Munich Re’s managing general agent Cockpit, said such regulatory change has a negative impact on any modernisation attempts.
“As a business and as a sector, we could all agree on a solution and then the Financial Conduct Authority throws out some curveball regulation, which forces us into a rehashing of any progress made to comply with what it wants. It’s a problem,” he said.
System flexibility, and IT and claims teams being given the freedom to adapt, are the key to solving the issue, said Rodrigo DeCossio, UK insurance lead at Marklogic.
“This is something we see in financial services. In investment banking, our clients face loads of regulation, loads of new requirements that come from the regulator and that need to be dealt with quickly. You have to have systems that are flexible enough to be able to adhere to those regulations when changes arise.
“If it’s a regulation, it’s a new business requirement. Something happens and is unavoidable. The system and the teams behind them need to be flexible and agile enough to be able to respond quickly to that.”
End of the claims manager?
Melvin questioned whether current claims teams have the required skills to build a claims environment fit for the future.
“We need to ask questions about the skill sets of the people in our teams and whether the claims teams that we currently see are the right claims teams for the future,” he said.
“One could argue that if you had the right data and data analytics, you’re really looking at cognitive scientists, not claims managers, to take this forward.”
Melvin added: “The change we want to see is systems recognising pattern, it’s benchmark profiling, it’s interpreting unstructured data in a way that can give you insights that will give you answers. That’s scientists’ work, that’s data analytical work, that’s not a classic claims manager’s work.”
DeCossio noted that when a business starts using robotics and artificial intelligence, job functions change.
“You get to a stage where everything is automated, a new claim will come in one end of the process and the processed claim will come out the other. The skills that you’ve acquired over many years in insurance claims are negated to some extent because you’re accepting what the AI tells you the answer is.”
A fully automated claims process is desirable from a business perspective, said Andrew Wallen, claims underwriter at Tokio Marine HCC, but he questioned whether or not that is best for the customer.
“When somebody buys a policy, they’re buying a claims service. They’re not buying a policy because of the piece paper.”
“Questions we hear time and again are: ‘how can we hand-hold our customer through the claims process?’ and ‘what can we do that adds value to the type of services we offer?’. The value of the product comes when a claim is made. Without that human interaction, how are we ever going to get to that hand-holding?”
Wallen added: “The data analytics, AI, none of that’s going to achieve an outcome where the customer is feeling confident and happy that we’re there to help them, which is what they paid their money for at the start of the whole process.”
Robin Challand, claims director at Ageas, agreed with Wallen and raised concerns that while automation has to be a part of the claims process, customers will still need to be taken through making a claim and want assistance from a human who can help.
“The customer’s making a claim once every 10 years. It won’t be something they’re used to. They’ll actually want to be taken through it, they’ll want to have that conversation,” he said. “AI and automation need to be a part of that process instead of replacing it.”
Mike Downing, chief technology officer at WPA, said he has already witnessed the efficiencies such innovation can bring to the claims process, particularly with complex medical claims.
Downing said the changes have increased customer interaction in the areas where it matters most, with staff able to focus on empathy and emotional support for the claimant.
“Medical insurance claims are quite complex – conditions, symptoms, treatment – it’s a lot for a person managing the floor to take in. We had to rebuild our entire claims system over the last three years, so that the machine does everything,” he said.
“It frees up the human part of the process to deal with empathy, to deal with the concerns, and the questions the customer may have. That’s led to less stress for our staff when they’re answering those complex calls, because they can deal with the conversation.”
Tech giants like Google, Apple, Facebook and Amazon are regularly cited as potential disrupters to the sector thanks to their data stores, technological advancement and vast cash reserves.
In May, Post reported that Amazon put on a ‘beauty parade’ to insurers last December with the intention of pitching itself as a motor managing general agent. Analysts say it is likely that incoming players like the online retailer will merely be the front brand, with any insurance products underwritten by an insurance provider with an established underwriting platform.
Sue Stansfield, claims strategic development manager at LV, said this will make no difference to customers and will not affect the disruptor’s ability to send shockwaves through the industry.
“The customer doesn’t care who’s behind the policy. The customer doesn’t go into Amazon and say I’m going to buy an Amazon product, because I know it’s underwritten by GS or whoever it might be,” she said. “They go to Amazon because of the brand, because they produce products and people buy them, because customers love Amazon.”
Stansfield added: “It may not have a call centre with insurance people in it or its own underwriters, it will use suppliers, but it will use the very best suppliers to deliver the technology that it needs to keep up with the Amazon image. That’s the disruption. It will use the analytics, it will use all of our historical data and it will take the best that providers can offer and make it better.”
Pyall said insurers should not be too concerned. While the technology giants and insurtechs offer a challenge, it’s the image that is the threat and not necessarily the offering they provide.
“As much as we say it is going to revolutionise it, all it is going to do is use their front end and act like an MGA,” he said.
“Behind all the branding will be a standard insurer and, therefore, the back-end processes are not going to be that advanced. It’s like most of the insurtech firms that we deal with at the moment. They look incredibly sexy at the front end, but when you look at their back-end processes, they’re still relying on the same third party claims administrators that everybody else is.”