Spotlight on digital claims: Reducing the void between insurance and retail

 

Amazon’s announcement of a multi-million investment into its Insurance Accelerator with Marsh is a shot across the bows for the global personal lines industry. Jeff Bezos’s company inspires exceptional trust among in its users, thanks to a relentless pursuit of digitally-enabled customer satisfaction. Starting out with liability for small businesses, could it look to inject un-dreamed of levels of digital efficiency into other lines?

Efficiency and customer satisfaction are likely to become the key battlegrounds for personal lines in the next five years.

When insurers started to ‘go digital’, they focused on the competitive advantages of online sales. Now, when the majority of policies are bought online – direct or via aggregators – it is during their after-sales service and claims experience that most customers have their Wizard of Oz moment.

In the Post Digital Claims Survey, the further customers get through their claims, the more the velvet curtain of digital enablement slips, often revealing a megaphone, flashing lights and two sticks with gloves on the end.  Electronic first notification of loss is commonplace but not the automation, digital workflow and intelligent straight-through processing of simple claims to back it up.

The survey shows that 66.7% of insurers hand-off elements to human agents within even the simplest of claims.  We can only guess where this goes when claims become more complex.

Insurers have always liked to ‘touch’ claims to keep claims handlers involved and prevent fraud but for many claims, that expense is wasted on human touches performing simple, iterative tasks based on decision trees. If the decision points in those trees can be articulated, mapped and placed within a workflow, they can also be replicated in digital claims handling so long as the platform supports the flexible configuration, automation and updating of the processes that result.

Forbes predicts that the global low-code/no-code development platform market will top $187bn in revenue by 2030. It claims it will account for more than 65% of application development activity by 2024.  

For insurers, eFNOL is a common starting point towards increasing operational efficiency in claims but, like the Wizard of Oz, it is worse to tempt a customer into an apparent digital claims environment and then to let them down at the next step. Insurers cannot afford to offer an Amazon-looking service at the front end and pull the digital rug immediately after a single online form.

The survey clearly highlights the void opening between insurance and retail in digital engagement. Indeed our own experience in digital innovation points to  three key areas where digital lag needs to be tackled by insurers: system siloing, automation and notification triggering.

System siloing

Every claim is a chain of events, actors and records but often the systems to interact with each sit in silos. Nirvana is where all information for every claim resides in one integrated record: a single version of the truth that all parties can access in whole or part. Rekeying and data-imports are by-products of system siloing so insurers trying to knit together disparate systems and point solutions find data is lost in the interactions between them. The single comprehensive record sits everywhere and nowhere.

In motor insurance, jumper claims [where a claim jumps significantly from its initial reserve figure when unstructured data is analysed], incubated claims and fraudulent claims result primarily from fine details of a claim falling between the cracks in systems. The situation worsens when claims handlers are required to enter their interpretations of events into systems. Integrity then rests on the skills and time available to individuals.

True digital claims handling gathers quality information fast, processes and triages it instantaneously and then triggers a sequence of actions; all within seconds of a customer hitting an eFNOL submit button. If at each stage the customer is then notified, customer satisfaction flows from the perception of speed and urgency plus understanding anytime what stage their claim is at.

The lag and inefficiency of silos becomes stark compared with a high-speed digital claims platform incorporating complete integrated records of all events and actors.

Automation

At its core, automating claims is a question of layering actions based on ‘If X do Y… unless Z then do A’ decisions. This triaging can trigger a speed revolution. There may be 500 different ‘if, then’ rules that a motor insurer follows but creating those rules once and reaping the speed and efficiency that comes every time they are triggered generates multiplicative returns.

The results show that once insurers move on from FNOL only 10% had automated workflow that knits in their supply chain. And just 5% automatically kept policyholders up to date at each step of the claim. The battle for retention and satisfaction will be won in the remaining 90% to 95%. Given that many tasks within a claims department are rule-based and iterative, digital handling can replicate and remove cost from such actions liberating claims staff to focus on higher value work. The initial leap of faith from legacy to digital innovation is often the hardest step in achieving this because so many vested interests tend to be tied up in the status quo.

Notification triggering

Customers like to know what’s going on. The more they know, the more at ease they feel. Claims are emotional events involving cars, accidents, homes, pets and holidays. When things go wrong, the problem becomes the customer’s primary focus.

The near-zero cost of an update SMS or email during claim is a fundamental difference in gaining a claimant’s satisfaction. Generating messages that link to an updated view of the progress of the entire claim can provide reassurance and slash costs. Thousands of claims handling staff each day feel the wrath of insurance claimants but building automated notifications into the heart of digital claim operations is one of the single best investments any insurer can make in improving customer satisfaction.

Digital conclusions

In the early 2000s, many insurers said that two things matter in insurance: the price and what it costs. In Covid Britain, where more customers than ever are online for their financial and home services, price is still important but true customer satisfaction involves much more. Customers have become used to Uber, Deliveroo, Amazon and eBay, so if insurers continue to rely on bored staff in contact centres to gather and process information this is a risky strategy.

The technology is here and with
no-code platforms increasingly putting the power back in the hands of business practitioners, it is a brave insurance CEO in 2021 who allows their claims handling to resist the tidal wave of end-to-end digitisation and automation.

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