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Spotlight on Digital: Insurance claims - The path to digitisation

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A recent survey conducted by Post, in association with SS&C Blue Prism, explored the ways in which digital claims are being approached by the industry. Despite digitisation taking off in recent years, many claimants today are still using emails and telephone to contact their insurer at the initial point of a claim.

Many believe that customers are dropping out of a fully digital claims journey due to claims being too complicated or customers being less tech-savvy. So, how can insurers ensure digital claims journeys are streamlined and easy to use for the consumer?

If you were thinking that claims is an area ripe for digitisation, you’d be right. Insurers wouldn’t disagree, with 86.8% of respondents to the survey believing that digitising all or part of the claims journey is the best way to improve the customer experience.

Before 2019, the top three channels used by claimants to contact claims teams were – in order of volume – telephone, email and a form on the website, although this medium was used less than a third of the top two methods.

Since the pandemic, the main channels have switched places, with email first, then telephone. The website form remains third and about as popular as it was before Covid-19 struck.

These two methods also dominate the channels used to communicate first notification of loss, with telephone just ahead of email.

“We believe any change must bring a benefit to our customers and our handlers,” says Will Paskins, head of digital customer journey at Zurich. “We’ve always sought to understand what it is that a customer or broker needs, and then what solution may be appropriate.”

In the drive for better customer experience, few would argue with this measured approach, or that commercial decisions must influence the approach.

“The cost and the time taken to build digital solutions are big factors,” says Neil Ashley, head of claims innovation and technology, Aviva UK, “particularly if an organisation is concerned they may not be used by customers and therefore won’t have an operational impact.”

Insurers are also aware of the importance of removing uncertainty for their customers, says Ashley, particularly at the point of notification where they may be under considerable stress. At these times, some customers will prefer to speak to a ‘real person’ rather than engage with a digital process.


Little evidence of innovation

Until such time as digitisation becomes more deeply integrated, the claims process remains a very hands-on process. Only 29.4% offer an end-to-end, FNOL to settlement process, while 25% have a partial digital claims journey.

Of the rest, 8.8% intend to implement in the next year and 16.2% within 24 months.

Meanwhile, more than a fifth (20.6%) have no plans to introduce an end-to-end claims journey any time in the near future.

“It’s important to be strategic over the digitisation of a claims journey,” says Paskins at Zurich, citing the many moving parts that increase complexity, depending on the nature of the claim.

“There is [no] silver bullet,” he says. “We’re very much guided by feedback from our customers and brokers to determine where we focus our efforts.”

Complexity, but for whom?

The main reasons given for customers dropping out from a digital claims journey are complexity, and difficulty over settlement. Trailing in third is a lack of IT ability or support.

Those insurers who do not yet have digital claims say they have been held back by two key obstacles: budget (45%) and the perceived size of the transformation projects required (40%).

Concerns about a negative impact on the customer experience only weigh in at 20%, while 5% bemoan a lack of insights into the claims process.

Of these companies, 60% have no robotic process automation or intelligent automation and their future objectives on improving their claims are to streamline processes (85%), create better customer experiences (75%), reduce cost per claim (70%) and speed up the end-to-end claim lifecycle (70%). Productivity increases, implementation of new tech and less reliance on the contact centre are lower priorities. The focus is firmly on reducing complexity within their own systems.

Jonathan Guy, chief claims officer at First Central Group acknowledges that digital first is not a priority for a customer who has experienced a loss where there is a strong emotional connection. The loss of a phone is not – despite what some may think – the end of the world. Whereas a smash on the school run could well mean exactly that for the people affected.

“Household is probably the most emotional line,” says Guy, “and it’s also often the one with the most fragmented supply chain if you need to make a major property claim, due to the myriad trades involved.”

Customers often insist on taking ownership, because it is their home. That is something the industry will need to crack if it is to offer an end-to-end digital solution over time.

Not as straightforward as it may appear

If it were simply down to a customer’s emotional interaction with the item covered, one might, therefore, expect to see motor and home at the bottom of the list of insurance lines where a full digital claims journey is supported. But they’re not – they are at the top.

These processes have been so extensively digitised because they are so complex. And aside from time, effort, quality and price, there is so much that customers simply do not care about, says Guy. Clearly, the complexity is less the concern of the customer than the insurer.

Making little headway

The reason digital is not exploited to the fullest extent is not simply down to customer choice or complexity, but the often fragmented supply chains and the lack of control that insurers have over that end-to-end fulfilment process, says Guy.

“While they have control to an extent over that supply chain, many use non-proprietary technology and are beholden to license fees and upgrade paths and don’t have a clear read-through of everything that’s happening from a customer perspective.”

This is not a criticism. As Guy says it is a common challenge that prevents insures from being able to see every point of the process and be able to optimise it.

“Human beings want to get an answer for whatever their immediate needs are,” says Guy. In motor claims that will be focused on getting mobile again, but they won’t want to oversee the minutiae of a repair process. This is where making customers aware of online tracking may get them to engage with a digital process, as it satisfies their immediate – and ongoing – requirements.

“You have to make sure that you’ve thought about all of those elements and designed things with the customer in mind.”

It’s getting better every day

The survey data shows the priorities for digitisation focus on improving internal processes. Half of those insurers who have begun digitising their claims journeys have made use of RPA and intelligent automation in FNOL, and almost as many (42.9%) in fraud detection and settlement.

Some parts of the chain are making heavy use of RPA. More than half of insurers (56.3%) use it in FNOL and fraud detection, for instance. Settlement is the next most common use case (43.8%), followed by supply chain at 31.3%. But there is lower penetration of artificial intelligence or machine learning. Again, the greatest application is within FNOL (43.8%), but less than a third (31.3%) are making use of it for fraud detection.

It is interesting to note that concentration of AI and ML is similar to those insurers that already have an end-to-end digital journey."

It is interesting to note that concentration of AI and ML is similar to those insurers that already have an end-to-end digital journey, with the use of AI in FNOL at 42.9%. In fraud detection, it is actually higher at 35.7% than both settlement and supply chain elements (21.4%), suggesting that those trying to catch up are focused on improving the customer experience.

Exactly one half (50%) of respondents have not applied AI or ML to their claims journey as of 2022.

The spanner in the works

While everyone wants to digitise the claims journey to improve the customer experience, legacy systems remain a major obstacle.

“One of the biggest challenges we see is legacy systems and their lack of interoperability – they simply don’t speak to each other,” says Craig John, global director of innovation at Davies Group.

John says RPA can be used as a digital enabler to start connecting systems, with the possibility of unlocking an Amazon-like experience for customers.

“The evolution of technology, such as using low-code platforms, allows us to create digital journeys without the major technical blockers of legacy systems.”

That’s provided the insurers’ own programmers can resist the urge to recode everything in their own syntax, says John. But that is just one of many cultural obstacles that must be managed by the innovators.

“Where policy information is today pulled in by a human, it can be done with a robot and [fed] into the decision engine,” says John. “It is immensely powerful and so RPA is proving to be a tactical glue, a way of joining up systems… to make these things happen.”

Of course, RPA, AI and ML won’t remove the need for a customer to speak to a real person to unburden themselves and be confident they’ve set a claim in motion. But insurtechs such as Peppercorn, who are developing conversational AI (chatbots) may in time replace a flesh-and-blood claims handler with a digital one.

“So you’re still speaking to someone, but it’s a digital omnichannel, and is very linked up,” says John, who thinks that electric vehicles will have a huge Influence on the adoption of digital omnichannels.

John cites Tesla’s own disruption of the insurance market and how its ‘machine visions’ go far beyond telematics, populating the system with data before a claim has even been instigated.

“Machine visions could be a game changer, because pictures or video can be analysed to assess the severity of an impact,” he says, leading to better, more tailored responses to customers. The system can even call an ambulance or a tow truck, if required.


Never lose the human touch

These innovations are still some way from becoming the typical experience of the insurance customer. The survey indicates that while there is limited penetration of digital claims processes, many insurers are investing in digitisation to improve the customer experience.

The survey indicates that while there is limited penetration of digital claims processes, many insurers are investing in digitisation to improve the customer experience."

Some will have greater difficulty in overcoming their limitations than others. But ultimately, the only point in delivering a digital claims process is if that is what your customers demand. ‘Build it and they will come’ is a high-stakes strategy.

Culture is one of the biggest considerations when moving to digitisation,” says Paskins. “You can have the most advanced technology in the world, but if people don’t want to or don’t know how to use it, it quickly becomes a source of pain and not benefit.”

Customers – both corporate and individual – are changing the way they interact in a digital society, and so the pace needs to be dictated by them, he adds. “Understanding this and letting them interact in ways they’re comfortable with is key. We can certainly nudge people in digital directions, but we would never say ‘if you want to do that, you can only email or fill out this form, you can’t speak to us’.”

Aviva’s Ashley agrees: “We have a fantastic uptake on our digital journeys, but this is not for everyone or for all types of claims.”

Aviva customers want to switch between digital and human, although digital enables customers to make a claim anywhere, at any time and control how long it takes.

“This gives a consistency in reporting. But it can’t cover every eventuality, and it isn’t easy to ask bespoke questions, so it’s important not to lose the human touch.”

Once a digital claims process is built, customers still have find a reason to use it. By focusing on how and why customers may want to interact with such a process, insurers may find the magic formula for a digital-based omnichannel experience that satisfies customer needs while resolving legacy and integration issues.

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