In series - Claims management: Making the most of technology

Technology is undoubtedly an important part of the claims management mix. new developments can deliver faster validation, more co-ordinated supply chain response and, ultimately, cost savings and improved customer service.

"Technology can deliver significant benefits to insurers, brokers and their customers and it was a key criterion when we were looking for a partner to whom we could outsource our claims management processes," says Dick Tucker, a consultant to Bluefin. "Unfortunately, because claims is seen as paying money away rather than bringing it in, there are a lot of insurers and brokers that don't invest in claims technology systems."

This view is shared by Steve Howell, director of Manchester-based brokers CBG. "it's embarrassing how slowly the insurance industry is moving from a technology perspective. Very few insurers offer the services that are taken for granted in other sectors. There are hardly any decent online claims tracking systems in place but can you imagine not being able to track a purchase on Amazon?" he says.

But the benefits enjoyed by those prepared to invest may help to change the industry's view on claims technology. cost reduction is probably one of the most compelling benefits. Although it requires an initial investment, insurers upgrading on the technology front do report significant savings. For instance, over the past 18 months, legal & general has been identifying ways to use technology to reduce the claims lifecycle. "We identified any unnecessary links in the supply chain, using technology to remove them and improve customer experience. This has resulted in a 10% saving," says Andy Webb, operations director at L&G.

Technology can also help generate valuable management information that can be used to build better businesses. As an example, Mr Tucker says it was important for Bluefin to get good Mi when looking for a claims partner. "Insurers don't always provide good Mi on their clients but we're able to obtain claims data that enables us to better manage the account with the insurer."

Insurers can also benefit from improved Mi. Rather than taking data from their claims partners, generating it themselves would enable them to analyse what is really happening in the supply chain, identifying where they might need additional partners or where a company isn't performing. Likewise, from a sales perspective, insurers and brokers overlook technology at their peril. "Generation Y don't want to talk to people when they're dealing with their insurance. They want a full online solution from purchase through to claim," says Mr Webb. "10 years ago, online was an option for insurers but today, if you don't offer it, you'll never attract these people's business."

Given the low starting point for many insurers, identifying where they can make the biggest gains through claims technology is important, allowing them and their partners to better target their investment. one area where it is regarded as particularly important is with the transfer of information throughout the claims lifecycle. By passing information between suppliers and insurers quickly, there can be better supply chain coordination and improved customer service.

Martin Milliner, director of claimant and technical services at lV, says this is definitely an area where an insurer could shave time -and money-off the claims lifecycle, but admits there are obstacles. "Unfortunately, it's usually the insurer systems that are difficult to hook into this. suppliers are generally more agile and able to modify their systems but insurers can be lumbered with mainframes and legacy systems making interfacing more difficult. We are partnering with suppliers to enable more system communication but it could be three to five years before the industry gets to the right point," he says.

Plodding along
While the insurers might be plodding along, suppliers are busy souping up their systems to help reduce the lifecycle of claims. In particular, the use of mobile internet devices by loss adjusters is seen as a major advance in speeding up claims. For instance, L&G's claims management partner uses Blackberries when assessing a claim, enabling it to send the data straight into the insurer's claims system. Derek Rigby, claims manager at Sagars insurance Brokers, believes this can bring quantifiable benefits.

"Where a loss adjuster can fast track data to the insurer it can cut up to five days out of the claim cycle. This is significant," he says.

As well as using technology to work towards a more seamless claims process, the insurance industry recognises there are other areas that would benefit from further technological development. Online claims tracking is one of the big must-haves as far as insurers and brokers are concerned. "It's about visibility and information for policyholders with online claims tracking the ideal," says harry Rule, property claims manager at Allianz insurance.

"There are systems out there that do part of what's required but no one has truly cracked it yet." Stumbling blocks for online claims tracking tend to centre on a couple of key issues. Security and data protection can cause problems, especially where there are several supply chain partners required to access the system. The second issue is the updating itself, with information not always as up-to-date as insurers and policyholders would like.

Mr Rule says one answer to the problem of getting suppliers to update might be to push the information out to policyholders so they expect it in that format. "We could keep policyholders updated by text message or e-mail," he explains. "Other industries are really good at this. Garage tell you when
your car needs a service by text and even my dentist reminded me by text that I had an appointment later this week."

Having smarter online tracking wouldn't only benefit the policyholder either. Making this form of technology central to the claims process would mean insurers are kept informed of any problems, for instance a drier not going to a flooded property or a part not being delivered to repair a vehicle.

The benefits are well recognised by insurers and many say they are keen to make improvements in this area. For example, L&G is planning to introduce some form of online tracking in the next few years. "I'd really like to be able to offer customers online tracking but we would need to change our claims systems to enable this. It will be a must-have in the next five years," explains Mr Webb.

Another major development in the claims market is desktop validation and many brokers would like to see insurers using this to a greater degree. "Some insurers are great and the cheque is on its way to the policyholder the same day; others want to fully validate the claim, spending £150 to reduce the claim, usually by £150, and taking 14 days to complete the process," says Mr Rigby. "It's not economical."

Immediate decisions
Validation systems are getting smarter though, with many insurers using systems for brown and white goods at the first notification of claim. By suggesting a suitable replacement, or a cash option, these enable an immediate decision without compromising the indemnity spend. Mr Rule would like to see improvements though. "These systems have to be up-to-date and fast. There's also scope for them to be introduced to other areas, for example, we're looking at a building repair validation tool," he says.

Technology is likely to deliver other claims innovations too, many of which may have limited appeal or even be labelled gimmicky by some commentators. Apps - such as those for the Iphone and other mobile internet devices - are a certainty, as every other sector shifts itself towards this space and some insurers have already launched claims-related apps. For example, in the motor claim arena are Zurich with ZConnect, Axa with Axadent and More Than with Car Claim - all of which enable users to collect data to kick start a claim.

But, while the insurers are eyeing this market, there is some debate around just how useful these apps will prove in the claims arena. Mr Milliner says he can see some value in a claims app. "The policyholder could take photos and send them through to us. If it's a simple claim you don't need to send out an expert to get the images but I do think this would only apply in a limited range of claims," he says.

There's also resistance from L&G. "People are always asking me when we're going to bring out an app to enable policyholders to register claims but I'm not sure how successful this would be," says Mr Webb.

"When I download an app I want to use it straightaway. This won't be the case with an insurance claims app."

Others believe it's simply that the technology hasn't quite arrived yet to make these apps really effective. Simon Gifford, claims director of Towergate Partnership, says the apps available now aren't much more than online claims forms but he's already anticipating the next generation. "There's technology round the corner that will allow an insurer to send an app to a phone that will enable an almost instant claims decision. This is exciting and opens up lots more interaction between the insurer and the policyholder, which is the holy grail," he explains.

By way of illustration he says that the phone could photograph and video the damage to a property. These pictures would then zip down the line to the insurer's validation system to enable an instant decision. "The RAC is doing this on its breakdown service to ensure that the right parts are on the van to repair the vehicle. It saves time and is great customer service," he adds.

Another nice-to-have is telematics. This in-car technology can be used to track vehicle activity, recording factors such as speed, braking and whether the vehicle is involved in an accident. "This can really benefit the claims process. As soon as an accident occurs it will alert the insurer or broker, telling them where the vehicle is and what damage has been done. It will also give you details such as speed, which can be useful when assessing liability," explains Mr Tucker, adding that he is currently looking at telematics for the group's fleet clients.

Although this sits in the nice-to-have box at the moment, it could become a must-have over the next five years. A European directive on intelligent transport systems, which came into force in August, has called for the adoption of telematics and is looking at ways to standardise systems to make them more affordable.

Whether or not it becomes compulsory, Mr Rigby would like to see this form of technology adopted more widely in the insurance industry. "We need an insurer to throw the rule book away. This would be beneficial but the need for investment can often stand in the way of innovation," he explains.

Part of the mix
Technology is also likely to play a larger part in fraud protection, with many insurers looking at data visualisation technology to help them identify potential fraud across their claims books. Other counter-fraud technology is also likely. For example, Mr Webb says he is working with a software provider to develop a means of registering serial numbers. With this, policyholders will be able to register all the serial numbers on their electrical goods so they can be stored remotely. Then, if they are stolen, the data could be used by the insurer as part of the claim but also by the police to help fight crime if the items are recovered.

But, while technology offers much, many feel it should remain just a part of the claims management mix. "The claims process should be people-driven. Technology is a key part but insurers must have experienced claims handlers to give faster, more informed decisions to policyholders," explains Mr Rigby. L&G's Mr Webb is also keen to retain the human touch, especially for first notification of loss. "This call is so important," he explains. "It really helps the policyholder understand what cover they've got and what they can expect from the claims process but it's also invaluable for fraud protection."

Whether the personal touch is a benefit to the insurer or the policyholder, Towergate's Mr Gifford believes it is essential. "A decent IT platform can help an insurer's claims process but if they've taken the good people out, the IT won't work," he explains. "No technology will replace the personal touch."