By Keith Raymond, Novarica
As insureds carry the customer experience expectations that have been set by other industries into the claims experience, digital transformation is becoming more important for those in the insurance industry. Today’s digitally-immersed customers have grown accustomed to being able to interact with companies anytime, anywhere, and from any device. To address these expectations, new digital opportunities enable insurers to leverage data from sources such as telematics, wearable devices, IoT sensors, GPS, and the weather.
The claims interaction is a crucial touchpoint through which insurers can demonstrate their value to policyholders and establish a positive relationship. By enhancing digital capabilities, carriers can significantly improve the claims experience, thus simultaneously solidifying policyholder relationships and gaining internal efficiencies.
Digital is not just about mobile or omni-channel capabilities. Digital describes the whole progression required to fulfill an external request from an agent, broker, or (in some cases) IoT sensors at FNOL through the back-end processes triggered during “moment-of-truth” interactions with carriers. Digital enables the evolution of both business and how companies interact with customers and stakeholders. It is forcing carriers to rethink the relationships between people, information, and processes given new technology-enabled capabilities.
As insurers move into the digital future and look to target today’s tech-savvy consumers, they will need the right mix of tools, applications, and capabilities to set their organization up for success. These tools include modern core systems; predictive analytics capabilities; emerging technologies in the claims process; and growth in collaboration between claimants, vendors, medical providers, and carriers.
Modern uses for artificial intelligence, machine learning, and the Internet of Things are evolving at light speed. Advanced analytics is gaining significant traction as a method to enhance digital offerings and the customer experience, and insurers are beginning to utilize predictive analytics for fraud detection and underwriting.
Predictive analytics, powered by IoT and other sources of current and future data, is one of the driving forces of the digital evolution. The insights generated by advanced analytics reveal issues like fraud detection and claims prevention, as well as allow services to be tailored based on human digital records. These capabilities underpin digital initiatives and lay the foundation for carriers to prevent leakage, serve customers more efficiently, and compete for new market share.
Large insurers tend to have more developed predictive capabilities. While smaller insurers have less mature capabilities, adoption is growing among midsize property/casualty insurers who may be in the early stages of predictive analytics projects. Many carriers are still at the beginning of the process to build out these predictive analytics capabilities, but it is becoming imperative to enable digital and enhance the customer experience.
There are four areas of focus for insurers to fold digital capabilities into claims: fraud, customer experience, straight-through processing (STP), and risk avoidance. With analytics-enabled digital initiatives, instances of claims fraud can be lessened by leveraging automated claims payouts to detect hidden fraud patterns and leakage, and customer- and agent-facing technologies can decrease fraudulent claims submissions. A self-service claims process across a variety of channels offers the opportunity for carriers to establish a positive touchpoint with customers.
STP offers gains in operational efficiencies, along with the potential for increased customer satisfaction. Plus, cost savings are likely to be gained; digital claims submissions and self-service require fewer resources to respond to claims inquiries and staff call centers. New digital channels also allow insurers to connect with consumers in different ways and push policyholders to the forefront of risk mitigation. New technologies like IoT and telematics devices can lower risk (and thus claims frequency), increase claims prevention, and provide data that can be used to predict claims complexity more accurately.
Technologies that can work in tandem with updated core systems and advanced analytics capabilities continue to emerge. Investing in and staying aware of these emerging technologies can help insurers keep up with the pace of change both inside and outside the industry—especially those in line with changing customer expectations. New entrants and InsureTech startups are disrupting parts of the insurance value chain, including claims, and while these companies can present a threat to the existing model, they also present opportunities for partnerships and innovative learning experiences.
Digital capabilities that can automate parts of the claim process drive operational efficiencies; improve decision-making; provide a better customer experience; and spur significant growth in collaboration capabilities between claimants, vendors, medical providers, and carriers. As insurers mobilize their organizations into a digital-based future, reinforcing claims capabilities will be a critical next step.
This article was originally published in the PAMIC Pulse.
Keith Raymond is a Vice President of Research and Consulting at Novarica. He is an expert in IT leadership and business transformation, back-office operations, mergers and acquisitions, and process improvement for both property/casualty and life/health/annuities. Prior to joining Novarica, Keith served as CIO/COO of Futurity First Insurance Group; his previous roles include AVP of Distribution Systems and Field Technology for Mass Mutual; CIO of Trumbull Services, a wholly owned subsidiary of The Hartford Insurance Group; Principal Consultant at HCL Technologies; and CIO of FPI, a software development and service company. Keith has a BS in Technology from Central Connecticut State University. He can be reached directly at firstname.lastname@example.org.