Claims in the digital age
Article Synopsis :
With attackers transforming the competitive landscape and elevating customer expectations, insurance companies must integrate digital technologies into their operations to keep pace and claims should be a top priority. This article from McKinsey offers advice on how to get started.
Insurers with pure-play digital business models, such as Lemonade in the United States, Youse in Latin America, and Nexible in Europe, are transforming the process of buying a policy or filing a claim into a fast, simple, and satisfying experience. Incumbents looking to keep pace can and should incorporate digital technologies into the three foundational areas of claims—customer experience, efficiency, and effectiveness.
A true digital redesign of claims integrates a relentless focus on the customer with a value-driven approach. Successful digital claims transformations integrate five elements:
- Customer-experience excellence
- Analytics-driven claims handling and automation
- Claims-prevention services
- Value-added services
- Continuous improvement from customer feedback
The claims value proposition—that is, the value an insurer can provide to its customers through the claims process—needs to go beyond traditional after-the-fact claims management. The value proposition sets the aspirational goal of offering excellent omni-channel customer experience supported by intuitive digital processes. Insurers should aim to adopt a faster, analytics-driven approach to claims handling and fully automate the claims handling processes for clear and simple cases.
To determine how digital technologies can unlock value and improve the claims customer journey from start to finish, managers should examine each step of the journey with the following areas in mind and develop an aspirational future state for claims that is unconstrained by potential short-term, technological barriers:
- Product simplification: Insurers can shift simple, routine transactions from claims handlers to intermediaries, such as agents and brokers, or customers themselves.
- Intelligent case management: Supporting the entire claims journey with automated, intelligent case management is critical to establishing truly end-to-end digital customer journeys. With the help of AI, a digital evaluation automatically identifies the best next step in a specific customer journey, reduces manual touchpoints, and significantly speeds up the claims process.
- Frontline and back-office process digitization: Digital tools and systems can simplify and standardize manual processes. Standardized reports and calculation methods leave customers with a comprehensive overview of how their claim was calculated, resulting in higher customer satisfaction and a leaner process with fewer follow-ups and/or recalculations and less litigation. Insurers can achieve the greatest efficiency gains by fully automating back-office processes.
- Communication: Providing customers with the necessary information in digital channels offers them the sense of control they desire. The quality of communication can raise customer awareness and usage of digital self-service tools throughout their journey.
Offering truly innovative customer journeys requires a combination of AI and upgrades to technology platforms as well as the digital integration of partners in the claims industry ecosystem.
- AI and digital technologies: Digital customer journeys require not only the AI-enabled automation of decisions traditionally made by claims handlers but also an IT architecture that supports real-time interactions with customers. While AI should ideally support the entire customer journey, it can generate significant value by automating claims management.
- Prediction of claims characteristics: AI algorithms can help segment claims cases by complexity using factual and predicted claims characteristics.
- Supported claims handling: Going beyond the first two modules, AI can support in finding the optimal claims handling process for a specific claim: a global insurance carrier, for example, leveraged AI to derive business rules to identify clear and simple claims cases suitable for an automated process.
Integrating real-time customer interactions and insights from AI modules into customer journeys poses vastly different requirements for the IT architecture. While in the past, online interactions with the customer were only one way (for example, saving the details of an online FNOL into the claims database), interactive digital customer journeys require real-time, bi-directional interactions.
A successful digital transformation radically reinvents the claims customer journey with the help of AI, digital technologies, and the claims ecosystem. This demands learning by doing, which can be jump-started in the following ways:
- The digitization of each customer journey should start with a short design phase. Ideally, design thinking techniques are used to iteratively develop the best possible end-to-end customer journey. This process directly integrates consumer feedback on ideas and concepts.
- Successful players quickly move from the drawing board to prototype development. Progress is best made with agile development methods, such as creating and improving a minimal viable product in ten-day intervals and then quickly evolving the prototype into production.
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Digital Insurer's CommentsRoy Amara, co-founder of the Institute for the Future, famously coined Amara’s Law: ‘We tend to overstate the effect of a technology in the short run and underestimate the effect in the long run.’
All the hype surrounding AI has caused many insurance executives to dismiss its near-term utility. Rapid advancements, including new AI tools available in the cloud, put AI in play today for real-world claims applications. Insurers are finding wins/uses exceeding expectations.
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