The Opportunity of Digital Claims

In an industry increasingly forced to compete on cost, digital technologies are providing today’s insurers with new methods of achieving competitive differentiation. While many insurance companies are focused on massive projects to transform their legacy IT systems, additional opportunities abound to use evolving technologies to modernize legacy processes. A digital claims process in particular presents insurers with unparalleled opportunities not only to revolutionize the way that they interact with and engage with customers, but also to improve efficiency and create operational excellence.

Deliver more responsive customer engagement

Beyond annual policy renewals, the claims process is likely one of a customer’s only interactions with their insurance company—and thus the insurer’s primary opportunity to build a deeper customer relationship. Digital processes and online customer interactions are not the wave of the future; they are the reality and expectation of today’s modern customer. Many customers are more comfortable using a computer or mobile device than they are speaking on the phone, and expect to be able to interact with their insurance company through digital means quickly, easily, and with a minimum of confusion.

However, delivering excellence through online interactions needs to be more than a digitized version of existing processes. The customer-facing portions of the claims process can be modernized to deliver a seamless response more efficiently. For example, use of telematics and GPS following a car crash can not only provide rich information about driver behavior, but can also assist the insurer to deliver a faster, more comprehensive response without additional burden to the customer. Data from other devices, such as mobile phones, smart meters, security systems, health tracking devices, and more can also be used to customize and streamline the insurer’s response to the customer’s unique needs.

Achieve faster, easier claims processing

During claims interactions with their insurer, customers are often under stress and are looking to achieve an insurance payout quickly and easily. There are a number of digital tool-kits and solutions that can help achieve these goals.

One approach already gaining considerable attention is the use of machine learning to help reduce the processing time for lower complexity claims. By digitizing and providing a cognitive learning system such as IBM Watson with historical claims data, the machine is able to learn the critical factors that lead a human to determine whether a policy needs to pay out. Provided with new data, the system can then predict with a high degree of accuracy whether a policy pay-out would be in order—in as little as 15 minutes.

By lowering the internal time required to assess and evaluate data for high-volume, low-value policy decisions, the insurer can provide funds to customers quickly and with a minimum of hassle. This can be a core method of differentiation beyond low cost premiums, demonstrating that the insurer is there to quickly support customers in a time of need. This approach also reduces the internal resources required for processing low-complexity claims, enabling re-allocation of resources to other critical business areas.

Cognitive technologies and robotics are also demonstrating considerable potential to reduce the process redundancies created by the fragmented claims ecosystem. A cognitive system that forms a “layer” atop other processes—such as interactions with legacy IT systems, suppliers, and more—can look for patterns to reduce repetition in data entry, thereby minimizing the time and effort required for each claim.

Drive additional operational efficiencies

Integrating machine learning into the claims process can also provide considerable benefits to the insurer’s operational efficiency through other methods. For example, with access to more robust claims handling data and an analytics process to provide clear line-of-sight on the total cost to serve, leakage cost, and other areas, insurers are enabled to build an auditing model to better control operating costs and expenses. This can not only increase efficiency, but also lower combined ratios and enable the insurer to offer more competitive prices.

While there is an understandable reluctance to commit to new technologies or wide-scale business changes while legacy systems transformations are underway, waiting for the completion of such projects is a mistake. To build robust digital platforms for claims processing and customer interactions, insurers need to start testing different approaches and learning new ways of doing business now. When evaluating which approaches to try, keep in mind that the best solutions are the ones that tick both critical boxes, simultaneously delivering a better customer experience and improving operational excellence.

By seeing the opportunities inherent in a digital claims process, insurers can not only develop customer relationships that inspire trust and loyalty, but also create a platform that competes on more than price.