Claims is by far a property and casualty insurer’s biggest cost component, as paid losses combined with investigative and settlement expenses accounted for around 70% of U.S. premiums collected in 2020. The pressure is always on to augment claims processing with new technologies and data sources that can increase efficiency, productivity, and accuracy, since every dollar saved goes straight to the bottom line. This transformation was greatly accelerated during the pandemic as necessity became the mother of reinvention, prompting implementation of widespread digital and virtual claims handling practically overnight.
However, interviews with chief claims officers (CCOs) from a dozen large and midsized personal and commercial lines carriers in the United States, Canada, and the United Kingdom found most walking a tightrope between the drive to divert more claims to automated systems and the overriding need to maintain a human touch at the moment that matters most to policyholders.
This isn’t an either/or choice between technology or people. Insurers should continue bolstering their data sources and technology infrastructure to settle claims faster, more accurately, and at lower costs, while also upskilling their claims professionals. That way, they could maximize the value of all the newly integrated technology and data available while still being able to curate a personalized customer experience.
The challenge facing insurers is how to effectively integrate these two sides seamlessly, so that they may deliver the right service at the right price point to the right claimant at the right time, with the goal of satisfying customers across a wide range of expectation levels.
Indeed, customers do pay close attention to an insurer’s claims handling reputation. A personal lines consumer survey by Deloitte found that 44% of US respondents conduct research into what it’s like to make a claim with a particular auto or homeowners insurer before buying coverage—while an even higher percentage do so in China (79%) and Australia (58%).2 The fact that a claim may be the only touchpoint a customer has with an insurer can make this element crucial to retention and growth.
This report focuses on how CCOs might overcome such challenges in transforming their operation, balancing the benefits of automation and more advanced technologies with customer demands for personal service. To accomplish this, insurers should look to raise the game of field adjusters, fraud investigators, claim file handlers, customer service representatives, and other essential claims department personnel to exponential levels.
What exactly is an “exponential” claims professional?
Advanced technologies and new data sources should increasingly supplement and augment (but not necessarily replace) adjusters, managers, fraud investigators, and other claims professionals. These advances should relieve them from many labor-intensive yet low-value tasks, while arming them with tools to speed up case resolutions and payments. This should also improve outcomes and customer satisfaction.
Exponential claims departments and professionals should therefore have (i) the training and skills to manage and audit automated results on a case and portfolio level, (ii) the judgment to quickly determine which tools and data might best serve a particular claim, (iii) the ability to strike a balance between automation and the ongoing need for human engagement, and (iv) the opportunity to offer value-added services internally and externally.
As more digital tools come online, insurers will likely be able to apply accelerated claims handling and automated decision-making to an increasing proportion of their overall cases, thereby boosting claims professionals’ productivity while freeing up capacity. However, a natural follow-up question that’s likely front of mind for many in claims is whether automation will make them redundant? And the answer is that it depends on whether they can adapt, so they keep adding value to the customer’s claims experience.
With new data and technology at claims professionals’ disposal, their roles and responsibilities will likely change. Traditional activities such as data collection and verification, loss estimation, and claims settlement could take somewhat of a back seat as automation solutions mature.
But this does not mean claims professionals will play second fiddle to emerging technology. In fact, claims professionals armed with these tools would be able to accelerate the pace of claim settlement, which should increase overall customer satisfaction, while supporting the continued evolution of automation solutions. Claims leaders interviewed also repeatedly highlighted the importance of personal engagement when clients need it, which should be a differentiator in an increasingly automated world.
This blog entry has been excerpted with permission
