Digital Insurance recently surveyed insurers, brokers and adjusters about the technology they're using in the claims space. We'll discuss the results of the survey and share insights on how insurers are investing in claims technology and explore how it's changing the experience for policyholders.
Transcription:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Patti Harman (00:07):
Good afternoon and welcome to our Transformation Forum, How Technology is Changing the Claims Experience. I'm Patti Harman, Editor-in-Chief of Digital Insurance, and I'll be your host today. Digital Insurance's parent company, Arizent, has a number of divisions that collaborate with our editorial teams and enable us to provide insights and information that are unique to our different news organizations. One of those divisions is our research division. And joining me today is Janet King, our Vice President of Research and Content Solutions for Arizent. Thank you so much for joining us today, Janet.
Janet King (00:46):
Thanks, Patti. It's great to be here.
Patti Harman (00:49):
So let's start with an overview of who participated in this survey, and can you give us an idea of maybe the size of the companies that responded and the job levels or positions that were involved?
Janet King (01:05):
Absolutely, yes. So as you mentioned, our team does a number of original research initiatives every year in partnership with Digital Insurance. This is one of six surveys that we're publishing this year for the insurance community. This was a survey primarily of P&C carriers, although we did have a few agents and brokers and other carriers in the mix. But for today's conversation, we're going to be largely focusing on the data around P&C because I think it's particularly relevant to this topic. So as you can see here, two out of three, two-thirds, 66% of those folks are at companies with a billion or more in revenue, and fully a third are at companies with 5 billion plus. So we had a good mix of companies, but we do have a lot of those larger enterprise organizations in the sample. And when you look at who they are, where they sit within their organization, 62% of them were in senior management roles with 30% holding c-level or SVP type titles. And another 32% in group manager, vp, senior director, director titles. So I think it's a very highly qualified audience and I'm excited to share some of their thoughts on where they see claims technology heading.
Patti Harman (02:33):
I was really excited because it was a nice mix of respondents, both in terms of the size of the companies and then who was responding based on the information that you've seen. What were some of the key themes or responses that were an outcome of this survey then?
Janet King (02:53):
There is a lot of data in here, but I think there were three things that really kind of popped for me, and we'll talk about them in a little bit more detail as we go through, but just to quickly outline them here, I think what it really shows is that claims sits near or at the top of digital transformation priorities for the insurance sector overall, but especially for carriers. For carriers, it's the number one digital transformation focus followed by customer experience or customer service. I think the second thing is that the research really shows how customers are playing a very pivotal role in shaping the claims experience and informing future roadmaps. So that's another interesting finding. And third, there's a lot of good data in here about technology and AI in particular. And what we see is that AI will be a focus of continued investment for many carriers. And while digital tools are widely in use, there's definitely room to drive adoption of those platforms for the overall benefit of the claims experience.
Patti Harman (04:03):
I wasn't surprised that carriers were really planning on spending a lot of money, especially in the claim space because that's kind of where the rubber meets the road for them. It's one thing to sell an insurance policy, but when a policyholder makes a claim, you want to make sure that they have the best possible experience in a very difficult situation. So investing in that claims process is going to be really important. Did any of their responses surprise you then?
Janet King (04:36):
Well, first let me say, I completely agree with what you just said. I think this whole topic is really interesting and it's so central to driving the customer experience within this area forward, but I don't think there was really anything completely unexpected in this data, but it did, and I'll get to this chart in a minute, but it really did confirm how pivotal claims is to the customer experience and the ongoing digital transformation efforts across the industry. And you can see it here reflected in this data, and I don't see claims so much as surpassing customer experience as a priority for carriers as it is driving customer experience forward. Those two things are really, really linked to your point. So I think that's really interesting. I think I also mentioned it highlights some really interesting stuff about the role of customers in the process, and we're going to get to that in a few slides. But another thing that I think is worth mentioning that surprised me a little bit is that most carriers view their progress on claims management as simply keeping pace with the competition. Really, I think showing how challenging it can be to innovate and to innovate across all stages of the claims life cycle, from communications to claims investigation to data collection, and to authorization and payment tracking.
Patti Harman (05:52):
It is well, and for many, many years, the insurance had the reputation of maybe not being the most up-to-date in terms of their technology. There were a lot of manual processes or a lot of legacy systems, and that has continued to be an issue, I think, in some respects. So figuring out where to invest is going to be important for a lot of these carriers. And along those lines, what do carriers identify as their top priorities then for the next 12 to 18 months?
Janet King (06:27):
So you get a good snapshot on this slide here. So you can see that when you ask folks to rank their top three priorities, what we see is that customer service and claims really top the list of digital transformation priorities for insurers across the board. And this is everyone, not just P&C carriers. So 56% customer service, 54% claims, and then data management/marketing followed by product development. What's interesting though is when you isolate this and really just look at just P&C carriers versus other carriers and agents and brokers and the P&C carriers in the dark green and the far left bar here, what you see is that claims really rises to the top for those carriers at quite a significant delta to the others. And then customer service is number one for everybody else. So again, those two things are really driving the focus for these organizations moving forward.
(07:36):
But there is, I think, Patti, one other thing that's interesting and that is understanding that claims is a top digital transformation priority for them in the coming months. We asked them where are they focusing their efforts for improving the claims process over the next 12 to 18 months? And what you see is that they're really focusing on accelerating automation. So trying to automate more of the claims process and trying to deliver a better, more personalized customer experience and reducing time from first notice of loss to initial payouts. And then just behind that, of course, looking at overall cost reduction and just improving transparency.
Patti Harman (08:19):
There are a number of factors that are at play within the claims industry, and part of that is that so many of these experienced claims adjusters are going to be retiring within the next five years or so, and that's going to just leave a huge hole in the industry. So I think what we'll see going forward a lot of times is that technology will be a good way to capture some of that institutional knowledge. And then because of the talent shortage, being able to automate some of the simpler processes will become even more important I think, for some of the carriers. And we hear a lot about how customer expectations have changed, especially given the increased use of technology across the insurance industry. What did your research show then, Janet?
Janet King (09:11):
Yeah, it's a great question. And to your point about the talent shortage, I mean that was also cited as one of the challenges that carriers are having, right? It isn't just having overworked and understaffed claim staff. So that's a problem. I think that's just going to continue to grow and certainly something we want to address. So in terms of customer expectations, there's a lot of different ways that you can engage as a customer now throughout the claims process. And it seems to me like the carriers that we spoke to seem to have a pretty good handle on how those expectations have shifted. So what you see here is that four out of 10 are saying customers are expecting more transparency throughout the entire claims process from beginning to end. At the same time, almost as many, 36%, said they also expect a fully digital experience. And then you had about a quarter who are saying that they've seen a desire for more human interaction and processes for reassurance.
(10:15):
So I think it kind of depends on what part of the cycle that you're in, but carriers are really trying to be more transparent and deliver more digital touch points. But I think you and I had this conversation at our event last week about, for instance, somebody was sharing a story with us about how their teenager got into a car accident, and at that moment, his option was to pull up his app and file a notice of loss, a first notice of loss, but he's got a crying teenager and a wrecked car and he wants to talk to a human in that moment, but then wanted to be able to do everything else digitally after making that initial touch point. So there's not really a one size fits all solve option here. But I will say one more thing about that, which is they seem to understand that the game has changed and everyone's striving for more transparency and more digital touch points and things like that, but only a minority of these carriers actually think that their company has adapted very well to keeping pace with those expectations. So 27%, the balance around 52% are like, oh, we're doing pretty well. So it's kind of like a middling level of confidence in how well their efforts are keeping pace with that changing landscape.
Patti Harman (11:43):
Right. Well, and insurance has always been relationship based from when you used to just buy your policy before you could do it online to that first notice of loss and just walking through the entire claims process. And I know from conversations that I've had with insurance carriers, they're still really trying to balance that blend between digitalization and having it be a customized event and response for their customer, meeting them where they are. The example that you just gave where someone wanted to speak to an individual, because so far AI has not learned empathy. And when you're in that space, that's one of those things that you're looking for.
Janet King (12:27):
Absolutely.
Patti Harman (12:29):
What impact has the greater adoption of customer self-service, and by that I mean taking photos or uploading information, had on insurance organizations?
Janet King (12:42):
Yeah, that's a great question because the level of involvement, is really still evolving, but the carriers that we surveyed acknowledged that when they empower their customers to play a more active role in the overall experience, whether that is taking pictures or uploading information digitally, that they're acknowledging that it's really helping to advance some of the most highly prioritized outcomes. So 55% are saying it's reduced their costs of the claims management process. Almost as many are saying that it's resulted in more transparency for claimants or it's reduced time from first notice of loss to initial payout. And if you remember, those were some of the areas of focus for them when they're thinking about how are we going to improve our claims roadmap, these are the things they're aiming for. And it's I think in reaction to the fact that customer expectations are changing and they're trying to keep pace with all of that. So I find this to be very encouraging.
Patti Harman (13:42):
It is. I would agree with that too, and that they're just really trying to make that experience as good as possible. And that kind of goes into my next question, which was are there certain actions that carriers are taking to improve the claims process for their policyholders? Because we joke when we're talking amongst other insurance professionals that everyone wants the Amazon experience, they want that transparency, they want that ease. So based on your research, what actions are carriers taking to help provide that type of an experience?
Janet King (14:19):
They're doing a number of things to try to deliver on that. And the thing that's most commonly happening is that they're working to enable electronic payment of claims, and almost as many are also saying that they're providing tools to allow claimants to track the progress of their claim throughout the process. So again, digital payments, digital tools, 51% said that they're using virtual inspections for property claims. That was something that I know we talked about a lot last week and just talking about how insurance companies are using drones, for example, to inspect properties after mass events or after even a singular house event. But certainly after wildfire events or hurricanes, things like that, you also see these carriers changing the way they communicate. So almost half are texting policyholders to communicate about the claims process, which I think is an interesting new development.
Patti Harman (15:19):
It really is. I remember maybe just two or three years ago having conversations with insurance adjusters at different conferences and they were talking about, oh, if we only had the ability to text customers, because it made it easier for them to set up their inspections, it made it easier for them to answer questions. And they were just really excited at that point about the possibility of being able to do that. So it's nice to see that all of that is kind of starting to come to fruition now. And Carrie,
Janet King (15:54):
Sorry, Patti. I was just going to say that you sparked a thought that's a really good example of meeting consumers where they are because we're so used now to communicating on text. Many people text before they call even like, is this a good time to call you now? So we've really changed our behaviors and it's almost the first line of defense. And so I think to your point, it's really interesting to see it come along
Patti Harman (16:19):
And you would think that that would be just a really small thing, but within the industry, that was just a huge transformational type of technology for them to be able to use. It goes along with carriers that have made significant investments in various types of claims technology. What are their expectations going forward when it comes to tech spending, say for the next year or so, and where do they expect to invest the most money?
Janet King (16:51):
So the investment or the spending environment is pretty positive, right? So what you see here is that 70% of the folks that we spoke with say that they're either going to have a significant or moderate increase in tech spending to support their claims management priorities in the coming year. So year over year, 70% are looking at an increase, and 25% are holding their level of spend steady. So really, no one is cutting back and the vast majority are actually kind of moving forward with bigger budgets for this area. So I think that's really, really positive. If you look at where technology is being adopted most often across the industry or what types of technology I should say is being adopted most often, it is definitely mobile apps, cloud and digital communications tools. So those are some of the things that are most widely adopted to date.
(17:50):
But we also looked at that through a slightly different lens to answer your question. So we wanted to understand where there might be new or accelerated investment in technology over the next 12 to 18 months. So this scatterplot shows you on the horizontal chart, the percent that are mentioning each of these technologies as being potentially transformative to the claims process. So they think this is a technology that's going to have a real transformative impact on claims. And then on the vertical access, it's the percent of folks who are already using those technologies but are accelerating their spend or they're not using it, but they're planning to spend on it in the next 12 to 18 months. So it's either net new or expanded. Expanded share of spend is what you're looking at here. And if you look at artificial intelligence way over to the right, what you see is that 75% think AI is going to transform the claims process and more than 50% are accelerating spend or planning to jump into that spending category in the coming months. So it's kind of interesting.
Patti Harman (19:10):
I would agree. It's very interesting to see where they're going to be investing their money. And I think it's funny, I used to ask people questions in terms of what are you planning for the next three to five years? But in covering the tech space within insurance, it's changed so much just within the last year that the furthest you can go out is maybe 12 to 18 months or so because technology is just changing so rapidly. So we've covered a lot over the last, go ahead. Oh, sorry.
Janet King (19:40):
No, I'm sorry. I was just going to say you're absolutely right on that. And I think the spending looking at asking people to forecast that window has gotten shorter because everything changes. But also I think things like cloud, big data, those things are really so foundational and fundamental to the adoption of AI. So it'll be interesting to see how those things I think will continue, they're more saturated in those areas we're already spending and more widely adopting those tools. But that level of spend needs to be maintained to really deliver on the promise of AI.
Patti Harman (20:15):
Right. Well, and my sense is that the pandemic really changed the focus for carriers. Anybody who was thinking of going through any sort of digital transformation, when the pandemic hit whatever you were thinking about, you had to do it and do it immediately because you had to completely change how you were operating, how you were communicating both with your employees and with your policyholders. I know from a claims perspective, they had to figure out, how do we do virtual claims? And so that's where if you had an app that was already developed, all of a sudden that took on even greater importance because it gave you another way to kind of manage some of these responsibilities and still provide a level of service to your policyholders. So some of the things that you're seeing with your research, I think the pandemic actually helped push those along a little bit faster maybe than what we would've done.
(21:13):
And it'll be really interesting to see what happens with AI going forward. I've had conversations, and it depends on who you talk to, even within an insurance carrier and within agents and brokers, because carriers understand that there are very real risks associated with the use of AI, both AI and Generative AI, and they're the ones responsible for underwriting those risks. So they want to understand them, they want to know what are the risks for their companies, what are the risks for their policyholders and everything. So it'll be really interesting to kind of see what happens going forward.
Is there anything that we haven't covered that you think is important for our audience to know about technology in the claim space at this point?
Janet King (22:02):
Well, it's interesting that you mentioned AI because we did our first piece of research out of the gate in 2024 was around the use of AI in insurance as well as other financial services sectors. So we looked at how AI and more particularly Generative AI is being used by big banks, by insurance carriers. And in a lot of ways, insurance is tracking with the large banks in terms of the pace of adoption of Gen AI as well as sort of the hesitation. I think it was maybe something like a third of the folks in insurance are putting policies in place to limit how Gen AI can be used at least out of the gate, right? They're trying to put some guardrails around it. They almost all universally think that there need to be more industry standards and guardrails to protect it. Like 70 or 75% of insurers I think felt that way.
(22:56):
But they are experimenting with it and sort of on par with banks and ahead of other industries like wealth management and things like that. And one of the things that came out of that was we asked the leaders who responded to that survey if they would be willing to pay a premium for AI-fluent talent to help usher in this next generation of technology and open up these new possibilities. And insurers led the way out of any of the verticals. I think it was maybe like 40% who said they'd be willing to pay a premium, but that was in some cases, twice as many as other verticals that we looked at. So insurance often gets pegged as being lagging or slow to adopt, but in the case of AI, there's evidence that they're well positioned with all of the data and all of the inputs that they have to work with and sort out the challenges that they're facing for AI to be a real game changer in a number of places. And I think you're seeing, at least we're seeing some evidence that the insurance companies that we're talking to are taking steps to make that happen.
Patti Harman (24:09):
I would agree because they're competing against companies like META and all of these tech companies, and Amazon, anybody who has a really strong involvement in technology, and that's who the insurers are competing against. So they understand that they're going to have to pay for that talent. Some of it they can re-skill internally, but I think they really are going to have to go outside to find people that can work with those technologies and create the information and products that they need for that.
Janet King (24:42):
I agree.
Patti Harman (24:44):
So thank you so much. That kind of ends our conversation today. So thank you, Janet, for joining us and giving us an insider's look into where carriers are investing in technology to improve and expand their claims processes. I also want to thank our audience for joining us today, and please join us for our next transformation forum when we take a look at parametric insurance and other new coverage options. I'm Patti Harman for Digital Insurance. Please enjoy the rest of your afternoon.
