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In association with

Vlocity, A Salesforce Company logo



A new paradigm in claims

As the COVID-19 crisis continues to send shockwaves round the world, the insurance industry has been forced to accelerate its digital readiness to be fit-for-purpose. In July 2020, Insurance Innovators hosted an online roundtable, in collaboration with Smart Communications and Vlocity, a Salesforce Company, at which insurers from across the US discussed the impact of this digital acceleration in claims.  Larry Hogan of Smart Communications and Phillip Ostberg of Vlocity, a Salesforce Company reflect on the key points from those discussions and the insight they provide on what now lies ahead.

Larry Hogan
Account Executive
Smart Communications

Phillip Ostberg
Senior Product Manager
Vlocity, a Salesforce Company

Eight months ago, the virus that was to change our world did not even have a name. In a short period of time, SARS-CoV-2 and the disease it causes, COVID-19, has brought entire economies to a near standstill and left families and business struggling to cope. For the insurance industry, it has meant a sudden acceleration of digital transformation plans, not only to support a remote workforce but to ensure continuity of service to customers facing unprecedented challenges.

Many say the crisis has compressed about five years of digitisation effort into a matter of months. Not only were tens of thousands of workers equipped with the tools to work remotely from their homes but new digital customer journeys had to be quickly configured to ensure continuity of service. Innovation, agility and speed were, through necessity, unleashed.

Many businesses admit they have been surprised by how quickly and creatively their people responded when it proved mission-critical to do so. Once the white heat of the crisis passes and there’s time for a debrief, it’s clear there will be lessons to be learned from this experience in order to build more resilient and innovative enterprises.

For those on the claims frontline, it has been an unusual time. Lockdowns have meant that there have been fewer motor and accident at work claims, while other lines of business have seen increased pressure, particularly in home insurance – which has seen a rise in accidental damage claims – and also, sadly, in health and life insurance lines.

Insurers have also been forced to adopt new ways of servicing extreme volumes. Deploying chatbots to enable more customers to self-serve has been crucial in both reducing wait times and taking pressure off call handlers to free them to deal with the cases where they can make the biggest difference. As one participant in the roundtable wisely pointed out, a good claims experience involves listening to the customer’s horror story so they feel heard, and technology has a key role to play in making sure there is time and space to be a good listener. Indeed, the COVID-19 crisis may have seen people retreat to their homes and be more physically distant but it has also brought people together, with people talking more via video conferencing channels. Insurers need to make sure they have the channel flexibility to service this need.

Digital acceleration on the claims frontline

For insurers that still relied on printed papers for part of the customer journey, the shutting of offices and closure of mailrooms forced a scramble to digitise documents and create online portals for secure and easy access. All aspects of data collection can be digitised, and this no longer means static, fillable PDF and web forms but instead intelligently guided, mobile-friendly user experiences, with known data already pre-filled and the facility for customers to upload attachments from their device of choice. This kind of easy, convenient and personalised process will increasingly become a hygiene factor that many customers will come to expect from all insurers.

When it comes to first notice of claim, digital has already transformed customer journeys, allowing customers to use the additional functionality of a smart phone – from the camera to the GPS – to quickly notify their insurer of damage and location. And, whereas once field agents might have been be sent to inspect damage, it’s now possible to use additional data sources – whether CCTV, satellite imagery or drone fly-over – to reduce trips that eat up both customer and company time.  This technology was available before but the COVID-19 crisis has been the catalyst to use it as scale.

As a result, our roundtable participants agreed, the past four or five months have put digital to the test in a real-time, enterprise-scale experiment. And the results are proving compelling, delivering not just better service for customers but also improving operational efficiency and reducing costs. All our experts agreed that there will be no rowing back to pre-COVID operations.      

Even so, it’s clear that digital-only is not an option for most carriers. The human element – whether face-to-face or over the phone – will remain vital. Even if it’s not the first-choice touch point, it will be essential to maintain a presence so that customers can drop out of digital and convert to phone when it suits them – and this hand-off between channels should be seamless.

As our participants noted, there are surprises when digital is pushed as the first channel. Often it is younger customers facing their first basement flood or serious prang in the car who want the reassurance of a human agent on the other end of the phone while more mature policyholders are happier to pursue the self-service route. Maintaining a mix of channels and understanding customer motivations as to why they picked one channel over another can be key to delivering the right service at the right time.

Building on the momentum

The key now is to maintain momentum. Digital came into its own when it was most needed – and that need isn’t going away. Whatever happens with the virus, it’s clear the pandemic will bring a long tail of problems in its wake, from economic hardship to chronic health issues, whether as a result of recovery from COVID-19 or suspended health care for other complaints. Inevitably this will impact the insurance industry, which has a social purpose to be a financial backstop when things go wrong – and claims handlers are on the frontline of this. The need to offer fast, responsive and empathetic service has never been more important and it will require a blend of digital and human support to deliver this. 

Insurers themselves will not be immune from the economic fallout from the pandemic. The pressure to reduce costs and seek out new revenue models will now be greater than ever. Digital can be key here, not only helping insurers configure new propositions and products to meet the needs of a changed world but also delivering operational efficiencies to sustain the bottom line. As one panellist pointed out, if a call agent has smart tools that give access to the right data at the right time, it can shave seconds off every call, potentially adding up to tens of thousands of man hours and millions of dollars saved each year. Likewise, a claims inspector in the field may manage three to four cases a day but oversee 15-20 a day when at his or her desk and accessing remote solutions.

The ROI on these use cases jump off the page, thereby securing further leadership buy-in to maintain digital momentum. This is essential, not just to unlock budget for technology investment but to also foster an innovation culture that embraces new, customer-centric ways of working and thinking. Insurers often talk about legacy systems holding them back but legacy thinking can be just as much of a roadblock. Look outside the industry at what other companies are doing and how they are doing it: what technologies work for them, what organisational structures deliver and, importantly, what does leadership look like in a truly innovative company?

Finding the right partners to move at speed

Such a scan soon reveals that innovative companies collaborate. There are many providers who can provide plug-and-play, best-in-class solutions so that insurers don’t have to reinvent the wheel when it comes to e-payments, document imaging or chatbots. As our industry experts discussed at some length, however, the need to innovate at speed means companies need to rethink how they select providers. For many applications, it’s no longer appropriate to spend six months making a decision because in that time your competitors will have already raced ahead and be delighting customers with smarter solutions and better service.

Perhaps the most important technology solution is the transition to the cloud. It’s no longer a nice-to-have but a must-have. Most insurers have applications and systems that were never designed to be accessed remotely and it’s only through cloud adoption that insurers will have the flexibility and resilience to weather uncertain times. Many cloud services providers also offer a suite of ready-to-go solutions that can be quickly plugged in to accelerate digital transformation. This could prove key as companies seek to build on recent success and continue to innovate at speed.

Innovation isn’t just about having the right technology solutions. Companies also need to think about how they stay relevant in a much-changed world. A connected world, drawing on data from the Internet of Things and insights from AI-powered analytics, will be one where much of the insurable risk can be predicted, mitigated and possibly eliminated. Many insurers are already seeking to move from a highly commoditised repair and replace model of insurance based on monthly premiums to one that embraces a data-rich universe to help customers predict and prevent risk at an individual level.  In this way, insurers can to add extra value to daily life, potentially a level that will enable them to command subscription charges. But what might this mean for claims departments? Will they need to pivot their role into administering risk mitigation and prevention services? There is also the question of what new and emerging risks should insurers be seeking to cover, whether it’s cyber, pandemic or risks related to the growing sharing and gig economies? Might parametric insurance play a big role in some of these areas, and might more and more claims be settled by smart contracts on blockchain as a result?

One thing is clear: the world is changing in new and often unpredictable ways. This was evident even before COVID-19 burst into our lives but it has taken a pandemic for many insurers to accelerate their plans and become fit for purpose in a hyper-connected world. In uncertain times, innovation, agility and resilience will be more important than ever. Insurance companies have now had a taste of what it takes to survive and those with the appetite to sustain the momentum will be best equipped to find new ways to thrive.

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