Bringing digital claims into the future: insurance leaders share insights
Published: 27 October 2022
By Gian Hayer
Digital Content Producer
Digital innovation has the potential to completely transform the way in which customers interact with all aspects of the insurance journey. IoT, AI, chatbots, ecosystems and more are increasingly reconfiguring the kind of experience that customers can expect, particularly when they file a claim. This month, a group of industry professionals, working in Claims Transformation, Strategy Delivery, Digital Value Operations, IT and more, gathered for a roundtable to discuss the future of digital claims.
Following an engaging discussion at the roundtable, sponsored by Shift Technology, we at Insurance Innovators wanted to bring you the key themes and takeaways. Read below for insights from industry leaders on managing change in the midst of digital innovation, maintaining human involvement in claims as automation is increasingly introduced, and keeping customer value front of mind when synthesising IoT-based insurance products.
1. Driving innovation, managing change
Insurance is, by nature, a prudent industry and change can be slow. During the roundtable, participants mentioned that introducing new technologies, such as RPA, automation and chatbots, can hit a wall of resistance and inertia. “We told our handlers that automation frees people up to use their expertise, spend more time talking to customers and spot when they are under-insured, creating new opportunities and making their roles more interesting,” said one speaker, “but for some that was a very scary proposition because it was asking them to work in ways they hadn’t for a long time, if ever.”
Others agreed, arguing that some fraud handlers who had been working for some time are most likely to think that they are able to detect fraud better than a system could, and that it will be a challenge to bring them on the journey towards innovation. In some cases, there has naturally been hesitation in the workforce towards straight-through processing, as handlers are worried about what the change would mean for their jobs given that a whole part of their role has been automated. According to one roundtable participant, “some areas of the business are really up for [straight-through processing] and want to automate everything, but there are others that are stuck in their ways. You really need to get that buy-in to make it a success.”
An enormous change that insurers have been forced to manage in recent years is the impact of COVID-19 on the workforce. During the roundtable, it was said that that some insurers are now seeing erosions in loss ratios as their workers are not executing as well as they were prior to the pandemic. As a result, these companies are having to think of smarter ways to support their staff, and this is especially the case with younger and less experienced team members, as insurers look into retraining opportunities to equip them differently in the field.
This will become more of an issue as a significant proportion of the workforce “ages out”. Automation can help here by handling lower-skill, low-complexity tasks, but it is not yet ready to provide the expertise required for more complex roles. “I do not think that highly skilled, highly experienced people are replaceable at this moment in time,” one participant argued. They claim that this is changing, however, given that AI will be able to dive into more complex processes, to augment handlers and provide context and a better vision of what is happening in any situation in order to push a claim forward.
2. Keeping humans in the loop
The rise of automation and self-service options looks set to only accelerate, yet the participants agreed it was unlikely that human beings would be eliminated from the process. “I can’t see us ever not having people involved in claims,” said one.
One participant mentioned that a fully online insurer works when comparing premiums on an aggregator site, but expressed elsewhere: “will it seem like such a good idea when you’ve had a crash on the M1 and you have to download an app and type into the chatbot? When it then comes to renewal, would the customer make a different decision? Or will people continue to chase the lowest price?”
Microinsurance is another model that may appeal, particularly to those seeking to keep a lid on insurance costs, but it too comes with limitations. A roundtable participant called for more accurate insurance cover, given that “it’s estimated that about 60 per cent of SMEs are underinsured but a lot are also overinsured because they have duplicate cover.” They argued that this is a huge pain point for customers, and that there needs to be a move to accurate and dynamic insurance that adapts as you live your life.
This focus on customer centricity ran throughout the hour-long discussion, with one participant stressing that customers are seeking simplicity, ease of use and speed of settlement from their insurers. The exact combination of technologies and human beings to achieve this remains a debate that insurers will continue to have for some time as they adapt to an increasingly digital future.
3. Finding value in IoT
The potential of the IoT to reshape insurance as we know it was the subject of much discussion. Sensors that can detect leaking water pipes, for example, have the potential to dramatically cut the risk of flood damage and shift insurance from a compensation-based model to one of prevention and mitigation of risk. Yet these solutions need to be carefully thought through.
“There are a number of IoT connected claims prevention technologies and ideas out there, but you have to look at the customer,” said one participant, arguing that it’s important to think about what the customer understands about the product, and about the data. “We really need education to help build understanding in the market that claims can be more than that one in ten-year moment of truth.”
“There are a number of IoT connected claims prevention technologies and ideas out there, but you have to look at the customer”
Another participant said that the industry needs to put its “money where its mouth is” when it comes to using IoT data flows and data transparency. They said that “there needs to be a value exchange where you’re rewarded for offering data” and putting yourself in a significantly lower risk category. These rewards need to go above and beyond simply offering a cheaper premium, with companies such as life insurance insurtech YuLife leading the pack in offering a wide range of value-added services for active participation.
Our speakers could also see the potential of parametric insurance, which enables the automatic filing of a claim when certain criteria are met, the most common example being flight delays. However, customers may not always want to file a claim, even when they have a valid reason to do so, because of the potential to impact future premiums. One participant suggested that “this issue can be solved by providing a simple click button that double checks if the customer wants to actually file a claim.”