ROUNDTABLE SUMMARY

The future of digital claims

Customer-centric, seamless, and personalised: the next transformation of insurance in a world of technological innovation

Insurance is, by nature, a prudent industry and change can be slow. Our participants said 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. “Some of our long-term fraud handlers probably think that they can detect fraud better than a system. Bringing them on the journey will be a big challenge.”

Thomas Harrington, Product Marketing Director, Shift Technology, said that Covid-19 related impacts on the workforce meant that some insurers were now having to think of smarter ways to support their people. “Some of them are seeing erosions in loss ratios because their workers are not executing as well as they were at one point so they need to equip them differently in the field, especially with some of the younger and less experienced team members,” he said. 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 highly skilled, highly experienced people are replaceable at this moment in time,” Harrington said.

“I do not think highly skilled, highly experienced people are replaceable at this moment in time”

Thomas Harrington, Shift Technology

This is changing, however. “AI is now at the next level to dive into more complex processes, to augment handlers and give them context and a better vision of what’s happening in any situation so they can push a claim forward,” said Harrington, giving an insight into the future.

Other speakers shared their experiences of introducing new technology. “We had an issue with straight-through processing, with people worried about the change and what it would mean for their jobs,” said one. “We find some areas of the business are really up for it and want to automate everything but there are others that are really stuck in their ways. You really need to get that buy-in to make it a success.”

Unintended consequences

“You need to consider the downstream impacts. You can put in self-service automation but somewhere in the business they may be taking an extra 1,000 calls a week”

Another challenge is that of unintended consequences following a digital innovation. “You need to consider the downstream impacts,” said one participant. “You can put in self-service automation but somewhere in the business they may be taking an extra 1,000 calls a week because it’s pushed something downstream.”

Others agreed. “You always get unintended consequences,” said one, commenting on a case where an automation of part of a process was undermined when manual checks continued because they were linked to employee KPIs and bonuses. “You try not to (have these unintended consequences) but it’s part of change.”

“You need the right measures to drive the right behaviours. It’s not just the technology, it’s the whole piece around it.”

Another added: “You need the right measures to drive the right behaviours,” she said. “It’s not just the technology, it’s the whole piece around it.”

Inevitably, the discussion turned to the challenge of digital transformation in the face of vastly complex and inflexible legacy systems. “We’ve got millions of legacy systems,” said one. “We have six or seven different systems just to handle one product. Our current claims system is from 2004 so it’s archaic, but we have some stuff that goes back to the mid-1980s.”

One speaker said that for some niche lines there just aren’t the economies of scale to justify the investment in straight through processing. “AI makes a lot of sense where you have a lot of volume,” he said.

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.

“We need education to help build understanding 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,” said one participant. “What do they understand about the product? 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.”

James Russell of esure said that the industry needs to put its “money where its mouth is” when it comes to using IoT data flows and data transparency. “Customers need to see some reward for letting us into their lives like this,” he said. “If they’re prepared to share this level of data and be in a significantly lower risk category, then we have to put some skin in the game and give them some reward in return.”

Our speakers could see the potential of parametric insurance, which enables the automatic filing of a claim when certain criteria are met, the most famous 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. “At the end of the day, we have to try some of this stuff and then iron out some of the wrinkles,” said James Russell of esure. “This issue can be solved by providing a simple click button that double checks if the customer wants to actually file a claim.”

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.

“A fully online insurer may seem like a good idea when the customer is comparing premiums on an aggregator site,” said one, “but 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?”

“Insurance cover has got to be more accurate… We really need to move to accurate, dynamic insurance that adapts as you live your life.”

James Russell, esure

Microinsurance is another model that may appeal, particularly to those seeking to keep a lid on insurance costs, but it too comes with limitations. “Insurance cover has got to be more accurate,” said James Russell of esure. “It’s estimated about 60 per cent of SMEs are under-insured but a lot are also over-insured because they have duplicate cover. We have to get smarter at this because customers hate it. We really need to move to accurate, dynamic insurance that adapts as you live your life.”

It was a great point, with Gareth Evans, Head of Customer Success at Shift Technology, building on this to stress 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 a digital future.