Though some carriers continue to favor traditional claims processes, the demand for faster cycle times, reduced expenses and improved customer satisfaction is driving increased automation and an eventual migration from virtual to touchless claims, according to new automotive claims research released by LexisNexis Risk Solutions.
“The Future of Claims: Touchless Claims Study,” found that the implementation of data analytics and automation are becoming ubiquitous across the auto insurance industry as a solution for greater business efficiencies.
LexisNexis Risk Solutions conducted in-depth interviews with 24 senior-level insurance executives about the integration of automation into their claims processing workflow, and found that 79 percent of the senior-level insurance executives recognized the importance of increasing auto claims automation as a critical or top priority.
The Roadmap to Touchless Claims
The company outlined the different types of claims processing:
Traditional: a process or workflow where an adjuster goes into the field, inspects the vehicle or property, and prepares an estimate.
Fast Track: a process or workflow that is designed to expedite claims handling with minimal insurance carrier employee involvement—for example, a direct repair program. (DRP) in which a body shop handles the inspection and repair estimate.
Virtual Handling: a process or workflow in which either a customer or vendor captures damage photos or streaming video that allows a claims adjuster to conduct the damage assessment remotely. No insurance carrier employee conducts a physical, in-person inspection of the vehicle or property.
Touchless Handling: a process or workflow that is similar to Virtual Handling except no claims adjuster or insurance carrier employee is involved in the claims process at all. Technology is used to report the claim, capture damage or invoices, run a system audit and communicate with the customer electronically. If the claim meets approved criteria, the claim is automatically paid without human interventiom.
While the majority of insurance carrier respondents have adopted ‘Fast Track’ workflows that leverage outside damage assessments to expedite cycle times, carriers still rely heavily on traditional claims processes which require manual inspections, multiple touches and in-field adjusters. However, the need for increased claims efficiency, including faster cycle times, and lowered Loss Adjustment Expenses (LAE), coupled with the continued evolution of technology, has motivated some carriers to begin implementing Virtual Handling of claims. By utilizing technology-based inspections to enable remote assessments and processing, Virtual Handling has already proven successful. LexisNexis Risk Solutions found that 38 percent of respondents are currently using Virtual Handling, and 67 percent of those carriers are open to the adoption of end-to-end technology-based processing or Touchless Handling.
Based on study results, below is the proven success of the evolution of automated claims processes:
|Claims Processes||Cycle Time||Number of Touches|
|Traditional||10-15 days||3-4 touches|
|Fast Track||4-6 days||2 touches|
|Virtual Handling||2-3 days||1-2 touches|
|Touchless Handling||1 day||0 – 1 touches|
This research indicates that despite the proven benefits of a more automated claims process, many of the senior-level insurance executives interviewed indicated reservations about further automating non-complex claims due to concerns over increased fraud, decreased customer interaction and claims inaccuracy. In addition, there are cultural barriers and technology restraints that currently hinder widespread Virtual Handling adoption. However, despite unilateral adoption of automated claims processing in every carrier segment, the ongoing implementation of automated processes is inevitable, the trends are clear and the benefits for consumers can be realized.
“As technology, coupled with data and analytics, has powered the claims evolution from Traditional to Fast Track, and most recently to Virtual Handling, we wanted to look ahead to better understand the future of claims handling,” said Bill Brower, vice president, Claims, LexisNexis Risk Solutions. “Due to adoption barriers, we recognize this is not something that is going to happen overnight, however, we feel that current technology, coupled with data and analytics, positions the industry to adopt Touchless Handling as the future of non-complex auto claims. There are already tangible benefits from automation that we are seeing today as Virtual Handling has reduced cycle times by 80 percent while significantly reducing touches.”
The Future of Touchless Claims
According to the respondents, Virtual Handling is not only chosen to increase efficiencies and decrease cost, but also to enhance the customer experience. As tech-savvy millennials continue to gravitate towards self-service options, it is expected that over the next several years mobile claims reporting will expand, and self-service claims options will continue to increase. Carriers also predict that self-service for claims adjudication will be led by larger, standard carriers who have the resources to invest in technology and who will benefit to a greater degree from process efficiencies because of their large claims volume. Claims experts from LexisNexis also see benefits for smaller, regional carriers who focus efforts on improving the personalized customer experience.
All senior-level insurance executives interviewed also foresee telematics playing an increased role in claims investigations within the next several years, as telematics automatically provides information that can further simplify and accelerate claims processing. According to the study, insurance carriers that have instituted Virtual Handling have overcome barriers relating to a mix of business culture and technology constraints.
Regardless of where carriers are positioned on the continuum of automated claims processing, the trend towards virtual – and eventually touchless – claims is inevitable, but should be approached with the customer experience in mind. The industry is moving toward more automated claims handling processes driven by technology-enabled solutions that yield benefits for both carriers and customers.