Insurance carriers have made an unprecedented investment to improve the integrity of their claims systems and processes. This transformation started in the US over 15 years ago with the original goal of improving financial accuracy, financial control, upgrading legacy technology and decreasing systems support costs. Many leading insurers have established claims transformation programs and have delivered upon these foundational goals. In recent years, broader InsurTech and advanced technologies have evolved, which have allowed insurance companies to drive improved operational efficiency and effectiveness, more robust, automated data gathering and analytics and more seamless customer experience with an omni-channel approach through their claims transformation programs. Claims transformation programs will continue with this broader focus, building upon advanced systems and adopting new technologies.
Retrospective: The State Of P&C Claims Transformation
Most P&C carriers are somewhere along the claims transformation journey. Some of the larger personal and commercial lines carriers were early adopters of modern claims systems. They focused on better workflow and improved data gathering for actuarial purposes. Many of them have further enhanced integration to digital/mobile, financial/payment systems and third-party vendors (e.g., medical bill review vendors or auto repair shops).
The second wave of P&C claims transformations saw more complete design at lower cost thanks to technology and vendor ecosystem maturation. The carriers in this wave had a second mover advantage and learned much from the early adopters. The third and the current wave of claims transformations is being completed for even less financial outlay and can be tailored to the digital, mobile, analytic and financial integration needs of the wide number of stakeholders.
Our personal lines clients have told us that their highest priorities are to continue lowering costs and improving the overall customer experience. These goals also are important in commercial lines, but the segment also wants to build a more solid, data driven operational partnership between claims and risk management to reduce loss through proactive risk mitigation and risk management. Advanced technologies such as drones, the internet of things (IoT), robotics process automation (RPA), and image analytics are helping deliver these goals.
Insurers with older claims business and technology platforms or ones that have not yet embarked on a transformation can choose from a wide variety of business partners and technologies that can facilitate tailoring claims operations to market, policyholder and financial objectives.
Prospective: Looking Toward the Future of Claims Transformation
There are four key themes that have dominated our recent conversations with the P&C sector about investments in claims transformation:
- Continuing focus on all dimensions of a claim (i.e., customer experience, effectiveness, and efficiency): Improvements in self-service to improve operational flexibility and the customer experience, better use and direction to vendors, and more automation of administrative tasks.
- Omni channel experience: Seamless use of digital, voice, agency, vendor and mobile touchpoints to make the loss restoration experience more customer-centric.
- Data integration and transparency: More robust, accurate and granular claims data for more stakeholders, including regulators, underwriting, agents, claimants, risk management/loss control, finance and actuarial.
- Use of advanced technologies and InsurTech in Greenfield operations: In order to improve the customer experience, reduce risk, decrease cost, and control loss, the claims function can help form new carriers and enter new businesses using technologies such as cloud computing, the internet of things (IoT), drones, big data, AI, robotics.
Insurers are looking for more than financial integrity and control. They also want to reduce operational cost, enhance the omni-channel claims experience, and deliver more robust and transparent operational and financial data.
Continuing focus on all dimension of a claim – customer experience, effectiveness and efficiency
Personal and commercial lines carriers have increased their investments in claims transformation and recognize they need further automate and integrate their claims processes by adding the following capabilities to their claims operations:
- Improved self-service – Many carriers are hoping that digital investments will pay off but are hampered by low digital adoption due to policyholder demographics and preferences. Most of their policyholders do not want to or are unable to submit a claim online due to the innate complexity of the claims process. This can lead to higher expense, lower customer satisfaction and sometimes poor loss outcomes. Carriers are looking for ways to simplify and integrate their self-service capabilities so that claimants can complete claims activities in ways that are most convenient for them and that don’t impact loss or other expense. In essence, they want the claimant to control the experience. This can improve the claims organization’s operational and service flexibility and help avoid costly peak load and afterhours staffing.
- Process automation to improve the customer experience and reduce cost – Process automation activites currently focus on lowering costs and improving the customer experience while doing no harm to the claims loss outcomes. Administrative tasks are still on the list for automation, as now also are data gathering and decision support. Many of the leading modern claims platforms have “wizards” that integrate big data sources and decision support engines to help perform core claims tasks. Automation also allows proactive communication about claims activities and events, such as adjuster or vendor appointents and changes in claims status.
- Maximizing the value of loss restoration partners in the claim value chain to improve the claim outcome and to improve customer outcome – Loss restoration partners play a critical role in addressing the claim event. From hospitals to body shops to carpenters, these partners impact the customer experience and the quality of the claim. Carriers are trying to model and improve the customer experience, and communicate seamlessly and effectively to direct these partners via integrated, advanced technologies. To quickly improve the customer experience, leading carriers are investing in integration technologies which remove the disconnects between vendors and the carriers. To do this, carriers must have a well designed claims customer experience and monitor and prioritize for attention any disconnects. Carriers also can decrease loss fulfillment errors and rework leading to better loss outcomes and an improved customer experience
Chief claims officers must explicitly manage the loss, expense and customer satisfaction triangle at a more granular level in almost real time to achieve a superior claims outcome.
Omni channel experience
Carriers are subject to the complex and fluid expectations of staff, consumers, agents and partners in loss restoration. The claims event is a difficult event and not as straightforward as online retailing. With the burden of a catastrophic event and the disruption it brings, claims organizations must have exceptional technology and people to deliver a true omni-channel experience. Carriers are also rethinking their digital experience and turning away from separate digital and “over the phone” experiences to an omni-channel, user-centric experience that maximizes their combined investment. Well-designed omni-channel claims experiences allow claimants to self-tailor the claims process and the claims touchpoints to best serve them. This type of experience also allows for the claimants to pick activities where they are comfortable serving themselves and others where they need help. To enable omni-channel experiences our clients are starting to make investments in the following capabilities:
- Full capability portals – One portal for all P&C carrier services that enables seamless mobile claims capabilities without a separate login or a disjointed experience with hand-offs and downloads.
- Integrated mobile tools – Claims tools, such as photo, video and document management tools, that are integrated into the carrier’s main mobile app and even develop an interactive experience with the claims adjusters and vendors to help them for the next step in the claims journey.
- Integrated telephony – Telephony that uses compliant digital tools to identify claimants, link them to agents and policies, and recognize them at any contact point with the carrier.
- Real time customer satisfaction measurement and management – Tools that can take a daily or weekly pulse of the actual claimant experience and that allow corrective action before an unsatisfactory outcome takes place.
- Proactive customer, vendor and agent communication – “End user tailorable” messaging via a channel selected by the end user. The goal is to provide claims information proactively to customers, vendors and agents and thereby affect a well-designed and high satisfaction claims customer experience.
Technology need to be integrated to best support front line claims adjusters to deliver a seamless claims experience that takes the stress out of loss restoration, no matter how easy or complex the claim.
Data integration and transparency
Claims data is used to formulate company strategy, underwriting guidelines, pricing, customer experience and financial reporting for carriers. It’s central to running an insurance company. The ability to accurately correlate variables, detect and dissect loss, expense and customer trends, and allocate costs accurately by line of business separates leaders from laggards. Carriers can dynamically respond to emerging loss trends in the market if they have richer and more useful claims data. Companies that are enhancing their claims data environments are investing in the following capabilities:
- Automated claims data gathering and synchronization – This enables carriers to use core systems to automate gathering as much data as is useful, practical, and economical. It also enables them to store and manage operational and financial claims data and thereby maintain and improve data integrity and recency across different purpose-built repositories.
- Invest in comprehensive, structured data for stakeholders – There are many different stakeholders who need their own view of claims data to perform their function in a P&C insurer. In the same way that the chief claims officer is investing in an external claimant experience, he or she must invest in providing each stakeholder with its own data needs and view. Stakeholders can be demanding but CCOs are getting better at managing and governing data needs, as well as understanding the benefits and communicating the costs of data.
- Integrate claims data across systems –Avoiding disintegrated claims data is a major goal in the wake less than satisfactory experiences in earlier claims transformations. In the past, complex batch jobs undermined data integrity and availability and eroded the detail of available data. The current wave of claims transformations have started in a time when lower cost data integration and synchronization tools are available. These tools have reduced the cost of data integration while increasing the flexibility of and ability to add data fields. Traceability and the ability to roll up and drill down into claims data for pricing studies, to answer regulatory requests, and perform other analysis is not only reducing effort but also increasing speed to market and pricing flexibility.
- Digitize analog data and metadata in images and documents – Image analytics can make a claims adjuster’s role more efficient and effective by providing insights from documents as they are received. However, adjusters are now being flooded by documents and photos, and analyzing these documents and photos takes time and must be done in a compliant manner. Automating this activity makes compliance easier and improves adjuster productivity. It also takes much of the guess work out of claims adjusting
Claims data is one of the most valuable assets of an insurance company. Insurance companies that use claims data to understand market trends have a distinct advantage as their markets change over time.
Use of advanced technologies and InsurTech in Greenfield operations:
InsurTech is opening up opportunities to start new businesses and form new carrier operations. Technologies such as cloud computing, the internet of things (IOT), drones, big data, artificial intelligence (AI), and robotics can help better determine and manage insurable risks, as well as transform how an insurance company adjusts claim. Two important questions for claims personnel include:
- What is the chief claims officer’s and claims team’s innovation role with using advanced technology? The claims function has collective market and business knowledge through its experience with claims loss data and management practices. It also understands customers’ and claimants’ service needs. It can use its knowledge to help design solutions using new technologies, specifically by identifying specific client/claimant/agent needs and aligning them to risks/loss management practices. Claims teams also can identify and partner with suitable InsurTech firms with the help of M&A specialists and procurement.
- How can the chief claims officer integrate new technologies into a transformation effort or greenfield operation? It is critical to combine the data from new technologies with existing claims data. Armed with this information, the claims team can use new technology to improve the customer experience, reduce adjustment costs, and enhance loss management and risk mitigation. The claims team also can observe and assess the effectiveness of how new technologies are used in practice, and “test and learn” and adjust on the fly.
- Carriers have increased their expectations of chief operating officers and chief claims officers to deliver improved loss, expense and customer satisfaction. It’s no longer enough to focus on just one dimension of the claims triangle (loss, expense, customer satisfaction) in a claims transformation program.
- Seamless omni-channel capabilities are critical to enabling “self-customization” of the claimant and agent experience.
- Robust and comprehensive claims data is critical to insurance carriers’ survival. Leaders in the industry will rely on analysis of claims data to deliver results that help drive financial effectiveness and improve customer outcomes.
- The application of advanced technologies in claims is a critical step to further innovation. Using claim data to specifically attack risk with these technologies is critical to establishing practical applications and cost benefit analyses.
Imran Illyas and Richard Pankhurst, PwC FS Insurance Advisory Services principals, co-authored this article with Matt Wolff, Scott Froseth, Ryan Hilyard, and Ryan Rodriguez, also in PwC’s FS Insurance Advisory Services.