Maximizing the potential of digital claims processing
In our work with insurance companies, we often notice a gap between claims strategies and their execution. Too many claims representatives strive to be best-in-class but end up as a master of none. To foster change, they restructure their claims organization and find themselves constantly reorganizing. They aim to become agile and resilient yet end up reacting to market changes.
A recent survey conducted by our team unveils some underlying issues: 4 out of 5 claims executives admit that their overall strategy isn’t well understood within their departments. Over 50% of them do not believe that they have a differentiating strategy at all.
In this article, I would like to share relevant insights on how the digitalization of claims processes can help form a clearly differentiating strategy and how rethinking the claims journey – the customer touchpoints in case of a claim – can create an enormous value for clients. Additionally, I will share several best practice examples and key aspects that you need to consider in the course of the transformation.
Digitalization: from product to service-orientation
Essentially, digitalizing claims management means adding selected digital capabilities to existing processing activities. In doing so, we transform a widely used product-oriented claims organization model into a service-oriented one.
To start the transformation, analyze and expand the customer claims journey, thereby focusing on creating additional value for clients. Our ideal claims journey, for instance, does not begin with the "usual" first notice of loss (FNOL) but with the supporting services for claims prevention beforehand.
Today, many technologies are available to create additional value within the customer claims journey, such as incorporating predictive claims prevention methods. Here are some examples:
- The modern customer-oriented insurer no longer exclusively settles claims. It rather actively motivates and supports its customers in avoiding risky situations. As clients are rewarded for prudent actions (i.e., with lower premiums) and the insurer can reduce the number of claims, it results in a clear win-win situation for both. South African insurer Vitality, for instance, motivates its customers by developing individual health plans, and helps policyholders track and achieve their health goals.
- With ControlExpert’s EasyClaim-App, the time required for claims processing after an accident is reduced from several weeks to just a few hours. Via a smartphone, customers can share information and pictures of the damage with the insurer. A few hours later, the policyholder knows the cost estimate of the damage, can opt for a fictitious settlement, or can even organize a direct repair in a nearby workshop directly via the app.
- Finally, technology can help streamline the administrative end around claims: After a car accident, claims adjusters must use a variety of devices to get the job done and spend most of their time entering information on site. A virtual assistant can guide the adjusters through the entire procedure, while tablets and wearables facilitate the recording, documentation, and processing. This reduces the administrative work from 50 to 20 minutes, thereby leaving the claims agent more time to focus on the customer.
The transformation in the insurance industry is in full swing. To satisfy customer expectations successfully, a true digital transformation of claims must address the following dimensions:
- Reduce costs by improving claims handling accuracy and reducing claims expenses
- Deepen relationships by expanding the current "repair, replace and refund" claims paradigm to include "detect and prevent"
- Create new revenue streams by rethinking the traditional roles of insurers and transforming itself from a product to a more service-centric insurance company
Those insurers that successfully follow this transformation path will certainly be among the winners in the increasingly fierce competition. Done right, this evolution kicks off a positive upward spiral that lowers costs, promotes customers loyalty, strengthens employee satisfaction, and enables additional premium and service revenue streams.
Katharina Zimmermann and Sebastian Busch also contributed to this article.
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