Insurers are working hard at matters such as customer engagement and straight through processing (STP). Other developments that will become even more important this year are artificial intelligence (AI), blockchain technology and creating an ecosystem. Insurtech companies such as Lemonade, FRISS and Qover are continually busy improving and innovating their products. This means that they also receive a lot of questions about these topics. They are happy about this, because obviously it is important to know what is going on in the industry. What’s more, it is a good incentive to improve our own solutions for fraud, risk and compliance even further.
What I think insurers are working towards, if only unconsciously, is a kind of self-processing of damage claims with minimal effort. At least, that is the feeling clients get. In the back office many matters are directly solved, or taken care of by technology, knowledge, empathy and automation. Like with self-banking. This requires a well-thought-out approach of insurers and a great deal of investment and collaboration.
Here are several methods insurers currently adopt to achieve self-processing of damage claims:
1. Adapting procedures and conditions
Some insurers choose not only to change their own systems, but also to focus on simplifying processes, procedures and policy conditions. For example, claims below a certain amount are paid out without human control or check. Preferably claims are negotiated in one go and/or a financial proposition is made in combination with a nudge towards certain repair companies and experts. All this leads to streamlined and faster processes. However, it can come at the expense of customer service, the proposition and/or certain risks. This can partly be overcome by an automatic check of claims on risk and by well developed customer journeys.
2. Insurtech in the reporting and processing of damage claims
Gartner has been writing about it for some time: Bimodal IT. In practice, it means that certain parts of the automation are outsourced to an innovative and specialized third party. This may for example be collecting all the details of a damage claim via a state-of-the-art app that has the insurer’s own look and feel. After the completion of this process, the client and claim are ‘passed on’ to the commissioning insurance company. A number of insurtech companies are focusing on this and in turn they are looking for partners for sensor data that automatically register, report or even try to prevent damage.
The assessment of the damage is also increasingly automated: automatic estimates of damage based on photos, the use of drones, chatbots and an automatic check on networks and patterns in the available data on objects, persons and circumstances. It also includes the assessment whether a damage claim is covered by a policy. Apart from a few large parties that do a lot of the ‘building’ themselves, this is mostly carried out in close collaboration with existing partners such as repair companies and/or new insurtech companies.
In other words, it means fewer technical worries and less maintenance for the insurer. Vital in this construction are good procedures for managing the client, price agreements and integration with systems of the insurer. Application Programming Interfaces (APIs) are key here.
3. Full package claims management system (CMS)
Leading suppliers of claims management systems are fighting for their livelihood and unique proposition and they are increasingly expanding their services in this field. They are integrating new techniques such as automatic claim estimation and voice analysis in their CMS. For this they also have to choose between developing these techniques themselves or collaborating with partners. As some insurers do not have the option, capacity or competencies to orchestrate this themselves, the purchase of a CMS also buys them some development. Some insurers go one step further by increasingly outsourcing the processing of the damage itself (as far as staff is concerned) to the same party that supplies the CMS. This could certainly work for certain insurers, though in doing so, you might also be handing over part of the control, autonomy and sometimes even your uniqueness as an insurer. The costs are another aspect that needs to be looked into.
This is related to points 2 and 3, but here it is even more about the position of the insurer. Often car manufacturers or online retailers are regarded as future insurers and/or risk bearers. For car manufacturers this is the result of the shift in liability and the availability of capital, for online retailers this is driven by their long experience with AI, customer engagement and logistic processes. By choosing the right partners, focusing on, among other things, the Internet of Things (IoT), as well as by pro-active collaboration with parties outside the industry, the insurer can be in control and work towards a total experience for the client.
Obviously most insurance companies adopt a combination of the above methods, or incorporate other methods. Much depends on the region (from a global perspective) where the insurer is located, legislation (such as the General Data Protection Regulation), the culture of the organization itself and the distribution channels. It is up to the insurer and the suppliers to remain relevant in this ecosystem as a whole and to stay focused on the additional value for their own clients. It is a great future to work towards, one in which the client will eventually only have to choose or give his or her consent at certain moments. The whole process of damage prevention, registering, reporting, assessment and solution will be facilitated and automated for him or her. Dealing with damage claims will become as agreeable as self-banking.