As we move ever faster towards a completely online world, consumers are expecting much more from insurance companies. It isn’t good enough to make people wait six to eight weeks to assess a minor fender-bender type claim – policyholders want their photos used as evidence of damage, an email estimate, and approval on the claim with days. The technology exists, and customers are demanding this capability. BAE Systems offers insights into how the race to settle claims ever quicker offers some data challenges too.
Insurers can quote faster than ever before, and settle claims quicker too.
In fact the online, app-based portal method means that automation and AI can be fine-tuned and deployed across most claims, to the extent where US company Lemonade stated that they settled a claim for a stolen coat within 3 seconds. Impressive.
But will that superfast service leave the door open for fraudsters and fake claims in the future?
“Insurance is a reasonably conservative industry. It hasn’t been revolutionised,” says Dennis Toomey, Global Director, Counter Fraud Analytics, BAE Systems. But market forces, he says, are pushing the sector in the right direction.
“The origins of the industry are as a big risk management engine, so there have been no radical changes. But insurers are struggling to make money, so there is now a real imperative for change.”
It isn’t just the pace of change, it is also the checks and balances that have to be put in place to make claims settlement as accurate as possible. Toomey goes onto explain that as companies drive more automation in the core business, to save money and improve customer experience, the anti-fraud and cyber teams have had to keep pace to fulfil the promises that digital has made.
“Insurers are moving to a world where they have a service-level agreement (SLA) to pay claims in two hours,” says Toomey. “They can’t then take 25 per cent of their claims into a manual fraud triage process because that breaks the SLA. The business owners driving that SLA won’t accept it.
“Businesses are not saying, ‘Let’s go and invest in digital because it makes anti-fraud measures more effective’, but they have to change the way they fight fraud to adapt to the way the business is interacting with customers.”
IS THERE STILL A PLACE FOR THE HUMAN TOUCH?
So what does this drive to speedy, technology-driven processes mean for the people who performed those roles before?
Hannah Green, Technical Lead, Cyber Analytics at BAE Systems, explains: “The machine can interpret much more data much more quickly than a human can, but the human understands its impact better than the machine.”
The core purpose of the machines is to crunch through the vast lakes of data at an insurer’s disposal and identify patterns and threats that emerge. But machines are not a catch-all answer to crime fighting in insurance.
There are, predictably, limitations. It is here that human expertise – and the ways it is deployed – remains key.
“By using a data-analytics program such as NetReveal, an insurer can be given 100 fraud alerts, with 90 per cent of the value of the fraud in the top 10. So they can decide whether to get the human to look at all 100 or just the top 10. That is a financial decision they have to make,” explains Green.
In the emerging world of cyber security, such decisions are more complex – and the need for human involvement all the greater.
“There you have 100 alerts and the top 10 are likely to be top 10 because we know what they are,” continues Green.
“The other 90 are there because they haven’t been seen before. That doesn’t make them less dangerous. A human is required to do the digging to find out what the real risk is.”
The balance that works best for both policyholders and insurers is a system that automates much of the routine, essentially similar motor, home, gadget and other claims, but still manages to flag up the claims that need more attention.
That deeper understanding may well come via artificial intelligence in the future too, but for now, trained staff can spot the patterns of data that indicate something out of the norm. Because insurance ultimately has the power to heal broken lives, it will always need the human element. Empathy, powered by humans as part of the claims process, goes a long way.