This latest piece is by Rory Yates, SVP of Strategy at EIS. As EIS’ SVP of Corporate Strategy, Rory helps insurers achieve their transformation goals and evolve toward ecosystem-based futures via insurance core systems transformation, including truly personalised engagement, taking innovation from concept to market quickly, and growing efficiently.
It’s time to think about claims as a strategic asset, something that can help define your brand and enhance customer insights, building relationships and more.
Ask anyone if insurance has changed in the past ten, twenty or even thirty years, and you’ll get the same response; “not really”. On the odd occasion someone does provide an example, it’s typically somewhat depressing; “my insurer now lets me download my documents from a secure portal”, etc. But has it made a difference? Again, it’s “not really.”
Having been lucky enough to spend time conducting in-depth customer interviews and sitting in on focus groups and anthropological studies, it’s clear that customer expectations and needs are light years ahead of the insurance industry.
People want to know why, when insurers hold so much information, it isn’t used to help them navigate risks or remove them altogether. They’ll say, “they know where my car is, where I am, what the increased risk is of this parking spot vs another – they could just tell me.” Or “When I claim, why can’t I just walk around with my mobile phone and we document the claim through an app with pics, video etc.? Surely that’s better for both of us?” And on it goes.
You can’t fault the logic or the puzzlement. Consumers know the technology exists because it’s offered by other services they use. Why, then, not in Insurance?
The Inconvenient Truth
The truth no one wants to admit is the transformation needed still hasn’t occurred. Instead, insurers are simply sticking plasters over problems. After a while, though, plasters get damp and black around the edges, and ripping them off is risky. You only want to do it if you know everything will be okay, and it rarely is.
Insurance businesses have been built on monolithic, highly structured, and complex to-change technology. If you want to change or build something that changes the customer experience, you’re faced with an epic IT bill with a low probability of getting what you asked for in the first place.
No amount of insurtech implementations, API connectors, or hybrid cloud offerings will change that.
Claims Innovation is Critical
Claims remain a critical component most customers see as the moment of truth in the insurance value chain. In the face of a strategic imperative to compete beyond price, build trust, and create a new paradigm between insurer and customer, it’s one of the leading candidates for transformation and differentiation.
Moreover, digitising claims holds tremendous potential to revolutionise the customer experience, reduce the cost of claims, and vastly improve decision-making and automation. But, to drive these outcomes, several critical areas need to be addressed.
High costs: Anything that delays or disrupts the claims process can be considered an unwanted operational cost. These include claims leakage, missed opportunities, erroneous payments, fraud detection and management, manual processes, etc.
IT costs: Complex legacy systems, architecture, and outdated mainframe solutions stay in place because replacing them seems risky and likely to disrupt the business with a high initial cost. There’s also the additional price of ongoing maintenance and user support of these systems.
Poor service delivery: The inability to prioritise the next steps for a claim causes delays and inaccuracies. Key culprits for this are incoherent processes and a lack of insight into data and task management. Manual decision-making means high unpredictability of claim handling costs and service provision, as well as the general customer experience.
Fraud is on the rise: Opportunistic claimants and outright fraudsters put a heavy strain on claims management due to time spent on analysing fraud indicators and consulting databases. This disrupts the entire experience and impacts all customers if not treated carefully.
Missing management information: Decision-makers often lack information about trends in their claims and how to act. In complex application environments, maintaining a data warehouse is a costly undertaking, and reporting is generally not real-time or relevant to daily operations. As a result, financial forecasting becomes a risk, and fluctuations threaten the business.
Integrations (APIs): Data integrations, like integrating with service-enhancing insuretechs for ENOL services, need the right architecture and a data-fluid customer core. Good data structure makes sure the right data is integrated into the claims experience and even makes it easier for employees to manage too.
Supplier performance: Poor insight into the performance of suppliers and service providers, like repairers and damage experts, creates blind spots in claims management. To make things worse, poor supplier performance may be caused by deficient integrations or data availability, affecting the ability to utilise this insight.
Claims as a Strategic Asset
Claims sit at the heart of the customer experience and often drive the low trust associated with the insurance industry.
Claims teams need the business and technology architecture that creates a foundation for effective, ongoing change. They need every aspect of the claims lifecycle and the 360-degree customer view to be adaptive. This allows insurers to tap into the best of new data sources, supply chain management capabilities, and insuretechs.
Treating claims as a strategic asset means investing in your ecosystem’s future, laying the foundation of continuous evolution, partnerships, automation (e.g. fraud detection), and simultaneously reducing costs.
Having worked at the AA, which people in the UK still perceive as the 4th emergency service (after the police, ambulance, and fire rescue), it was clear that the company benefits from dealing with people in difficult situations. With over 80% of breakdowns resulting in a fix at the roadside, in these moments, the service saves people and sometimes their lives.
By treating claims as a strategic asset and harnessing ecosystem thinking, insurers can integrate into the human experience, inter-operate with the supply chain and ancillary services that support claims, and make the experience seamless through any channel at any time.
A claims situation is a wonderful chance to be by the side of customers in need rather than the obstructive gateway to the outcome. From the low-hanging fruit of simply making a claim’s status known to a customer at the touch of a button or proactively communicating a status change to video-based assessments and automated ENOL, it’s all possible now.
To get there, insurers need a technology architecture that puts the customer at the heart of the business. One that’s fully data-fluid, intelligent, seamless, and integrates with other ecosystems supporting it.