Claims automation: Are insurers doing it right?

Claims: The heart of insurance 

For insurers, claims handling has always been the ultimate moment of truth. Although it is a situation that both consumers and insurers would like to avoid, it is critical for both parties when it occurs. 

Consumers would want to go through the process quickly and fuss-free with all the personalised support in an ideal situation. Likewise, insurers look for efficiency while managing their costs. 

Thankfully, with the advancement of technology, artificial intelligence can significantly optimise the claims process. By 2035, artificial intelligence (AI) is predicted to enhance labour productivity by 30% to 35% in 11 Western developed countries and Japan. 

Automation transforms the claims process

In recent years, insurers have been ramping up their digitalisation efforts, and some have also introduced various levels of automation to their claims management process. Automation could come in many forms, e.g., modernisation of the claims platform, integration of chatbots, data extraction with artificial intelligence (AI), and many more.  

Research by McKinsey showed that automation could reduce the cost of the claims journey by as much as 30%. Furthermore, insurers also saw improved productivity, indemnity performance and risk elimination.  

Automation provides speed and transparency, which are deciding factors for a great customer experience, particularly in claims management. According to Microsoft's Global State of Customer Service survey, 58% of consumers will sever their relationship with a business due to poor customer service. 

Put customers at the center of the claims process

By initially identifying the customers' needs and pains, insurers can ensure that the future claims process corresponds to their actual requirements. With a detailed understanding of the customers, it forms the foundation for implementing technologies that support the business's long-term strategy.  

Go from data-based to data-driven 

One key differentiator between competitors is their data, and the decisions and actions they take as data-driven insurers. Here are two approaches that can help organisations optimise their claims automation journey: 

Start small and scale-up 

Based on a specific business case, create smaller-scale solutions, e.g., individual teams can quickly build or purchase a solution to meet their immediate data and analytics needs. This allows business units and small teams to speed up their processes and continuously improve existing products. At the same time, organisations should also keep an eye on integration. 

Integration at the right time helps the organisation be quick from the get-go and promptly deliver benefits while also ensuring an efficient connection to the core system.  

Think big and make it happen 

This approach echoes a company's vision through a long-term data strategy that focuses on alignment with the business model, defining and implementing necessary technical, organisational, and cultural measures.  

A part of the process also includes establishing a 'Single Source of Truth' to ensure data quality for data applications. Data needs to be available and collected in a structured manner. While this enables strategic organisation-wide decisions, it requires an end-to-end comprehensive solution that may take considerable time to see the end results. 

The key to making your organisation data-driven is to focus on action and progress. Think about building capabilities and encourage a culture in teams to think in the same way as technology companies to move away from legacy technology and systems. 

Prioritise value delivery in specific scenarios that cut across business functions and relate to customer value. Identifying these ‘thin slices’ allows you to focus on realising the value and showing results in months rather than years. 

Conclusion

The relationship between consumers and insurers has traditionally been mainly transactional and low touch. As such, insurers find themselves losing customer loyalty amidst the growing competition from new players that have disrupted the insurer’s entire value chain.

Insurers should strive to be more flexible and be prepared to compete in an economy with digital platforms and connected ecosystems. While they can easily introduce a new solution or dive straight into restructuring their end-to-end claims process and corporate strategy, insurers need to be clear on how these technologies can support their long-term business strategy to focus on providing value for their customers.