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Insurance

Claims automation: Are insurers doing it right?

innovation
  • Many insurers struggle to unlock the full potential of claims automation as they face obstacles like the inability to scale, lacklustre customer experience, and fragmented workflows.
  • Ensuring positive claims experience is key to maintaining customer satisfaction and loyalty, especially in a low touch industry like insurance. 
  • Insurers need to go from being data-based to data-driven. This forms the foundation for implementing technologies that support the organisation's long-term strategy. 
5 minutes to read

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. 

Common challenges faced by insurers in their automation journey
Along the claims automation journey, insurers face common challenges including the inability to scale data systems, lacklustre...

Along the claims automation journey, insurers face common challenges including the inability to scale data systems, lacklustre customer experience, and fragmented workflows. 

Data as a siloed, static asset
92% of life and non-life insurers fail to capture the entire value of process automation. As insurers apply automation to their...

92% of life and non-life insurers fail to capture the entire value of process automation. As insurers apply automation to their projects, they might be doing it in a siloed and incremental way, using non-integrated tools and systems. 

Enterprise data tends to reflect the organisational structure that created it. It is often siloed, internally focused and isn’t customer-centric. It has usually been structured to report on what happened weeks or even months ago and doesn’t help you influence what is happening right now and in the future. 

As a result, they focus on automating individual tasks within their workflows instead of the end-to-end process, which comes at the expense of overall business and customer value. At the end, when some organisations start building a data management platform, they provide limited value, only delivering reports and charts that do not power timely decision-making.  

Unstructured data leaves room for undetected fraud
Every insurer deals with both structured and unstructured data: the former is easy to analyse, while the latter includes emails,...

Every insurer deals with both structured and unstructured data: the former is easy to analyse, while the latter includes emails, images, and medical records, which are more complex for software to understand. In fact, more than 80% of enterprise data is unstructured, making fraud detection even more challenging. 

Staged accidents, thefts, and phantom medical procedures are common types of claim fraud. Even with the most robust tool and model, the output is still highly dependent on the correct data for accurate and thorough analysis.  

Unable to enhance the customer experience in claims journey
Customer experience is the one thing that sets insurers apart in this commoditised market with intense competition, downward...

Customer experience is the one thing that sets insurers apart in this commoditised market with intense competition, downward pricing pressure and infinite options.  

Aside from fraud detection, insurers also face difficulties enriching their customer profiles if they have inaccurate and incomplete customer data. For instance, by combining geospatial data with other business data, insurers can more accurately access prospects' risks, personalise their claims journey, and respond quickly to their needs. 

Most importantly, insurers need more than just complete data. They need a customer-centric approach to better design a process that prioritises the ever-changing customer needs.  

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.

Zuhlke - Peter Haarmark
Contact person for Singapore

Peter Haarmark

Insurance Practice Lead, Business Development Manager

Leading Insurance at Zühlke Singapore, Peter Haarmark has over 15 years of experience working in cross-functional roles in tech start- ups and global companies. Before joining Zühlke, Peter worked for a large Danish insurer in Europe and also created the commercial insurance offering for a leading cloud- based corporate services provider in Singapore. Peter holds the General Insurance License from Singapore College of Insurance.

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Connie Yeung
Contact person for Hong Kong

Connie Yeung

Business Development Manager

Connie oversees the Insurance and other key business verticals in Hong Kong. She has over 10 years of experience working in both Finance and IT industry, supporting a wide range of organisations including Fortune 500 clients. With that, she has gained extensive insight into how enterprises can create better business outcomes with digital innovation. Connie is also active in foundations supporting initiatives on women leadership and women in IT.

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Brewster Barclay
Contact person for United Kingdom

Brewster Barclay

Business Development Director

Brewster Barclay has a long history developing and selling innovative software and hardware solutions in the electronics and Internet industries, including running a start-up for 6 years. He is dedicated to helping customers create innovative solutions in healthcare and has shown this outside of his Zühlke responsibilities in his frequent mentoring of e-health and medtech startups.

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Gabriele Baierlein
Contact person for Germany

Gabriele Baierlein

Director Business Development

Gabriele Baierlein joined Zühlke in 2016. She has already acquired more than 20 years of sales and leadership experience and led complex service deals in international IT companies. 

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Contact person for Austria

Helmut Taumberger

Managing Director Market Units
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Lukas Urech Zühlke
Contact person for Switzerland

Lukas Urech

Director Business Development

For more than 20 years Lukas Urech has been helping companies implement digitalisation projects. He joined Zühlke in August 2016 and is responsible for the insurance business as Director Business Development. Lukas holds a MAS in General Management from ETH Zurich and specialises in solution-orientated business development. Creating value for customers is his number one priority. 

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