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Advertising feature: Embracing claims digital transformation - focus on outcomes

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The general insurance industry is in the middle of a digital overhaul. The customer mix is shifting towards digital natives, who expect seamless interactions over digital channels. According to EXL's UK and Europe team, Mohit Manchanda, head of insurance, Rohan Regis, vice-president insurance and Swarnava Ghosh, senior engagement manager - insurance analytics, while slow to start, the industry has embraced digital transformation – in large part due to new competitors such as insurtechs and platform companies entering the arena.

Over the years, insurers have invested in transformation initiatives to stay competitive, support their strategies, and build more agile, adaptive and disruptive businesses and operating models. With a changing competitive landscape, insurers must realise where to bet big on transformation effort and cost.

The claims function is a critical moment-of-truth in the insurance value chain. For general insurers, digitising the claims function holds tremendous potential. Claims are one of the few opportunities carriers have to deliver a positive, impactful customer experience, build customer loyalty, and collect valuable data to help improve operations.

Outcomes that matter

The challenge for insurers lies in balancing digital services while also maintaining a personal touch. Integrating process optimisation, technology and data into the claims value chain is necessary to design an optimum operating model.

Transformation objectives have evolved from focusing on operational outcomes to driving better decisions with data. Insurers need to focus on an end-to-end view of the claims value chain and the outcomes claims organisations need to achieve including:

Optimising indemnity: improving recovery hit ratio, detecting fraud, reducing leakage and third party exposure, preventing losses.

Reducing cost of claims: improving straight through processing, reducing claims handling expenses, litigation cost, supplier cost, and failure demand/repeat requests.

Providing a frictionless customer experience: improving net promoter score, increasing first call resolution, self-serve and reducing cycle time.

Each outcome will impact the other as carriers will look to prioritise initiatives for 2021. Looking at this holistically is the only way carriers will be able to manage this balance.

The impact on claim outcomes

Ensuring the right claim outcome is achieved requires insurers to use the right key performance indicators. In a typical insurance claim, digital transformation can deliver exponential impact during key phases such as:

  • First notice of loss: focusing on loss prevention via alerts/safety warnings, reporting a claim online promptly (more than 70% of claims reported online are by customers and agents with auto-feed into insurers’ systems) third-party capture, higher straight through processing and early fraud, litigation and total loss indicators.
     
  • Assignment/triage: scheduling an appointment with workshop/adjuster online, efficient and accurate routing, missed subrogation opportunity, proactive notifications.
     
  • Loss assessment/fulfilment: self-service damage assessment using digital channels, transparency on claim status via push messages, remote damage assessment, reduced handoffs, accuracy in damage estimation, efficient and frequent adjustments in reserve levels, optimal cost.
     
  • Recovery: shorter lifecycle, optimised chase strategy and increased recovered vs. spend.
     
  • Payments: real-time and automatic processing and payout of cash settlement, reducing leakage.

Levers for claims transformation

An effective, efficient claims practice can be a key contributor to strengthening customer loyalty and attracting new customers. The opportunities to transform claims are unprecedented, and requires embracing technology and re-designing operating models.

The three key levers or assets that can enable building a next-generation claims model include customer journey led business transformation, artificial intelligence-driven analytics and digital tools and technologies.

  • Customer journey-led business transformation: as customer journeys go, the claims journey is complex and personal. Key business outcomes include developing a clear understanding of the customer for whom the experience is built for, and what needs to be done to get there. Re-imagining first notification of loss requires driving the right outcomes both for the customer and the business.

Insurers have realised that improving the end-to-end claims experience requires transforming internal processes inside the enterprise to provide real-time responses and support customer transformation.

Achieving omni-channel communications is challenging, as digital, data, and processes must support real-time, seamless switching from one channel to another.

The goal should be that information should never have to be rekeyed, and picking up a conversation through a new channel should be a continuation rather than a restart.

Advanced digital solutions such as conversational AI, cognitive agents and chatbots enable seamless conversation giving a near human like interaction as well as an ability to switch to a real agent, if the emotion rating indicates that as the best approach.

  • AI-driven analytics: analytics can significantly improve and speed up claims management using predictive insights. AI can identify and infer characteristics of claims that are not fully known at FNOL. This enables quick decisions on fraud, recovery, total loss and litigation, and affects all three desired outcomes of indemnity, expense and customer experience.

A good example is the use of AI-powered damage estimation solution to identify total loss at an early stage of claims lifecycle. This helps avoid unnecessary expenses when repairing a total loss vehicle and speeds up the settlement process improving customer experience.

Data and analytics can help in the following ways: propensity prediction; propensity of fraud, recovery, litigation, re-open, total loss, walkaway claimant. Severity detection; accurate quantifying of loss calculations lead to better reserving, better case management, TP capture, large loss detection. Segmentation and assignment; classification of the claims into appropriate segments based on captured and predicted variables and triaging to the appropriate handlers based on skillsets and experience. Claims decision support; helping claim handlers adopt the next best action using data and insights.

  • Digital tools and technologies: as insurance customers become more tech savvy, the ability to provide real-time responses and self-serve journeys becomes critical for insurers. Real-time customer interactions and AI-driven analytical decisions require a different set of tools and technologies than traditional claims systems.

Three facets can usher in the digital and interactive claims process at scale: advanced digital solutions, data and system integration and integration with the Internet of Things.

- Advanced digital solutions: that unlock value across claims value chain by delivering impact across all three key outcomes. Some of the examples are AI/ natural language processing based content extraction and data ingestion solutions for digital intake, intuitive virtual assistants for customer contact centres, specialised insurance platforms that transform key parts of the value chain, for example subrogation platforms.

- Data and system integration: many insurers still rely on traditional green screen core claims systems that prevent integrating AI modules and solutions at scale. This problem can be solved by bringing changes in underlying IT architecture introducing middleware that can interact with both core claims systems and the customer facing front-end while running the AI and machine learning modules that provide decision support and real time interactions.

Data sharing through integrated digital networks between varieties of entities in the claims ecosystem can help insurers fast track the claims process and elevate customer experience.

- Integration with IoT: IoT solution providers and insurtechs can fundamentally change the way claims are assessed by bringing in new data elements that were previously impossible to capture.

Today, most insurers are working hard on specific components of products and services, but few have sought to completely target all three outcomes together and overhaul the claims journey. To make that kind of transformation – and keep up with the leaders – insurers will need to shift to a balanced approach to impact profitability along with proactive customer experience.



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