Is has become a truism that the Covid-19 pandemic has accelerated the pace of digital transformation in every walk of life.
The digital consumer that was just a theoretical abstract a few years ago is now a reality, almost the norm in many walks of life. That poses a profound challenge to the insurance industry, nowhere more so than in claims.
It has never been an industry that has been quick to change. Yes, it has always had its innovators but they often remain outliers for years. Back in the 1980s, when Direct Line launched its telesales operation on an ill-prepared and highly sceptical motor insurance market, the industry’s responses ranged from the dismissive to the outrightly hostile, especially when it came to the prospect of handling claims over the phone.
As Direct Line and a few early imitators started to grab a significant share of the motor market, people said it was alright to sell insurance by phone but that it would prove impossible to handle claims over the phone. They were wrong. Very wrong.
Is history in danger of repeating itself?
That danger is explored and analysed in-depth in the new Evolution of Claims report produced by Research in Insurance.
The results of the mixture of qualitative and quantitative research among claims professionals reveals a contradictory blend of complacency and honesty.
Over half of professionals in claims or working closely with claims think their firm is ahead of their peers in terms of the quality of claims servicing. This goes up to 64% of those surveyed among carriers. But 53% of carriers believe their firm’s claims technology is behind the times, while just 13% believe their firm’s claims technology is cutting edge. Clearly, quality and deployment of technology is not yet widely seen as being one of the key defining characteristics of a quality claims service.
Measuring oneself against one’s peers will not meet the challenges. Measuring claims service against customer expectations is what is needed to spark the digital transformation. With just 13% of established players backing their current technology there is a very long way to go.
Many who took part in the research acknowledge that meeting rapidly changing customer expectations means stepping back and looking at processes from customer perspectives: from that of the digital-first users to the digitally-disadvantaged.
Universally, people want claims settled quickly, have a fair outcome, with little quibbling and interruption to their lives. Convenience and transparency are at the core of this re-shaped service proposition and that means developing a 24/7 self-service approach, while acknowledging that will not suit every customer or every claim. Data will also be key, especially a willingness to share data with customers in order to give them greater control over their own claims. This will be a cultural as well as a technical stumbling block for many traditional players.
However, the report does tease out some of the answers.
The list of potential applications of technology in the claims process, highlighted by research participants, is long and varied:
• Claims portals, via apps and mobile tech, will tell customers where in the process a claim is with less need to chase and have negative or frustrating interactions over updates.
• Greater use of chatbots, although many respondents see them as having big limitations, as some customers get frustrated with them.
• Payment processes speeded up
• Guarantees of payment for certain types of loss. For example, one insurer is guaranteeing payout on business insurance within three hours if tools are stolen. This could point the way to more forms of parametric insurance becoming commonplace.
• In motor, driver FNOL (first notification of loss) using apps, telematics and automatic incident reporting.
• In home, video FNOL and use of drones to survey property damage.
It is the integration of all this new, rapidly gathered, data into sophisticated AI systems that will deliver the speedier, cost-effective, customer-centric claims processes. But it will also mean insurers ceding control over some aspects of the claims process to customers. It will certainly mean an end to underwriting at the claims stage as customers will expect all the data they provide at policy inception to be automatically accepted at the point of claim. They will also expect insurers to know that their street has been flooded, that there has been an accident on the road they are travelling on, or that the connected vehicle they are in has been damaged. In short, they will expect insurers to have access to a wide range of external datasets, even with more complex commercial claims.
The report reveals that many in the industry are impatient with the slow progress of evolution and are fearful that others will come in and spark a revolution, rather as the direct insurers did in the 1980s.
Respondents complained that even when projects are initiated, the timeframes once they start typically drag on over several years. They also highlight the piecemeal nature of many so-called transformation projects, saying they are developed for one line of insurance before moving onto another line.
The digital consumer is here. When will the digital insurance industry catch-up?