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Claims Leads the Way for High-Impact Transformation

The claims department is an ideal sandbox for insurers that are ready to experiment with innovation.

May 23, 2016 Photo

We all know that the interaction with the consumer during the claims process has the strongest effect on policyholders’ renewal decisions and most directly affects overall customer experience. Not coincidentally, it also is an area ripe for innovation as insurers embrace new technologies and capabilities.

The claims department is an ideal sandbox for insurers that are ready to experiment with innovation. Maturing and emerging technologies can be piloted on a small scale to determine the best fit within the claims ecosystem. Its impact can be quantified by measuring increases in customer satisfaction and retention as well as improvements in claims results.

Of course, the path forward starts with the modernization of claims management systems, which are designed to automate a number of manual processes that limit insurers’ progress toward becoming more efficient and effective. Insurers need modern claims systems to streamline workflows and adapt to the growing complexity of claims management. Only then can they begin to rethink and redesign the effectiveness of their end-to-end claims processes.

A critical component of the transformational possibilities enabled by modern systems is the ability to incorporate new technologies and new capabilities to enrich the customer experience and accelerate the claims settlement timeframe, providing never-before-seen data and delivering payments with extraordinary efficiency. Advanced payment technologies, such as e-payment alternatives, allow insurers to respond to situations that require immediate payment to claimants and third-party providers. Service excellence, customer satisfaction, and, ultimately, renewals are influenced across the entire process, and insurers establish a digital experience that can be built upon in the future.

We have been tracking maturing and emerging technologies for years, and our 2015 findings identify several technologies particularly suited to the claims ecosystem. Of the 12 emerging technologies that we study, insurers reported that drones and aerial imagery, the Internet of Things, new payment technologies, virtual/augmented reality, gamification, and artificial intelligence have the most immediate potential for claims as well as the lowest risk, which makes them excellent candidates for investment. The other emerging technologies will either have indirect influence or are further down the road include 3-D printing, driverless vehicles, wearable devices, semantic technologies (including those that interpret unstructured data), biotechnology, and advanced robotics.

Drones and aerial imagery are the top emerging technologies with claims applicability. Their dual uses are part of their high potential: historical data can be obtained by aircraft or satellites, while drones can produce real-time data via still images or video. Aerial imagery has seen significant and growing use over the past few years for catastrophe assessments and difficult roof and property evaluations. The introduction of drones has even greater potential impact for claims not only from the loss prevention perspective, but also for adjustment and assessment processes. This emerging technology can provide quicker, more efficient loss assessment while increasing the safety of claims professionals, with enormous potential for covering vast areas after a large event.

There already are myriad applications for drones and aerial imagery in claims. Crop and livestock monitoring via drone can identify and automatically report claims. Insurers can compare pre- and post-catastrophe satellite imagery to identify areas of major damage that belong to their policyholders. Other applications will arise as drones become more sophisticated, such as evaluating potentially hazardous working conditions for workers’ compensation purposes or identifying roofs prone to collapse after a heavy snowstorm. Drones also hold promise in loss prevention areas by enabling the proactive monitoring of specific areas or holdings.

Drones’ potential impact on loss prevention, as opposed to mitigation, highlights an important piece of the puzzle: claims transformation is bigger than modernization, encompassing changes to the entire claims business model and philosophy rather than simply the day-to-day processes of claims operations. To put it simply, tomorrow’s claims management will not—and cannot—look like claims management today. Transforming claims is an increasingly crucial undertaking in the 21st century’s insurance industry. The digital world is highly competitive. Insurers need to be creating real differentiators for their businesses, and transformation is the way forward. They need to move beyond modernization and press on toward becoming really innovative operations.

Transformation touches all areas of an insurer’s business, establishing an organization with the right skills to support the new vision of claims with new technologies and business capabilities to support an elevation in services and a redefinition of risk management. Insurers that are positioning themselves to be tomorrow’s leaders are implementing—or have already implemented—modern claims solutions that can be extended by capitalizing on new tools, technologies, and data to optimize today’s business while innovating for tomorrow’s leadership advantage.

In today’s digital world, the management of claims is increasingly complex, demanding, and, above all, in a constant state of flux. New technologies are constantly being introduced. Their development and adoption is unpredictable, but their impact will only grow. Insurers must be alert to those with game-changing capabilities and find creative ways to apply them.

Claims is a high-impact business area in which new technologies and business processes can be tested in the customer service areas of the restoration process, improved loss mitigation, and, in due course, loss prevention. Innovation in these critical areas helps position insurers for greater transformation, advancing toward their goal of becoming next-gen insurers. Claims is the go-to capability for insurers to start that journey.

About The Authors
Karen Furtado

Karen Furtado is partner at Strategy Meets Action and an expert in insurer core systems, including claims. She has been a CLM Fellow since 2014 and can be reached at (978) 239-2741,  kfurtado@strategymeetsaction.com

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