Insurers face a critical challenge as the digital world continues to change their business models, operations, people, and technology. The insurance company as a corporate entity is based on what worked decades ago. The customer experience, too, focuses on yesterday’s customer—and yet it is the customer experience, especially in claims, where insurers have the opportunity to deliver on their brand promise and cement the loyalty of their policyholders for years to come.
But customer expectations today are not what they were 20 years ago; they’re not even what they were five years ago. That evolution is felt most strongly in claims—the customer touchpoint for insurers. The claims interaction is the most stressful, emotionally charged experience that policyholders will have with their insurers. The impact of the claims experience for customers can go in one of two directions: it can demonstrate the value that they get from their policies and the insurance company as a whole, or it can frustrate them so much that they do not renew their policy.
Claims, like the rest of the insurance industry, is in for some significant transformation. The good news is that understanding the drivers and how they are playing out in the real world gives insurers a great way to differentiate themselves by combining high-touch customer service and highly efficient, effective service processes in their claims operations.
Insurers need to know what factors are putting pressure on their current claims environments in order to make smart plans for their own claims transformation. Trends from across the digital landscape converge in the claims area, like mobile acceptance and communication, new technologies like connected homes and buildings, new virtual entities like Airbnb and Uber, and, above all, changing customer expectations. Although customer service at an insurer is vastly different from customer service at an Apple Store, customers cannot help viewing their interactions with their insurer through the lens of the customer service norms they encounter in other industries.
Together, these trends are driving the transformation of insurers’ traditional claims models to better meet the needs of today’s customers. There are three main areas in which customer interactions and claim experience is shifting for insurers: restoration, mitigation, and prevention. Shifts are already taking place in all three areas, and opportunities abound. Insurers ready to transform their claims processes or further their ongoing transformation efforts have a number of opportunities.
Restoration is the traditional focus of an insurer’s claims department, beginning from the moment a claim is filed and progressing through a relatively predictable set of tasks and interactions and ending in compensation or denial. Efficiency and effectiveness throughout that process has always been the ultimate goal, but customer centricity has broadened the definition of restoration to include value-added services not outlined in the high-level overview of how a claim is processed. Customer needs and preferences have taken a greater role in the claims process, incorporating omnichannel interaction and communications, new payment technologies like electronic payments and e-checks, and mobile-friendly operations for both claimants and claims professionals. These may sound like nice-to-have features from the insurer’s perspective, but in the mind of most customers, they are basics.
There have been occasional efforts in mitigation in years past, but today, we are seeing major growth in this area as insurers see the value of making it a standard part of their claims operations. The key to mitigation efforts in claims is communication with policyholders. Digital communication through all channels is fundamental, particularly for disaster preparedness when a text, email, or call could mean the difference between serious losses or injuries and a minor or nonexistent claim. Omnichannel interaction is a critical part of that service when near-term action is required—a policyholder whose phone is set to silent still may be checking her email regularly enough to see an early warning for an approaching weather event. But even in less dire situations, claims mitigation requires a variety of digital communication channels.
One example is an insurer that encourages the use of IoT (Internet of Things) devices in policyholders’ homes following water damage claims. Since there is a high incidence of repeated water damage once a home has experienced it for the first time, this insurer provides policyholders with information and access to water leak detection and auto shut-off valves to prevent recurrences.
Loss prevention is the gold standard in terms of where an insurer can improve the customer experience. If the insurer can prevent a claim entirely, nothing gets damaged and no one gets hurt. The claims process need not occur at all, and loss ratios improve drastically.
The outside world is changing the risk landscape. There are some aspects in play in the prevention arena, but the industry is not quite there yet. This area is being driven from the outside in by innovations in technology. Technology will be the main factor in developing preventive processes with a significant emphasis on IoT. We are already seeing connected homes and connected buildings with the potential for insurer involvement. We may not be at the tipping point for autonomous vehicles yet, but the accident-avoidance technologies in new Subarus and Teslas can certainly be described as semi-autonomous. Prevention also is an area where evolving customer expectations will play a significant role.
Through the areas of prevention, mitigation, and restoration, insurers are transforming the expectations of customer interaction and the claims experience. An insurer can make a significant impact on the customer experience by delivering on its brand promise at one of the most important decision points for renewal. Claims is at the center of the customer experience, and transformation in claims will have widespread impact throughout that experience for customers and insurer alike.