The claims process lifecycle begins when a policyholder submits a first notice of loss (FNOL). Critical information is provided to the insurer including policy number; date and time of theft or damage; a personal account of the incident; and more.
The insured largely sees this claims process as tedious, marred by inefficiencies, and, worse, ingrained with the stubborn perception that carriers are fixated on making the process as difficult as possible.
From the perspective of insurers, the claims process is challenged to meet very high—some would say nearly unrealistic—customer expectations, with customer impatience at its highest. No prizes for guessing that this is a demanding situation to be in.
Not Wired for Satisfaction
The insurance market is crowded and competitive and we all know how fickle customer satisfaction is in determining whether customers stop renewing policies or continue supporting the provider. According to Accenture’s digital insurer claims customer survey, “Why Claims Service Matters,” 41 percent of all claimants say they wanted to shift to a new insurer, citing lack of customer satisfaction.
When it comes to FNOL, its hassle-intensive nature acts like a stumbling block when it comes to meeting customer service goals. Companies that stick to legacy systems for FNOL have to bear labor costs as well as the indirect costs that result from process delays and inadvertent data errors.
A regular FNOL process involves multiple steps that depend on the coordination of information from various systems, which then needs to be collated and verified. This increases claims-processing costs and reduces productivity. It also results in a dissatisfied customer.
The Digital Shakeup
With more and more customers demanding digital channels that connect directly with insurance companies, it is imperative that insurers use disruptive digital technologies to make their own operations more customer centric. The hope is that digitization can help usher in a new era of customer experience, efficiency, and productivity.
At root, the digital transformations making inroads across the industry share one thing in common: the intent to build a claims ecosystem that is customer focused and adopts a value-driven approach. Insurers must map the claims journey of their customers to align them with meaningful digital interventions that make that journey more seamless. Today, insurers must also think about how they can integrate artificial intelligence in their pursuit of end-to-end digitization to deliver truly proactive claims processing to customers.
You might ask, “Isn’t the FNOL system already automated?” Yes, but there is a difference between basic automation and digitization that adds value. Most of today’s FNOL systems are just online extensions of ACORD forms so, as a part of the FNOL process, the user at the other end of the line just asks the insured for information that is then entered into the electronic ACORD form. This is then submitted to a claims professional or appraiser, who then carries it forward. As illustrated, this process is just data collection and submission; there is no value addition.
It is important to use digitization as a way of positively engaging with the insured and make the person happy, which results in higher loyalty. A positive customer experience is the key to reducing the cost of customer acquisition and churn. Your digitization strategy must integrate with your customer experience strategy. No one is calling to report a claim because something good happened. The question to ask here is, what will your customers appreciate in their moment of loss? The answer to this question, and ensuring you are able to deliver on that answer, will help foster customer loyalty and repurchase of policy.
Enter FNAR
The next level of FNOL—first notice and resolution (FNAR)—will involve basic claims information not just being collected, but also the claims resolution process being initiated at the same time. FNAR is a digital strategy that offers a more connected, automated, and accelerated way of claims processing right from initial reporting to resolution settlement.
The FNAR strategy is a perfect fit for the digital generation that wants the claims process to be transparent and seamlessly accessible, mobile, and needing the least amount of involvement with a human representative. While smart insurers seek digital means to add more value to the claims process, they frequently come to the conclusion that millennials resist using their devices for making phone calls.
Consider a situation in which a policyholder reports an auto accident and can no longer drive the vehicle. With FNAR, a policyholder with enabled coverage can automatically be booked into a rental car in the same step as the accident being reported. Before the insured finishes the call or enters the claim, the system provides reservation and pickup information to the insured. That’s a proactive value addition and a responsive claims process that can promise a very happy customer and speedier resolution for the carrier.
Fast responses offered to the insured are not at the cost of the insurer’s business rules. Digitization means the strategy is adhering to comprehensive business rules, wherein reports can be accessed from various channels to understand accurate claims assessment and associated risks. You have a happy customer and a satisfied claims executive. It is a win-win situation for everyone, courtesy of harnessing the power of digital innovation.