- Brett Baith and Dennis Miller in ITA Pro
The Changing Face of Claims
A steady diet of core modernization is necessary to drive claims innovation and better loss control.
For the past several years, claims modernization has led insurers to execute core modernization programs that entirely replace the legacy claims system. These are difficult programs, but have the potential to be a game changer and are typically well worth the effort. Core modernization is a pre-requisite to fast, flexible, and information-rich communications with claimants, policyholders, and third-party service providers. Given today’s volumes and the thirst for new coverages, core modernization is fundamental to executing accurate, timely coverage verification, securing an accurate first notice of loss (FNOL), and managing claim service networks. However, core modernization is just setting the table for a new array of innovative dishes that truly drive superior service, and ultimately, loss control.
Loss Information Capture
Once the proverbial table is set, the first course relates to loss information capture. Recently, companies are using drones that capture and aggregate claim information and data on site, to help understand the nature and severity of the claim. This is particularly true for catastrophe losses due to fire, flood, windstorms, and hail. In addition, the growth of sensors in cars is allowing for a more accurate understanding of the conditions that were present at the time of a crash and actions taken. Insurers with modern claim systems are now capturing this information, and mining it to reduce cycle time and claim payment accuracy. To serve the first course properly, it is important for a competitive claims organization to constantly evolve its third-party and technology eco-system to be able to address new types of losses and also be able to store the results for future analysis and loss control.
Core modernization is a pre-requisite to fast, flexible, and information-rich communications with claimants, policyholders, and third-party service providers.
The second course harnesses an increasing insurance company appetite for predicting claim profiles, and evolving claim systems to provide more data of higher quality than legacy predecessors. With new core systems in place, it is possible to mash up core "hard data" with a cornucopia of new, more insightful "soft data" provided by third parties. Insurer adaptations include the deployment of analytics at the FNOL to identify how damage severity or indications of fraudulent activity affect assignment logic, vendor utilization, and the profile of the adjuster best suited to handle the claim. Analytics can also provide the foundation for straight through processing (STP), thus improving claim cycle time, costs, and ultimately, customer satisfaction.
The main course, innovation in coverages and management of those coverages, arrives at the table to serve just in time to satisfy the rapidly changing needs of insurance customers. Insurers are devising new products and coverages to address new risks at a faster pace, but new products lead to new types of losses. As a result, insurers and third-party providers are increasing the pace at which technology innovations are implemented and applied, integrating these innovations into all aspects of providing coverage and claim management. As always, the goal is to mitigate and even prevent claims. This leads to further improvements in mitigating claim frequency and severity, and the cycle of improvement goes on. Lastly, the ability to leverage sensors, video, robotics, and other emerging Internet of Things (IoT) technologies will provide claim departments with the ability to incorporate additional insight into core processing and analytics platforms.
Finally, comes dessert. Customer experience, which includes customer service and customer choice, remains a critical area for achieving competitive advantage. Serving the client well is the icing on the cake. Electronic interactions between individuals, companies, claimants, and third parties have given rise to real-time collaboration. This new collaboration ecosystem is much more than reporting status. Participants combine the currency of real-time data acquisition with the ability to access recreated accident scenes and analytical estimating models, as well as the comprehensive videography and photography that now often accompany a claim. For many claims, the claimant now takes on some of the tasks of a claim adjuster by taking photos of vehicle damage using a smartphone and submitting the information to receive an accelerated damage appraisal, engagement of a service provider, and claim payment. In some instances, a claim can be finalized without the claimant ever speaking to a representative. There has also been an explosion of new payment solutions in the past three years, and because the fundamental innovations that underpin blockchain technology virtually guarantee greater advances in claims collaboration and payment, there will be more.
Companies must be disciplined and thoughtful about transforming insurance models and processes, and should come equipped with a visionary roadmap for the future when planning how to serve up a select menu of dishes from the feast of advances available today and in the future.
Over the next decade, there will be more stunning advances in the nature of loss control and claim payments. Insurers, third-party service providers, and the claimants themselves will transform the way that claims are identified, managed, and paid. Further, stakeholders will collaboratively engage in loss control supported not only by IoT devices, but also by insurer-provided, real-time, easily-absorbed analytics, that engage the insured in managing how to reduce the probability and severity of future losses. Companies must be disciplined and thoughtful about transforming insurance models and processes, and should come equipped with a visionary roadmap for the future when planning how to serve up a select menu of dishes from the feast of advances available today and in the future.
About the Authors: Brett Baith is a partner at MVP Advisory Group. He can be reached at firstname.lastname@example.org