Modernizing Insurance Claims Processing – Perspectives from an Industry Expert
Alan Demers has been living in, leading and modernizing the world of claims processing in insurance for over 20 years. He understands, at the very deepest level, both the opportunities for change and the headwinds we face in the path to modernizing, or really redefining, the claims process in the digital age.
I recently had the pleasure of sharing the stage with Alan at the Connected Claims Conference in Chicago. Following the event, Alan and I recorded a podcast together, which will be available soon on the OutFoxed podcast on Apple Podcasts and Spotify. In preparation for our podcast, I conducted a brief interview with Alan.
Steve: Throughout the conference, there was a repeating theme – automating the claims process, specifically, “touchless claim processing.” There was great interest during the Q&A part of our presentation about the concept of touchless claims and the relationship of data. Where do you see the insurance industry headed on this front?
Alan: That’s a big question. Let’s try to unpack it a bit.
First, to the question, “should insurers automate and provide ‘touchless’ claim experiences?” I would answer with a resounding, YES!
How much touchless service should be provided is a bit more dimensional to answer.
For starters, it will depend on the type of product offering, with insurers offering many different product lines to consumers and commercial customers. Another consideration is claim type, given the wide range of exposure, damages and other factors such as legal representation. However, vast majorities of claims do fall into minor to moderate damages with no injuries and are often cited as non-complex in nature.
Finally, and perhaps foremost, insurers and others will need to begin by defining what “touchless” means to customers and what they want and need. The good news is that there are several forms of low or no-touch in the marketplace today such as apartment renter, travel and windshield claims where both insurer and customer needs are met. Finding mutual efficiency levels for both insurers and customers may answer how much of claims should be touchless.
An additional perspective would be to make portions of all claim types touchless, even for the most complex and serious claims, where human interaction, empathy and other attributes are important. Even in these complex cases, a portion of the claim could be touchless, such as loss reporting, updates, follow-ups, requests for information, so on.
Steve: That’s great. So what’s holding insurers back from making the type of progress they desire on the push to touchless (however they may define it) processing?
Alan: There are several factors holding back insurers from reaching desired progress. Insurers face many internal barriers around readiness to change and adapt, ranging from legacy systems, outdated operating models, talent/skill gaps, funding commitments and perhaps most importantly, a clear vision for their future design. Other forces holding insurers back are technology choices and selecting new providers – many of which are partial solutions.
This landscape is a big challenge for insurers to consume. Things like prioritizing and deciding what to pursue can be difficult. Time and effort to research, develop and consider both the provider and technology/solution are consuming. Most P&C insurers are fairly new in the innovation space and are currently building acumen, acquiring talent and learning along the way. Many have broad “portfolios” of innovations afoot to demonstrate progress and reach into a range of areas like telematics, drones, AI, blockchain, image recognition and RPA.
While this is a fine way for organizations to test/learn and get started, limited resources are often spread too thinly. Likewise, innovation teams are faced with trying to build solutions that the business units may not readily support, creating the age-old question of whether to build outside the operation and apply later or build with the business unit along the way, which can be slow and fraught with setbacks.
Other speed-to-market difficulties that insurers face relate to legacy systems and the integration of data sources. For instance, many insurers would like to provide updates and meaningful information to customers regarding their claim status. However, the data source and availability may be limited or in control of the numerous service providers in the claim resolution ecosystem.
Steve: Let’s talk about customer experience a bit. In many cases, people are interacting with their insurers at vulnerable times in their lives (after a car accident, a home fire, etc.). The ultimate goal of the customer is to have the easiest and fastest possible path from First Notice of Loss (FNOL) to claim payment. What are insurers doing today to shorten that time between FNOL and payment, and how difficult has it been to improve on this front?
Alan: Insurers have been working to compress cycle times (from first notice to settlement) for many years. Direct repair programs, phone adjusting and mobile estimating are some of the older advances. More recently, insurers have adopted photo estimating, e-payments and both on-line and chatbots for claim reporting. Cycle times are measured closely as the longer a claim remains open, the higher the potential costs and likelihood for customer dissatisfaction.
One of the difficulties in speeding or reducing cycle times is that the current operating model is linear and step driven. The general claim process was designed based on insurer requirements to control loss costs, fight fraud, meet regulations and standards. The process was not intended for customer self-service, automation or lesser standardization.
So while insurers work to shorten cycle times, they must also re-imagine the overall process. A good example is today’s FNOL, which is mainly an order-taking apparatus where information is gathered only to be handed off to others (adjusters), who then call back a day or longer later. This is not only outdated, but also a recipe for delays, missed calls and confusion. Insurers have augmented this process with features such as text confirmations or providing the assigned adjuster contact information. However, this falls far short of an interaction that is on par with many of today’s e-commerce consumer experiences.
Embarking on a new service delivery process combines a thoughtful consumer design, self-services and both the insurer operating model and necessary data to drive a spontaneous, interactive and intuitive way of doing business.
Want to Know More?
To find out more about how MarkLogic is helping insurers across the globe solve their most complex data integration challenges, visit MarkLogic’s industry solutions for insurance.
Follow @OutFoxedPodcast on Twitter and watch for the upcoming episode featuring Alan and Steve.
Alan Demers – LinkedIn