Faced with increasing pressures, from rising customer expectations and operating costs to mounting insurance fraud and catastrophe losses, insurers realize that emerging claims technology could revolutionize the traditional claims process. With impressive possibilities, insurers are now working to surmount organizational challenges to achieve meaningful claims transformation.
Although the ability to practically incorporate innovation varies greatly by product class, complexity, client appetite and regulatory regime, here is a small sample of claims-handling innovations that could revitalize the insurance customer experience, contain losses, improve efficiency and enhance catastrophe response.
Elevate insurance customer experience
Insurers recognize how claims transformation, by introducing the right combination of technologies along the claims process, from first notice of loss (FNOL) to settlement, can enhance the customer experience. The claims process includes well-understood moments of truth in the customer journey that can build customer loyalty, drive renewals and earn word-of-mouth recommendations, or have the opposite effect. In particular, technology could better engage the customer during claims reporting. For example, some insurers are now striving to reduce customer stress by empowering individuals to make their FNOL by their preferred channel, such as telephone, Web, text or smartphone.
A number of insurers are focusing their attention on rolling out seamless, integrated, multichannel options for claims reporting, mirroring their efforts to integrate other points along the customer sales and service chain. Unfortunately, some experts estimate that it could take years for insurers to access and adopt systems that could fully capture, store and analyze the vast free-format data that will arrive from these channels.
There might be more immediate promise in accelerating the speed of claims handling, information gathering, investigation and payment for a number of product classes. For example, the introduction of mandatory telematics emergency notification systems in German automobiles in 2015 could mean that accident claims could be received and assigned faster.
Meanwhile, in the United Kingdom, select insurers are piloting programs by which clients e-mail claim photos or videos and receive a rapid mobile payment, rather than a traditional check or fund transfer.
Beyond shortening cycle time, insurers in some markets are experimenting with sentiment analysis tools to improve overall service quality offered by call-center staff. Through automated analysis of voice recordings of customer conversations against key words, phrases and business rules, they can monitor handlers and compare claims data, to determine whether positive or negative sentiment scripts impact settlement costs. They can then fine-tune protocols and training, while also accumulating invaluable compliance records.
Reducing fraud losses
In light of rising levels of false or inflated claims, insurers are taking note of technological innovations that can help prevent, detect or recover insurance fraud losses. Among the main avenues to improve fraud detection: data analytics of structured data to improve fraud scoring, text and voice analytics of unstructured data from client interviews, and external source and social-media analytics.
Aggregated global data could help insurers spot patterns and build more accurate predictive modeling of potential fraud. Then, better fraud detection rules and workflows can be developed, so that claim data can be mined for high-risk flags. Again, voice recording analysis could identify relationships between customer language and typical fraud indicators to alert claims representatives, accurately route files to investigators and swiftly block payments. With the immense potential uses of these technologies, particularly fast-evolving artificial intelligence applications, insurers are beginning to envision or even build the capability to automatically read and interpret huge quantities of existing or incoming unstructured claims data.
Harnessing this data will most certainly pay-off in both underwriting terms and claims management, in both cases providing additional benefit to carriers and ensuring a consistent and predictable customer experience, benefiting both carriers and customers.
Enhancing catastrophe response
A raft of technologies, many of which are emerging from the “Internet of Things,” can be applied to boost both operational efficiency and help insurers respond better to catastrophes, including more frequent weather and natural disaster-related losses.
These emerging technologies could improve insurers’ capabilities prior to, during and postcatastrophe. Pre- disaster, better event forecasting systems and prediction models can help insurers analyze probable policy-holder impact and prepare strategies for loss minimization. They could also help an insurer review overall operational and financial preparedness and set appropriate reserves.
These tools could enable insurers to issue early warnings to customers and save lives, making the insurer an invaluable, trusted partner to disaster preparation authorities. Such tools could also help insurers rapidly mobilize adjusters and other resources for post-event claims handling and customer support.
Although there is already rich partner data for forecasting, insurers’ deployment of many of the above technologies is hindered by recurring internal data quality issues, or systems that do not have the performance capacity for larger data volumes. Despite the challenges, insurers are acknowledging the importance of testing and applying available data in order to improve and evolve their capabilities.
There is also rising availability of off-the-shelf tools that could transform the process, one chain link at a time. For example, with Google Glass eyeware, adjusters could capture image, video and voice recording on location, collaborate in real-time with specialists for quick decision-making and instantly submit forms via mobile apps.
Similarly, commercial drones could help adjusters access hard-to-reach catastrophe locations, and transmit data instantly to the claims center. These products are often available at affordable price points, with hardware and software that can feed into existing company systems.
When implemented in combination, such digital tools could revamp what is often viewed as the slowest part of the claims process, the investigation and evaluation stage. It could also eliminate the still-widespread use of paper checklists, manual forms and worksheets by adjusters. We cannot be naïve to assume there won’t be initial costs. However, the payback over the long-term will justify the investment made; just think investment in fraud technology or tools to support personal injury assessments. Both have required insurer spending, but have supported quantum and loss assessment. Based on KPMG’s recent research, we anticipate a cost of approximately 3 percent to 7 percent of the claims payments.
First step: Open minds, but focus on basics
While the list of ready-to-go or soon available tools is intriguing, the essential first step for an insurance firm to realize the dream is to embrace culture change and open minds to the possibilities. Insurers’ historic propensity for risk avoidance means that many firms have yet to embrace experimentation, constant learning or the “fail fast and move on” attitude that is a hallmark of top technology firms.
With the right mind-set, an insurer might first examine whether they are capturing the fundamental, basic information needed to understand and optimize their claims process. Identify the basic business problems that must be remedied and begin working toward the solutions, seeing technology as the capability. Potentially, concentrate your efforts on two to three well-defined problems and explore technology solutions through cocreation or small-scale, low-risk pilots that can be expanded or abandoned, depending on results.
While there are many routes to achieve practical, executable claims transformation, there is one widely agreed endpoint: Those firms that explore the technologies that are now within reach will be tomorrow’s leaders in making the claims experience more friendly, transparent, convenient and cost effective, enabling them to reclaim their place in the customer-centered digital revolution.
The article is written by Louis Régimbal of KPMG in Canada, Aashish Patel of KPMG in the UK and Martin Köhler of KPMG in Germany.
R.G. Manabat & Co., a Philippine partnership and a member-firm of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
For more information on KPMG in the Philippines, you may visit www.kpmg.com.ph.