A Practical Guide to an Efficient Customer-Centric Claims

Automation has become a fact of life in the insurance industry. From simplistic autofill online forms to complex algorithms determining payment thresholds for claims resolution, we are starting to build a picture of where machines fit in the insurance ecosystem.

As a result, there has been a natural concern over what this means for the human element. Does implementing robotics mean that the human workforce is ultimately redundant? When we eventually move from automated process into true artificial intelligence (AI), is it game over for the skilled underwriter and claims specialist?

The answer is, as it always seems to be, that insurers should expect change but there will not be wholesale revolution. It’s in defining the role that each resource - human and machine - plays that will determine the success of any integration.

Merging human and technological resources wisely

What is driving the integration of machines in the first place is pressure: time pressure, data pressure and ultimately cost pressure:

“We are always under pressure to deliver more with less and that drives the focus to how can we reduce the amount of expenses in claims. And also, there is a pressure to understand how we can do more with the information we have access to and convert that to data to drive insights that reduce claims cost. Basically, be leaner as a business, that is a constant,” explains Steve Tait, RSA’s Head of Claims Automation

Machines can respond to that pressure by processing more data, more quickly and more accurately. In some cases, a machine will be able to do most, possibly all of the job that a person is currently employed to do and will inevitably be able to do it better.

Of course, saying this creates immediate cause for concern. The difference between people and machines however, is that people are both retrainable and are able to access the je ne sais quoi of the human touch.

In February 2017, UK insurer Aviva1 asked 16,000 employees if they were concerned that a machine could do their job as well as they could. This wasn’t an exercise in weeding out unnecessary labour. The company will look to retrain those employees for another role where the human touch is a vital element.

Moving towards greater automation will also impact new hires with executives already suggesting that they are seeking more ‘whole brained’ individuals - people with a talent for both logic and emotion, art and science - to round out their teams. They also echoed an industry-wide belief that there is still a place in a technological world for experience and ‘gut instinct’.

Merging technology and human resource is an exercise in listening. Understanding the pressures and concerns of the workforce won’t just help the organisation repurpose, retrain and hire its staff more effectively, it can also reveal new insights that will make the combined automated/human workforce exponentially more effective.

Hiscox’s Former Head of UK Claims, Eva Berg-Winters suggests: “Win the hearts of the team and allow them to flourish and drive the answer. It’s their future and they should be the ones shaping it. If the team believes and can see how automation changes their working lives in a good way, they will not only support it but drive it.”

Understanding how to reshape the organisation to meet the dual demands of a technological and human labour force is a question of business culture. It’s especially difficult to manage in the claims space because it is often at the tail end of any businesswide change.

“Claims has a tendency to have a follow strategy, it is normally second in line to underwriting and product areas. To change the culture of the business, you need to start from the underwriting and product part of the business,” Tait suggests.

However, we are already beginning to see cultural changes taking place at the ‘front end’ of insurance so to speak. In Anything You Can Do, AI Can Do Better,2 AIG noted there was “tremendous potential” for machine learning while Zurich Insurance agreed “I see insurance applying machine learning to improve P&L then claims management [...] it’s a much faster process and it is easier to reduce errors by using machine learning.”

Strategic, rather than tactical cost savings

Simply parcelling out roles to machines or humans isn’t enough to make the most of the combined technology and human resource. Nor is it enough to simply look at cutting topline costs. The concept of ‘being cheaper’ can lead to a very superficial application of automation to the issue of cost.

Klaus Vogel, Senior Vice President and Head of Claims, If P&C Insurance agrees that there is much more potential in automation than insurers have been able to access: “I have heard of examples here and there but there’s still a big, unrealised opportunity. No-one’s made a great deal of progress yet, particularly in claims.”

Instead of looking at making savings largely from an operational cost perspective, just in the claims environment, insurers should be looking at their whole business model to find out where technologies could be contributing to an overall improvement. Berg-Winters elaborates:

“Automation lowers the cost of claims handling; the cost of arranging payments. But the key cost benefit lies in better cost management such as from increased visibility over the supply chain. With a focus on third party cost this can be a win-win for both insurer and customer.”

Vogel agrees that process cost is only part of the picture: “Previously, automation has only been viewed through the lens of cost cutting but now it’s becoming part of the business model supporting seamless customer experience including transparency and standardised communications.”

Automation impacts indemnity cost throughout the claims process. There are several points in the process that technology can support handlers in speeding up the resolution of the claim. From the time taken to complete the claim (and the resulting use of support services such as replacement vehicles or temporary accommodation) to the cost to service the claim through call handlers, number of site visits and so on.

And of course faster claim resolution is central to improved customer experience. Great customer experience and reduced indemnity costs are two sides of the same coin. Improving one benefits the other. Intelligent application of both human and technological resource is key.

Automating the customer experience

In an industry that has historically been predominantly face-to-face, or at least phone-to-phone, there have been concerns in the past that a move to automation may suit the insurer more than the insured. Focusing on the company’s needs is almost always a sure fire way to damage customer experience. Tait assures us that this is not the case.

“Our customers’ expectations are being led by other industries not by the insurance industry. What our customer wants is immediate and efficient access to us. They want to know automatically what is happening with their claims. Managing customer expectations around what is going to happen in one week or in two weeks and keeping them updated is already something that we do. It has eliminated a lot of the contact points with our officers and we know in part it drives customer satisfaction.”

But it’s important to recognise that automating doesn’t create an either/or choice for the insurer. Instead, it is an either/and choice for the consumer. Berg-Winters explains: “You want to give your insured customers choice. In claims customers may prefer to initially notify their insurer of an incident by phone but might then prefer to receive further case updates via website. Speed and transparency are very important for customers and digital can play a strong role in delivering this.”

“We should not force any customers onto the automation track. Whether they report via an app or a contact centre, we should always give the choice of personal interaction as an alternative,” Vogel agrees.

Tait adds: “In the first stage you have AI helping to handle claims. It can say here is a claim that fits these characteristics and here are similar scenarios from past claims and this is what they have cost and why. It’s almost like having a small robot on your shoulders helping you make a decision, but it’s still ultimately down to the human. AI is not about entirely new processes but is about changing the culture we’ve been working in so the business is looking for these insights and wanting the support to act on them.”

Vogel acknowledges that offering multiple points of contact remains vital but also introduces an element of risk: “The business model for most claims handlers going forward will be a combination of automation and manual interactions with the customer. This will put a lot of demands on us as insurers in securing and giving good customer experience. If we fail in just one step in the whole process, either automated or personal interaction, it will lead to negative impressions.”

Using technology to support staff/customer interactions can deliver enhanced customer claims experience - merging speed with empathy, efficiency with understanding but it’s vital to make sure that processes are joined up.

There’s no point encouraging customers to self-serve by entering all their data on a web form, only to find they need to repeat it all to a call handler when they need to revert to more personal interactions. This can prove challenging for a single company to manage. When the insurer is trying to orchestrate the many parties involved in a single claim, the potential for disconnect in customer experience, enabled by technology or otherwise, is strong.

Joining up experience in the supply chain

The insurer’s relationship with their customer is not a simple one. While they bear much of the responsibility for the customer experience, they are only one of many parties delivering that experience during the claims process.

For the insured, they may have contact with emergency response teams, repair shops, independent assessors, temporary service providers (hire cars, rental properties, loan equipment) and so on, all of whom impact on the insurer’s delivery of customer experience. Anything that can help all parties deliver a cohesive level of experience is in the insurer’s interest.

“We need to guarantee that the supply chain is working as it should, is digitised and connected to the insurer. We can answer the claims calls quicker but if the speed and customer centricity doesn’t follow through the funnel to your suppliers, it won’t impact customer satisfaction,” Tait emphasises.

“The claims supply chain is absolutely crucial. Data is key and the ability to understand where repairs are happening. We need to be connected with different suppliers and create transparency in the chain. The worst result for us is when a customer calls to say our supplier should be there and no-one came,” he adds.

Berg-Winters explains that making information available automatically internally and to partners is a critical factor in keeping all the plates spinning effectively: “Our internal portal, Hisconnect, is really key in sharing information with our partners. We use that to exchange information, customer compliments and complaints as well as working together on governance processes.”

Vogel adds to Berg-Winters’ comment that managing internal processes is crucial by highlighting the need for companies to rationalise their technologies as much as possible, particularly where they work across multiple business units and geographies:

“A complicated legacy system landscape makes automation very demanding but not impossible. In an optimal world an insurance company should have one legacy system across countries that will make automation much easier.”

The journey towards automation is long and ever-evolving. While there are a number of clear benefits to the organisation, insurers have to look at implementing new technologies through the lens of all stakeholders: customers, employees and supply chain partners.

Leaving just one of these out of the equation leads to a disconnected experience that no amount of robotic speed will smooth over.

Claims Visionaries and Insurance Leaders Together at Connected Claims Europe Summit!

This article has been compiled in the lead up to the Connected Claims Europe Summit(October 24th & 25th, London).

Connected Claims Europe is an unmissable opportunity to leverage technology, such as AI, Machine Learning, Chatbots, Advanced Analytics IoT and more to drive business efficiencies and exceed customer expectations.

From automating the first notice of loss to digitising and connecting your supply chain, this is the ultimate meeting place for claims visionaries and leaders to gain inspiration and tools for immediate implementation from innovative insurance case studies.

For more information on Connected Claims Europe Summit, please go to our website (https://events.insurancenexus.com/connectedclaimseurope/) or message me at [email protected]