Why does claims automation matter?

The fundamentals of claims automation

In today’s society, automation is taking care of an ever-increasing amount of our daily tasks, such as doctor appointments, food orders, dating or even driving cars. 

Customers have quickly adapted to automated technologies and their expectations on services are rapidly growing. There is no exception when purchasing insurance products. Many choose to use an app or web based service. This also applies to how policies are managed and how customers prefer to interact with their insurance provider. 

But why does a policyholder purchase insurance? Usually it comes down to protection through compensation or replacement in case of damage or loss. Understandably the policyholder experiences a sense of urgency and irritation after having damaged or lost their belongings when contacting their insurance provider. Handling the issue in a fast, smooth and accurate way is critical for customer satisfaction. This moment is sometimes referred to as the “moment of truth” for insurers. Either they lose out or win a positive customer experience. 

In order to get the “moment of truth” right, insurers should carefully think about their policyholders’ expectations and how they can provide a net positive customer experience. Considering instant service models of companies like UBER, Just Eat, or Amazon, it becomes evident that insurers in many ways could replicate these hugely successful models and apply similar  principles to their claims processes. 

Claims automation presents itself as a good way to start, making the “moment of truth” instant, based on data and most importantly transparent for policyholders’. Much in the  same way they are used to it from other industries, resulting in an improved Customer Experience. This leads to higher levels of loyalty and more upselling of insurance products such as additional policies or recommendations, usually resulting in higher potential revenues for the insurer. 

Traditionally, a claim’s experience consisted of the following steps, if no automation existed:

1. Incident happens
2. Policyholder contacts insurance company to file claim (FNOL)
3. Claims adjuster is assigned to investigate the claims 
4. Policy is reviewed
5. Back and forth to get items in claim identified
6. Claims adjuster manually valuates the objects, doing manual searches
7. Claims adjuster manually calculates the compensation
8. Claims adjuster initiates compensation 
9. Compensation and claim summary is sent to policyholder
10. Policyholder usually has questions (as claim is not transparent) resulting in low FCR

Due to manual tasks such as identification and valuation, most of the claims adjuster’s time is spent on administration and tedious tasks. This is also where most process gains can be made. Having the claims adjuster’s time more efficiently by providing reliable data and eliminating manual tasks contributes to providing a transparent claims journey for the customer. 

According to a recent study by EY more insurers are looking to improve their claims process by balancing human touch with automation. In order to reduce costs and claims processing time, automation can be implemented to help with freeing up time for sensitive claims where human input is needed. 

But what are the key benefits of claim automation?

1. Reduce repetitive task
2. Improve departmental processes
3. Reduce total claims costs
4. Improve customer experience
5. Frees time for highly emotional claims or where human touch is needed

It is essential that insurers establish their own customer journey and decide on how automation can fit into the end-to-end process to improve the overall customer journey. 

Once this is mapped out with the policyholder in focus, it is time to decide what type of claim should be (fully) automated. The recommendation is to start small and scale up until the desired target state is reached. Usually, high volume / low value claims are automated first, allowing claims adjusters to focus on more high-value and “emotional” or complex claims. 

It is often wrongly considered that claim automation is difficult to implement, but if all the steps are followed correctly, a clear strategy is designed and the desired customer journey mapped out, then claim automation can be successfully deployed in a few weeks.