It turns out that the insurance claims process has just as many pain points for insurers as it does for consumers, but thanks to digital innovation this won’t be true for much longer.
According to Jay Sarzan senior analyst with Aite Group’s P&C Insurance practice, insurers are embracing the idea of improving the claims process by addressing the issue of claims leakage. “The insurance claims process has, for far too long, been a slow, complex process that doesn’t produce optimal results.” he told us in a recent conversation.
“What we’ve found is that for insurers the claims process has far too many opportunities to not follow best practices, or base decisions on individual interpretation of a situation,” he said. “As well as generating a monetary cost from a higher than average claim, this lack of consistency can also produce a negative customer experience during the claims process often triggering a customer to leave the carrier resulting in a highly undesirable double loss.”
Then, of course there’s the issue of whether the claim was adjusted correctly. Sarzan clarified that “this is not so much an issue of overt fraud, although that does happen, but it’s more an issue of was all the necessary information gathered, was that information correct, and were any errors made in the claims adjustment process and not caught?”
So what options do insurers have to address these dual challenges of claims leakage?
In a recent white paper on the challenges of claims leakage from Cognizant, it was noted that the only time a carrier has traditionally had the opportunity to address claims leakage has been after the fact through closed file review. However, with recent digital innovations there’s the opportunity to adjust in real-time as well as conduct closed file review more quickly, both of which reduce the amount of claims leakage.
“As long as there are humans involved in the process, there’ll always be challenges to overcome,” shared Donna Popow, an insurance industry expert. “But technology – from smart phone data to Artificial Intelligence (AI) – is having a positive impact on the insurance industry and the claims process.”
Telematics, smart phone data, video conferencing, and virtual assistants can streamline claims and ameliorate many of the challenges with transparency and work to streamline communications. But where AI and big data technologies show their true value is addressing the broader challenges and inefficiencies in the claims process.
“While there’s never a single “right” answer in insurance claims because humans are involved, there are definitely parameters within which claims should fall,” said Popow. “Too many claims outside those parameters should throw a red flag.”
As Popow shared from her own experience, the traditional review process has relied on people being able to identify trends or find the proverbial needle in the haystack. “In the early days of my career, I’d have to have paper files delivered from one office to another and then start the manual review process. Digitizing files so they are available online removed one obstacle and, now, the ability to use AI to detect patterns has propelled the industry to the next level.”
Not only does AI enable patterns of waste and possibly fraud to be identified, but it also automates processes freeing up experienced adjustors to work on more complex and nuanced claims. “Being able to assign the right person to the right role is vitally important in the insurance industry,” noted Popow. “The insurance industry, at its core, is all about people. What these new technologies do is to take the routine tasks, and not only automate them but make them happen in real-time. This enables the the skilled adjustor to focus on complex customer claims and stop revenue from walking out the door.”
As insurance carriers seek to respond to changing customer expectations and manage structural change within the industry new tech tools will be more important than ever to a thriving bottom line and a satisfied customer base. While we’re still many years away from a completely touchless claim and a seamless customer experience, digital tools and solutions will certainly mitigate the stubborn problem of claims leakage and point the insurance industry in the right direction.
