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Prioritize Claims Process Automation and Reap the Rewards

Jacob Sloan, Global Industry Leader - Insurance
July 18, 2022

In their recent report on insurance services, ISG outlined the everlasting impact of COVID-19 on the insurance industry: “greater adoption of online and omnichannel distribution, cloud platform services, and analytics to cope with the crisis and to prepare for new ways of operating and serving customers.” 

With more emerging players entering the insurance market and insurers recognizing the need for providing a digital experience, consumer demands for a connected insurance experience have grown to new heights. For many insurance customers, the claims process is a critical moment of truth, making it essential that insurers deliver a hassle-free, seamless experience. 

According to an EY global consumer survey, 87% of policyholders say the claims experience directly impacts their decision to remain with an insurance provider. 

Disconnected claims management harms an insurer’s competitive advantage and bottom line. When insurers experience inefficiencies in their claims processes, claims leakage—that is, the difference between what should be spent on a claim and what’s actually spent on a claim—becomes unsustainably high. Responding accordingly, 59% of respondents to Celent’s North American Property/Casualty 2022 CIO Pressures and Priorities noted they were currently replacing, beginning replacement, or making significant enhancements to their core claim system.

Why should you prioritize claims process automation?

There are many factors to consider that vary from insurer to insurer: FNOL, reserves, reinsurance, catastrophe management, litigation, fraud—the list goes on. So how can insurers increase straight-through processing and optimize claims handling to deliver a more connected insurance experience? Celent recently published their report, Claims Systems Vendors: North American Property Casualty Insurance, to help insurers determine just that under the lens of the current technology landscape. Take a look to see their perspective on claims process automation and advancements in technology, but in the meantime, here’s ours.

1. Organize customer data with low-code and automation.

Insurers have data living across many disparate systems, like CRMs, document management systems, accounting systems, core administration systems, and more. This results in time wasted toggling between screens, searching for information, and reentering data, increasing the likelihood of human error. This all results in a prolonged, disjointed customer experience.

Relying on outdated systems takes a heavy toll on insurers’ bottom lines—Forrester Research estimates that maintaining older applications and technology typically costs 70% or more of an organization’s technology budget, severely limiting what can be spent on innovation or new development for value-added services that would enhance the customer experience. Instead of relying solely on these disparate systems, insurers should look to unify and extend their data across systems with low-code.

With low-code, insurers can bring together their existing systems without data migration, creating a single engagement layer across the entire claims process. By using integrations and open APIs to unite data, systems, and processes in a single workflow, insurers can achieve the following benefits:

  • Access a single 360-degree view of each claim and customer.
  • Stay agile by having a tech stack that can easily integrate with the industry’s ever-expanding digital ecosystem of IoT networks, telematic devices, and insurtechs.
  • Increase productivity by minimizing the “swivel chair effect” and empowering staff to concentrate on more high-impact work
  • Improve customer satisfaction by reducing the need for customers to provide duplicative information.

Utilizing low-code enables insurers to reap immediate benefits without the risk and expense of ripping and replacing core systems. 

2. Optimize digital claims intake.

Disparate systems and data make it more difficult to manage claims from first notice of loss (FNOL) to close. The pre-defined data models of legacy systems limit the ability to capture quality data, resulting in manual intervention at multiple points over the lifetime of the claim and cycle time delays, particularly during high-intake periods like natural disasters.

Automation gives insurers the power to tap into technologies like intelligent document processing (IDP), artificial intelligence (AI), and machine learning to optimize claims intakes and achieve these benefits:

  • Replace paper-heavy or phone-centric FNOL processes with digital intakes.
  • Leverage IDP and AI to automatically extract information from claims documents.
  • Capture relevant claims data outside the legacy system’s proprietary data model.
  • Better orchestrate claims flow by creating workflows to ensure claims are routed to the best resource quickly, accelerating time to close

By breaking down silos and unifying legacy applications and new data sources, insurers can more easily capture and manage each claim from the moment it’s reported.

3. Digitize the claims experience.

Demand for a digital experience from insurance consumers continues to grow. Throughout the industry, fully automated insurance products are bringing unprecedented speed and ease to the claims experience. And when we say unprecedented, we mean it: Lemonade, an emerging insurtech, set a new world record for settling a claim in just three seconds. To compete in such a high-speed market, insurers must streamline processes to accelerate time to close. 

Here are just a few ways insurers can optimize their claims experience:

  • Fine-tune the claims process with workflow, business rules, and data to better segment claims processing.
  • Integrate with advanced data sources like IoT, telematics, and insurtechs to accelerate claims processing.
  • Create custom workflows for different user personas.
  • Leverage AI and IDP to ensure complex claims are routed to more experienced claims handlers.

Claims are crucial in delivering a connected insurance experience.

These steps are just the beginning when it comes to what insurers can do to achieve seamless claims processes for an improved, connected customer experience. The insurance industry is facing new and growing challenges on all fronts—threats like natural disasters and cyber attacks are increasing in both frequency and severity, overloading teams with surges in claims. That’s why the disruptors coming in with innovations that streamline and automate the claims process are so crucial. 

For more tips on modernizing the claims experience for your customers, take a look at our eBook, 7 Ways to Modernize the Claims Experience—Using What You Already Have.