Improving the P/C claims experience through digital transformation

By Lars Boeing

The past couple of years have been tough for insurers. Auto insurers have had to choose between raising rates or closing down, according to J.D. Power, due to “a record high number of serious collisions, skyrocketing used-vehicle prices and surging repair costs.” Overall, property/casualty insurers are facing “near-record high catastrophic losses, massive supply chain disruptions and ongoing workforce challenges.” Meanwhile, customers unhappy with rising costs, long customer service wait times, and delayed repairs are likely to abandon their insurers. A recent survey found that around that 70% of the customers who switched carriers did so because they had a poor claims experience.

Solving the problems of customer churn and workforce shortages requires insurers to understand the elements of the claims experience that are pain points. This will enable insurers to adopt solutions that address those pain points to build the foundation for a more customer- and employee-experience focused future.

Issues that detract from the customer experience

The three problems that customers cite most often are delays in the claims process, a lack of transparency about the process, and perceived poor outcomes for their claims. J.D. Power’s 2022 P&C study found that the average time it took claimants to get repairs made increased by nearly three days compared to the year before, due to “slower cycle times, more complicated claims processes and communications challenges.”

When customers want an update on the progress of their claim, they expect to be able to find the answer themselves instantly from an app or website, similar to the digital updates they can get on package deliveries, medical test results and e-commerce product availability. If they have to make a phone call, navigate a menu and sit on hold for that same update, their overall experience will suffer and they won’t be happy.

The claim decision itself is a big determiner of customer satisfaction. Insurers without comprehensive automation, data, analytics and artificial intelligence may not be able to deliver decisions as accurately as insurers whose adjusters have those resources. These technologies help speed up the claims process by reducing the amount of manual analysis or research and manual labor adjusters perform. This also makes it easier to update claimants on the progress of their claims while their claim moves through the system.

What does an effective near-term digital transformation look like?

Insurers can begin to address these customer satisfaction issues by adopting or modernizing their core claims platform with an ecosystem enriched by artificial intelligence, machine learning or insurance technology offerings. Implemented properly and enriched with a meaningful ecosystem, core claims platforms unify and analyze data from across the organization — including claims data, repair costs and options, and other relevant information — to help adjusters create better estimates, set more accurate reserves, and make faster, better decisions. The platform can enable straight-through processing of smaller, simpler claims. It also can provide customers with their claim status in real time and help them manage payouts online, such as opting for a digital payout instead of waiting for a slower, less secure paper check.

In 2022, J.D. Power found that only 11% of P/C customers make full use of insurers’ digital channels for each major step of the claims process. However, “overall satisfaction scores among such customers is 33 points higher than among customers who used no digital tools in the claims process.” The World Insurance Report 2021 found that 60% of small and medium business owners preferred a digital interaction channel as more convenient than reaching out to their agents or brokers.

Well-built claims ecosystems let insurers prioritize digital interaction with customers and give them the choice to speak to a representative only if and when they prefer. Although most customers want digital updates on basic claims, they may want to talk to a person about complex claims and sensitive or emotional aspects of a claim, such as the loss of a home to fire. When a claims platform is used to automate simpler claims, agents, customer service representatives and adjusters can devote more time and attention to higher-impact customer conversations and drive higher customer satisfaction.

Setting the stage for a longer-term digital transformation

Apart from those near-term benefits, a claims ecosystem offers insurers long-term customer experience and employee experience improvement pathways as customer and employee needs and expectations change. Over time, insurers can build out more capabilities, such as more self-service tools, expanded automation and analytics use cases, and even more advanced process and experience improvements.

Customer self-service options can move from digital claims filing, status checking and payout management to streamlined omnichannel communication that saves time by showing employees exactly where the customer’s claim is in the claims process and suggesting next best steps based on claim status and customer journey analytics. Self-service can also include remote claims assessment, using images and video shared by the customer or drones, to speed up claims reporting, damage estimates, and claims processing. In terms of payouts, self-service can move from a simple digital deposit versus paper check choice to a variety of payout options.

As platforms gather and analyze more data — and as customers and employees get more comfortable using the platform—companies can use historical analytics and real-time data to automate more processes. For example, once the system AI understands which adjusters are experts in certain areas and learns to categories claims accurately, it can automatically assign claims to the best adjuster. A similar analytics-driven strategy can automate inspections and estimates for some claims or generate vendor recommendations. As more processes become automated, employees’ time can shift to focus on complex and sensitive cases.

Because technology always evolves, the platform may eventually connect to new and more data sources including third-party data. For example, vehicle sensors may enable remote first notice of loss reporting as soon as an accident happens, and sensors in a home could allow inspectors and adjusters to assess property damage in detail without an on-site visit. In these situations and others, the data would feed straight into the platform for analysis just as if the customer reported it — but without the customer lifting a finger to make it happen.

Preparing for what’s next in claims

Insurers that want to retain customers, earn their trust, and improve the experience for their employees should move now to develop a modernization plan. That plan must include organizational change management strategies, technology and process improvements, and training to help employees navigate and benefit from the shift toward more a data-driven, customer-focused claims experience. By taking the first steps now, companies can maintain a competitive stance and build a solid foundation for a more technology-driven future of claims.

Lars Boeing is a vice president in Capgemini Invent’s Insurance Practice and leads Capgemini’s global future of claims offering. He may be contacted at [email protected].