The modern insurance claims process is increasingly complex. More variables and data are constantly coming into play, and carriers must determine appropriate settlements and flag potential fraud faster than ever. On top of technical challenges, insurers are dealing with their customers during stressful and vulnerable moments; times when the delicate balance of empathy and automation must be struck in order to give insureds the peace of mind they seek.
The shift to a mostly-automated claims process will likely take a decade, but given that the initial steps in the core claims system transformation process are so long, carriers that are not already taking action will risk falling behind. Now is the time to consider questions like:
- Can we imagine maintaining and increasing our ability to execute without 70-90% of our current personnel?
- With less person-to-person engagement, how will we succeed at keeping a pulse on our customers’ needs and at preventing fraud?
- How equipped is our claims analytics team to manage this data growth and put data into action?
Today, handling claims is a mostly manual process that relies on adjusters’ individual experience and expertise to manage customer experiences and vendor networks. But as carriers continue to invest in digital experiences, data analysis capabilities, and technology ecosystems, the claims process will become more automated and pattern-driven. As a result, industry experts predict that carriers will make significant improvements in the realms of customer satisfaction, operational efficiency, and accuracy.
“Insurers are doing a great job at the critical customer touch point of claims reporting, but the end-to-end claim process is still costly and not as fully integrated as it needs to be,” said David Pieffer, Property & Casualty Insurance Practice Lead at J.D. Power, while introducing a recent report. “The challenge for insurers is to seamlessly transition the claims reporting function to more cost-effective digital customer care solutions. For many insurance customers, reporting a claim is one of the few direct interactions they have with their insurer, and it comes at a time when they are looking for a reassuring voice. That’s not the ideal time to introduce a new digital touch point.”
Here are just a few examples of challenges today’s claims organizations face:
Claims processes with multiple touch points and massive amounts of data
With many stakeholders and decision points, claims processing involves many business rules that can be difficult to execute. This can result in numerous employee tasks and a fragmented customer experience. Carriers seeking to automate these processes will find many activities to track and manage, and few comprehensive systems capable of handling them all.
Changing customer needs
Customers’ expectations are increasing as their buying and servicing experiences outside their insurance needs impact what they expect from carriers. Given that insureds only face a claim once every several years, carriers need to be able to manage the emotions of the situation as well as the logistics. Advanced technologies can help tame the complexity of the process, but there is no substitute for the human element when it comes to providing reassurance and building trust.
Proliferation of emerging technologies
Carriers now face the reality of evaluating unproven insurtech vendors and determining the best way to capitalize on the value created by incorporating their solutions into complex and integrated workflows. More insurtech firms are focusing on improving the claims process, allowing carriers to engage with their customers more effectively and create new efficiencies. The challenge for insurers is knowing what solutions will work best–not to mention integrating them with their own claims systems.
A changing claims workforce
Insurers are facing talent shortages as skilled employees retire and attracting new employees becomes a struggle. They are responding by using automation for low-skill activities and modifying their traditional talent requirements to build a workforce for the digital age. Not only is it becoming harder to find individuals skilled in the legacy coding languages many core systems still run on, the number of companies in all industries competing for talented coders is increasing exponentially. Maintaining a growing, profitable insurance company today means relying as much as possible on configurable software solutions that individuals like business analysts (as opposed to developers) can work with to create and modify insurance products, business processes, and more.
The impact of maintaining legacy claims systems
The biggest challenge many carriers face today is the intense resource drain imposed by the maintaining legacy technologies. Rigid legacy systems can prevent carriers from adapting to new customer requirements and optimizing their operations. IT intervention is often required to change system behaviors and processes, limiting carriers’ ability to respond to internal or external changes. These legacy systems also carry legacy IT processes for development and testing, further slowing progress and innovation. Insurers need to modernize by replacing legacy systems to avoid the negative consequences of inaction:
- Customer satisfaction and retention will decrease, since customers have certain buyer journey needs and will be able to fulfill them elsewhere. The inflexibility of legacy systems prohibits carriers from keeping up with the needs of their customers.
- Expenses will increase, since IT expenses will outpace investment gains. Even though carriers may succeed at automating processes or creating digital experiences, the underlying legacy technology still carries rising maintenance and upgrade costs.
- Claims handling accuracy will decrease, since carriers are increasingly outsourcing claims processes to specialist vendors with limited oversight while automation removes people from the equation. The complexity of legacy systems prevents carriers from integrating and consolidating the data sources needed to monitor vendor activity and measure vendor effectiveness.
This shift towards automation and specialization will take years, or even a decade. But given the investments being made globally in areas like AI and claims-specific insurtech startups, it’s inevitable. While some carriers might think they can put off this initiative, even the initial steps in core claim system transformation are so long that if carriers are not already acting, they’re falling behind. The lasting impact of this shift will be completely transformed claims organizations that benefit from new capabilities and are tasked with a new mission to drive organizational outcomes.
Building a way forward
Fortunately for today’s insurers, modern claims systems enable carriers to improve their processes and offer better interactions with their customers at the same time. Here are just a few ways that future-ready claims technology can help carriers navigate their challenges:
- Smart processing–automating processes, suggesting next best actions, and making predictions to optimize claim outcomes, react to changing priorities, and be alerted to exceptions
- Seamless customer experiences–guiding customers through ideal journeys, leveraging connected interactions across multiple channels with internal and external systems and services
- Continuous collaboration–optimizing workloads and managing multiple aspects of each claim in parallel, with transparency across internal and external parties
- Operational transparency–identifying trends, compliance, opportunities, inefficiencies, and inconsistencies in the claims process
- Business agility–reacting quickly to customer commitments, regulatory requirements, and changes in business processes
- Innovative flexibility–continuously introducing new claims processes or technologies, with minimal consideration of sunk costs when changes are rejected
All of these are possible with the right solution. Duck Creek Claims provides content, processes, and tools to support end-to-end lifecycles across a broad spectrum of lines of businesses and geographies, including:
- Claims handling automation
- Workflow management
- Low-code configuration tools
- Data analytics and reporting
- Omnichannel support
Duck Creek Claims improves claims handling accuracy, leading to less leakage as decision making is better informed in areas such as fraud detection, reserves setting, damage estimation and coverage, and benefits review. Through automation, standardization, and integration, the solution allows adjusters and CSRs to process claims faster, access the right information at the right time, and effectively guide customers through the claim’s lifecycle.
Duck Creek Claims lets carriers offer personalized, transparent, and effective communications with policyholders via their preferred channels, reassuring them during stressful times and reinforcing their beliefs that their claims were handled with care. When insureds experience fast service, connectivity, recognition, and transparency throughout the claims lifecycle, important bonds are created–improving retention and business results as your agents and adjusters focus on people, not processes.