New tech is driving significant change across the insurance sector and fundamentally affecting how claims processes work. Shaiwal Mathur looks at how to stay on top of emerging trends and gain market share.
Recent tech developments have unlocked a whole new approach to claims management. Firms are increasingly moving toward online processing: improving the speed of payments, and reducing the needs for manual interventions. This is good news for customers and good news for your business. Early adoption can help you meet emerging customer expectations, streamline claims processes, and cut costs.
Embracing digital disruption
With all this talk of emerging tech, it can be tricky to see past the hype and find real-world applications that add genuine value to your business. Some of the key tools in use across the insurance sector include:
Data analytics
This is a pretty well-established tool, which can help firms identify how customers want to interact with their insurer. In turn, this can help to create a more personalised customer experience and support straight-through processing.
Geospatial analytics
This can support data visualisation, with real-time analysis of global perils – helping to improve the accuracy of reserving and faster claim settlement.
Conversational AI
This includes recent high profile large language models, such as ChatGPT or Google Bard, which have a range of uses and can enable 24-hour resolution and claims support.
Automated inspections
This is where customers can upload videos or photos via a claims portal, and AI will assess the extent of the damage. Providing greater data than manual inspection, it’s also quicker and less labour intensive.
Data sharing
AI and machine learning can help you share data across all relevant business functions, resulting in faster underwriting, claims handling, and payments processing.
Payment processing
Blockchain can speed up payment processing and bypass traditional checks between third-parties.
Using a combination of the above, you can automate your claims processes and make significant gains across four key areas.
Claims prevention and the role of InsurTech
InsurTech is increasingly big business, and uses internet of things (IoT) devices and wearable tech to track health, monitor in-house security, or examine property data.
Incentivisation
Incentives and financial benefits can change customer habits. For example, some insurers are using wearable tech to incentivise customer’s physical activities and reduce ill health claims. These can result in cheaper insurance premiums.
Real-time analytics
Predictive analytics on real time data can help reduce losses due to catastrophes, and can work in two ways. Apps can track real-time data to prevent accidents or damage to property, for example by warning users of bad weather, ultimately supporting claims prevention. Or they can use real-time information to inform premiums, for example through the use of cameras to assess driving and create ‘pay as you drive’ policies.
Early monitoring and detection
Smart home detectors and sensors can help identify early faults and avoid expensive repairs and claims. Customers can also use apps to track and monitor pre-existing health conditions, allowing for improved condition management, and reducing the potential for a claim.
Apply learnings
In addition to real-time applications, insurers can analyse data from wearable tech, cameras or apps to better understand customer behaviour. These can inform future policy design and pricing, and help you tailor preventive claims measures.
InsurTech is changing the face of the insurance sector and isn’t going away any time soon. As such, it’s important to consider how your business model can incorporate claims prevention, including good use of data analytics over existing information, or how InsurTech could generate greater customer insights to inform policy design and premiums.
Fraud prevention
One of the key benefits of digital claims processes, and the use of InsurTech, is the additional customer data available. This can support a wider range of business processes, including fraud prevention.
Trust based architecture to prevent double dipping
In the future, insurers could start using blockchain to share transaction data across the sector. This would improve transparency and reduce the potential for fraudsters to submit multiple claims with a range of insurers.
Analysing customer behaviour
Machine learning tools can help you find historic and new patterns in the data to identify unusual behaviours, repeating trends, and instances of fraud. You can also use social media analytics tools to help fraud related behaviours using location and browsing history.
IOT-driven instant notification of loss
There’s usually a gap between a loss or damage to property, and the first notification of loss. This gives fraudsters time to manipulate data and increase the value of the claim. IoT devices can prevent this with instant notifications to prevent data manipulation. For example, an IoT can instantly notify the insurer of a car accident and initiate the claims process with data, such as time, location, and speed for accurate claims assessment. This has the added bonus of speeding up settlement times.
Conversational AI to support claims
Natural language processing chatbots can help customers make claims quickly and easily, with the option to upload supporting videos or photos. These interactions can also be assessed to identify recurring patterns or fraudulent activity. When assessing phone calls, you can also apply voice analytics tools to transcribe and then assess customer interactions. Looking for key verbal cues you can use this information to identify fraud, and reduce the time taken to resolve a claim – so there's less time to manipulate losses.
Maintaining hybrid working
Maintaining hybrid working
Hybrid working has become the norm, helping to attract talent from further afield and support a better work-life balance. This cultural shift has seen a greater focus on flexibility, with updated resourcing policies to help firms compete for top talent. It has also increased the pace of digitisation, with more manual processes now online or automated. Claims is a key example of how further automation can improve customer service, rationalise processes and save you money. Ultimately, automation can support straight-through processes with customers able to initiate, and process claims digitally, reducing reliance on human support.
Over the next few years, insurers need to think about how they can re-train and re-skill their claims teams, moving them away from manual processes to more technical roles. In-demand roles will include business analysts, data analysts, and data scientists, in addition to more technical claims specialisms. Human resources will need to consider what new roles are available, how they can leverage talent from other parts of the business, and where you need to find additional talent to join your team.
Keeping up with ESG
ESG is becoming increasingly important for insurers and customers alike, and customers may not want to remain with an insurer whose values don’t align with their own appropriate ESG targets, metrics, and public disclosures. A move towards digital claims processes gives you more data than ever before, helping you set meaningful ESG targets, monitor progress, and report effectively.
ESG factors need to be considered throughout the claims process, including the use of third-party suppliers or anti-modern slavery policies. You also need to consider how your staff are looked after and supported, especially throughout periods of retraining, and you need to make sure they have the skills to manage claims appropriately and fairly. Good use of tech can help firms make sure that claims compensation is fair and transparent for all customers. It’s important to remember that all automated processes or AI-based decision making must be repeatable and reliable to ensure good outcomes for customers.
ESG is also a growing trend for liability claims, and insurers could see more legal action taken against companies that are found guilty of greenwashing, or that behave irresponsibly in relation to the climate or biodiversity. This could inform future products and create new types of insurance for organisations or individuals. Drawing on all available data, you can assess how ESG factors are represented in claims and start to design new products to meet growing customer demand.
Read more on ESG insurance
Taking the plunge
At the moment, most insurance companies are using a combination of automated and manual activities to support their claims processes. This is inevitable as there’ll always be a short-term transition period. But in the long term, this approach can seem disjointed for customers who may feel a disconnect – for example, when moving from online to a telephone call and having to submit key information again. Moving to a wholly digital model can smooth out that process and help firms deliver an improved customer experience, in line with market expectations.
For more insight and guidance, get in touch with Shaiwal Mathur.
