As they inspect homes ravaged by storm waters or step away from cars wrecked in accidents, most people’s thinking quickly turns to insurance. So it is no surprise that the actions of their insurer in the hours and days after these life-altering events can have a profound impact on a claimant’s attitude. Will the insurer create a satisfied customer who will be loyal for life or a disgruntled customer who will tell anyone who will listen about the horrors of their experience?
In general insurance, claims can be a defining moment in the lifetime value of the customer. It will likely be the only time a customer has a human interaction with their insurer.
If the first claim goes through smoothly, the insurer need not worry about customer loyalty, but if anything goes wrong, they have immediate and permanent attrition. Unfortunately the industry’s track record is patchy – according to an industry report, a significant number of customers are dissatisfied with claims handling and 83 per cent of the dissatisfied clients plan to switch their provider.
The pandemic led to a considerable increase in the cost of claims, especially in health, and now we are seeing a rise in claims because of extreme weather in Australia, the United States and now the United Kingdom. Insurers have extra opportunity – and incentive – to create a quality user experience.
From the customer’s perspective, the desired experience has at least these elements:
From the insurer’s perspective, the desired experience is the same. This includes the last point, because most insurers are reasonable when it comes to the amount settled and do not want to unnecessarily reduce the payout of a genuine case.
But insurers often struggle to correctly investigate and adjudicate the claims because of inefficiencies in their operating model, especially around legacy technology and employee skillsets.
In general insurance, most of the disruption has taken place in the motor segment, where claims below a certain complexity and value are automated. As use of automation spreads, we can expect to see similar innovation soon in areas such as fire, marine, health and professional indemnity.
To benefit from this disruption, insurers will need to take an incremental approach.
Start by fixing the first notice of loss (FNOL) touchpoint for customers. This is the opportunity to get all information required, so it ought to be exhaustive and pertinent, and avoid asking for information you already have, such as policy number or sum assured. The machine learning algorithm can then convert the raw data into insights, with a decision on the settled amount or rejection to be reviewed by the claim manager. The claim manager can then further investigate or seek clarification in case of a complex claim or even just override the machine learning decision with their own.
Insurers can adopt the following approach to transform their handling of claims.
The claims function will have a profound effect on profitability and revenue, through renewals. Insurers need to put their claims process high on the digital transformation agenda.
As more customers lodge claims with their insurer, the gulf between those who invest in the claims process and those who do not will become ever larger.
Get in touch to discuss how we can support you to transform your business processes.
Connect with Paurush Singh on LinkedIn.
Published on 16 September 2022.
 Accenture, Satisfaction with Insurance Claims Settlements not Enough to Keep Customers Loyal, According to Accenture’s Global Insurance Customer Survey, 2014