Over the years, Novarica has discussed “moments of truth.” These are times when individuals or businesses interact with insurance carriers. Today, with a pandemic raging, the experience we have with our carriers is more important than ever. These moments of truth are emerging in many ways. For example, one positive experience is that auto carriers like Allstate, Travelers, USAA, and others are refunding premium dollars since miles driven and auto claims are way down due to the pandemic. However, there are negative experiences such as business interruption insurance claims being denied since the policies “exempted” pandemics.
How people experience their insurer’s claims process will create impressions that will last beyond the pandemic and, in many ways, impact the long-term success and survival of these carriers. People are looking to their insurance carriers as partners helping them through difficult times. The pandemic has resulted in myriad claims for death, long-term disability, workers’ comp, business interruption, D&O, EPL, and other lines.
Beyond that, there is preservation of the quality of the claims filing and processing experience, including call center answer times, access to adjusters for auto and homeowners, availability of key individuals needed to move the claims along, claim paying ability (including manual checks if desired), and claims process efficiency overall.
Claims Investments Paying Off
In a way, insurers have been preparing for 2020 for years. Many carriers replaced their core claims systems between 2015-2020. Some are still in the process of replacing their systems, and a few chose not to replace those systems at all. Where new systems have been implemented, insurers have extended access to these new core claims systems for third parties via secure APIs to streamline processes. Carriers have reduced paper usage while moving to a digital experience.
Since 2018, implementations of machine learning, predictive analytics, and data capabilities leveraging third-party data have dramatically increased. In many cases, claims system replacements have been linked to corresponding replacements of core policy, rating, and billing systems. Insurers are no longer willing to live with traditional systems that require labor-intensive, paper-heavy processes, which are expensive to maintain and require skilled developers to make modifications.
Over the last few years, Novarica has also seen carriers deploy new capabilities that integrate into the claims ecosystem, including support for IoT devices like smart homes and drones. Insurers are using these technologies for things like identifying leaks and flooding before they become serious and assessing damage following catastrophic events. During this pandemic, processes that don’t require in-person interactions to be executed will grow exponentially. This is necessary because of social distancing and will make it safer for everyone.
Questions for the Future
Digital interactions, from FNOL through payment, are improving transparency and cycle times for personal lines. Commercial lines customers are relying on advanced analytics. As retention is imperative for personal and commercial lines insurers, operational excellence in claims handling is a key competitive advantage.
Sounds great, right? However, the pandemic has highlighted challenges in claims due to the speed at which it has changed our world:
- The leadership challenges around organizational and process change. Are the leaders we have the leaders we need during this period of accelerated change?
- Upskilling or reskilling people based on operating model changes. What is the best way to structure training and build engagement? How do we make the most of new tools like texting and video?
- Converting remaining “analog” processes like mail processing, check payments, and imaging and indexing when most work from home. Can these types of transformations be done quickly to eliminate risks to essential employees that perform the processes? Can existing digital payment partners provide what’s needed?
- Reintroducing claims staff to a physical workplace. Should the space be reconfigured for the new normal? Or should we simply drop the need for a physical workplace?
- Can we reduce the operational overhead and other expenses by reducing real estate needed for claims or introducing new digital processes?
- How do we handle claims projects like core system replacements that may currently be in flight?
- Can we continue to expand the use of analytics, AI, and machine learning rapidly to reduce loss expense?
- In this new distributed environment, can we get the right claim to the right adjuster with the right set of digital processes to have the best possible outcome?
- Finally, how do we avoid security issues and be proactive in detecting fraud?
Novarica covered vendors active in this area in our Property/Casualty Claims Systems Market Navigator. We have also extensively covered challenges related to the pandemic in our virtual town halls and various blogs and articles found in our COVID-19 resource center. On May 21, my colleague Deb Zawisza and I will host our Virtual Special Interest Group on the latest challenges for property/casualty insurers. Please register and join the conversation.
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