Insurers are finding themselves on the cusp of an innovative overhaul, specifically with regard to the claims journey – a process historically plagued by complex systems and lack of transparency, but now being redefined by advancing technology and evolving customer expectations.
As the insurance industry continues to navigate the fast-paced digital revolution, the claims process – often considered the true litmus test of an insurer’s value – has come into sharp focus. In the past, this process was a convoluted maze of paperwork, lengthy wait times, and a lack of transparency. However, driven by technological advancements and changing customer expectations, the sector is now on the cusp of a remarkable transformation.
It is an undeniable truth that insurers have had to re-evaluate their claims journeys and processing methods in recent years. This upheaval and re-think have been driven by several factors.
Firstly, the rapid advancement of technology has played a pivotal role in reshaping the claims process, according to Eileen Potter, VP, insurance marketing at Smart Communications. “Insurers are more aggressively leveraging automation, artificial intelligence, and machine learning to enhance efficiency and accuracy.”
Simultaneously, customer expectations have changed dramatically. Dave Connors, founder and CEO of distribind, notes that insurers have had to increase their focus on the customer experience as consumers are less willing to tolerate complex claims journeys. “Insurers have had to focus particularly on the speed of claims settlement and the customer’s visibility of the process between claim and settlement.”
Moreover, Yam Derfler, co-founder and VP of innovation at Air Doctor, said that the Covid-19 pandemic underscored the importance of efficient and agile claims processes, particularly in relation to travel insurance and healthcare coverage. What’s more, the rise of InsurTech companies and innovative startups have disrupted the traditional insurance landscape, intensifying competition. “These new entrants leverage advanced technologies, data analytics, and customer-centric approaches to deliver superior claims experiences,” he said.
Bottlenecks at the back and front-end
One of the insurance industry’s biggest pain points when it comes to the claims process is the timeliness and efficiency of the process.
According to Mike Winterle, senior product marketing manager at Novidea, historically the industry’s biggest flaw is taking too long to settle claims and relying on manual back and forth communications to collect the information needed to settle.
“Customers often view insurance as a bill they pay annually that they never use. When a loss happens, they have high expectations that what they have been paying for will make them whole as quickly and painlessly as possible.”
For too long, Winterle said, claims adjusters have relied on antiquated, manual processes that make customers feel like the insurance company is trying not to pay or puts the burden of proof on the customer. “The back-end is held back by legacy software that requires a significant amount of manual entry on the part of the adjuster to fill in all the required information to settle a claim.”
In addition, Sebastian Gruber, CEO of hi.health, highlighted that the insurance industry also faces the ongoing challenge of fraudulent claims. “Detecting and preventing fraudulent activities requires robust systems and vigilant monitoring, which can add further complexity to the claims process,” he noted.
On the front-end of the claims process, Winterle said the customer often feels they have to prove the validity of the claim just to get the payment they deserve. Smart Communication’s Potter agreed that from the customer perspective, the claims process can be perceived as confusing, cumbersome – and often unfair.
“Policyholders often face complex documentation requirements, lengthy forms, and excessive back-and-forth communication. The lack of digitalisation and self-service options can further exacerbate frustrations,” she said.
To combat this, Potter said insurance organisations are actively working on improving their claims processes and embedding more empathy throughout the claims lifecycle. They are investing in modernising their technology infrastructure, adopting automation and artificial intelligence to streamline workflows, and implementing customer-centric digital platforms that improve transparency and communication – driving faster, more personalised claims experiences.
Whilst improving the efficiency on the customer-facing end of the claims process is important, this is closely interlinked with the middle and back office. distribind’s Connors added that too many insurers tend to focus attention on the customer end, “only to realise that the benefits to the customer are heavily limited by inefficiency in the middle and back office.” Insurers need to make sure they have middle back-office efficiency in order to deliver a good experience.
Turning to technology
Insurers are also turning to technology to respond to these challenges. Air Doctor’s Derfler, said advanced analytics, artificial intelligence (AI), and machine learning (ML) are being used to streamline claims assessment, automate routine tasks, detect fraud, and improve overall efficiency. These innovations not only speed up claims processing but also enhance accuracy, reduce costs, and deliver better customer experiences.
Novidea’s Winterle said IoT and Telematics are other technologies that have helped to advance the claims handling process by alerting insurers if a crash has been detected or an airbag deployed. This enables insurers to be proactive and reach out instantly to customers who may have had an accident.
The advancement of technologies that allow more efficient sharing of data is also improving the claims experience. According to distribind’s Connors, the easier extraction, enrichment and sharing of data is simplifying elements of the claims process and allowing some claims chains to complete faster. “It also removes frustrations from claimants being asked the same questions multiple times or needing to find information from different sources. This is allowing faster, less stressful claims experiences for some users.”
Another way to simplify the claims process can be achieved through the provision of payment cards designed specifically for claim settlements. Hi.health’s Gruber highlights that insurers are embracing these payment methods to enhance the user experience, ensuring greater convenience, while maintaining complete cost control and mitigating fraudulent behaviours. By utilising payment cards, insurers can streamline the reimbursement process, empowering members with a seamless and secure way to manage their claims efficiently.
Air Doctor’s Derfler added that collaboration with external partners is another area where technology is reshaping claims management. “Insurers are leveraging technologies to establish seamless integration with services like Air Doctor. These partnerships enhance the claims journey by providing immediate access to medical expertise, reducing the need for lengthy claims applications, and improving overall customer satisfaction.”
The automation revolution
Arguably the most influential technological advancement to the claims process revolves around the use of AI and automation.
According to hi.health’s Gruber, AI and automation transform claims management by enabling faster processing, improved accuracy, and personalised customer experiences. “With AI-powered algorithms, we can automate claims validation and detect fraud much more effectively. Claims will be adjudicated in real-time and chat-bots will provide the necessary transparency for members to understand the decisions & policies.”
Automation plays a vital role in streamlining claims processes, Air Doctor’s Derfler said, “By reducing manual intervention and the risk of human error. Meanwhile, data analytics and AI enable insurers to make more accurate predictions, risk assessments, and claims decisions, as well as detect fraud. Machine learning, through its capacity to analyse historical claims data, is helping insurers to continually refine and improve their claims processes.”
Moreover, distribind’s Connors added that the rise of the virtual claims agent has “certainly been a by-product of AI if not an always welcome one.” Applications of AI such as image recognition used for motor damage assessment for example, are positive and allow for increased automation of such claims, he said.
A catalyst for change
The emergence and growth of InsurTechs in the industry has been a huge catalyst for transformational process change. Smart Communication’s Potter said that they have introduced new digital platforms, tools, and business models that are reshaping how insurers handle claims.
“Their lack of legacy technology, coupled with a culture of continuous innovation, has enabled them to more easily leverage modern technologies and customer-centric approaches to address the industry’s pain points with respect to claims management.”
Air Doctor’s Derfler was in agreement that the rise of InsurTechs has brought new technologies, customer-centric approaches, and disruptive business models to the table.
“InsurTechs have also prompted the industry to embrace digital transformation and reimagine their approaches to claims management. The competition and collaboration between traditional insurers and InsurTechs have spurred the development of innovative solutions that address long-standing flaws and inefficiencies in the claims process,” he added.
The future of insurance claims
Looking ahead, distribind’s Connors predicts that the existing trajectory thus far will continue. That is, more connected data leading to more automation and better claims service. This will see the insurance industry reducing its reliance on spreadsheets as the middle and back-office benefit from automation, he said.
Novidea’s Winterle predicts that speed and accuracy is going to be the “name of the game” when it comes to the future of claims. Customers are going to want an increasingly hassle-free experience where they can file a claim anywhere, anytime, and get it settled immediately. Technology, and new products such as parametric insurance, will continue to assist in this transformation and lead to better results for customers and insurers.
When it comes to medical expense claims, hi.health’s Gruber said the future is poised to bring significant benefits to members, insurers, and healthcare providers alike. “I envision a future where claiming is effortless, streamlined, and entirely cashless. Real-time claims adjudication will provide instant transparency to members, allowing them to easily track what expenses are covered and what are not, enhancing the overall claims experience.”
For Air Doctor’s Derfler, the future of the insurance industry as a whole is one in which insurers embrace technological innovation, anticipate customer needs, and continually evolve to exceed expectations.
“It is a future where insurers truly partner with policyholders throughout their claims journey, providing efficient, transparent, and personalised support every step of the way. This approach will make the claims process smoother, faster, and more intuitive, ultimately resulting in a seamless experience for the customer.”
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