Claims represent a pivotal moment in insurance, often determining customer loyalty and future business opportunities. They not only involve the insurer and the customer but also the beneficiary, creating a chance to impress and potentially convert the beneficiary into a new customer. This underscores the importance of a satisfying service process during claim handling.
Comarch, a global IT products provider, recently delved into claims transformation and how insurers should tackle this opportunity,
At the heart of every insurance company is the sales process, where the journey begins, primarily evolving to digital platforms that equip agents with necessary tools. However, claims management is crucial right after the initial customer acquisition.
According to the 2017 EY Global Consumer Insurance Survey, a staggering 87% of policyholders consider their claims experience a major factor in deciding whether to stay with an insurer. A negative claims experience is a common reason for customers leaving, hence ignoring it post-policy purchase is perilous.
Claims are not only vital for building customer loyalty but also represent the most significant cost area for insurers. Client loss is costly, and the expenses related to handling claims are rising amid economic changes. Moreover, offline servicing, including manual and paper-based tasks especially in life claims, escalates operational costs and prolongs processes.
The challenges in claims processing are multifaceted, encompassing long processing times due to extensive data and documentation collection from all stakeholders. Other issues include poor data quality from legacy systems, transparency deficits, and gaps in real-time controls, which hinder efficient risk assessment and claims handling.
Technological hurdles further complicate claims transformation. Many insurers struggle with outdated back office systems and disjointed policy management setups, pushing them to continually try and streamline these processes. Despite efforts, complete digital transformation in claims handling remains elusive for many.
The digitization of claims processing is imperative. KPMG’s 2021 report suggests that claims functions are likely to become largely automated in the next decade, reducing human involvement in reporting and settlement processes, Comarch said. Claims transformation should focus on increasing flexibility, enhancing automation, and integrating extensive data analytics to improve operations.
Capgemini highlights the necessity of automating claims to enhance customer experience. Ensuring up-to-date data in insurer systems through digital tools can significantly smoothen the claims process. Moreover, the potential economic transfer from the “Great Wealth Transfer” emphasizes the need for insurers to secure asset retention through efficient claims management.
A digital, real-time, and simple claims process, backed by a flexible and open IT infrastructure, is ideal. This setup would support automation and integration, enabling swift claims handling and enhancing customer satisfaction. However, insurers must also provide options for direct human interaction to accommodate all customer preferences.
Moving to a digital model has clear advantages, as indicated by a 2019 McKinsey report. It can reduce the claims handling time by up to 30% and cut medical costs by 10-20% in health insurance. The benefits extend to improved operational efficiency, better data integrity, quicker decisions, and reduced fraud risks.
Ultimately, insurers should leverage pre-configured claim handling software and service-oriented architectures to modernize claims efficiently, Comarch explained. Adopting proven solutions minimizes risks and maximizes returns, facilitating a smoother transition during claims transformation.
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