Claims management is at a turning point. Insurers need a claims process that contains losses and improves loss ratios; file handlers want to be free from busywork so they can focus on tasks that matter; and policyholders are demanding a fast, convenient and transparent claims experience. Emerging technologies mean everyone can be happy – but only if they’re ready to embrace the future of claims.
Meeting the Demand for Digital
Do you remember waiting by the phone for an important call? Checking your mailbox every day for an important letter? Listening to the sound of dial-up internet and hoping a phone call didn’t cut your connection?
You might remember these things, but many young consumers don’t. Generation Z has grown up in a society characterized by instant gratification and hyper-convenience.
Insurers need to pay attention. According to Property Casualty 360, a report found that customers under the age of 55 are almost three times more likely to switch insurance providers. Digital tools are a main motivator for switching.
This age group is too big to ignore. According to PwC, Generation Z and Millennials make up around 38% of the workforce. By 2030, that figure will climb to 58%.
As digital natives take over, their preferences are holding more sway. They expect processes to be fast and easy, which includes insurance processes. To win this cohort over, you need to offer digital FNOL, communication, and payments options.
AI and Machine Learning Are Taking Off
Insurers are racing to adopt AI. According to an NAIC report, 89% of auto insurers either currently use AI or machine learning or plan to use it or explore its usage.
Insurance customers want fast responses and personalized experiences, but the insurance industry is dealing with a talent shortage. Automation – powered by AI and machine learning – is filling in the gap.
Automation is especially critical in the claims process. For policyholders, automation can support fast resolutions. For carriers and TPAs, automation can boost operational efficiency and cut costs. According to McKinsey, automation can reduce the cost of a claims journey by up to 30%. When insurers are struggling with poor loss ratios, that amount of savings is too enticing to ignore.
Communication and Transparency
Transparency is critical when it comes to data. Insurers need data to power AI tools that support a positive customer experience, but consumers worry about their data falling into the wrong hands. Nevertheless, consumers are willing to share their data, provided they gain something in return. According to Accenture, 69% of consumers say they would share data on driving habits and exercise in exchange for lower insurance prices.
Transparency is also important during the claims process. For policyholders, the claims experience can feel like a black box: they don’t understand how the claims handler arrives at the offer they make, which often leaves them feeling unsatisfied or even cheated. Delays can also seem unfair. Policyholders want a fast settlement. If the claim drags on, they may think it’s because they’re not a priority.
Of course, claims professionals know otherwise. They can’t offer benefits that the policy doesn’t provide, and delays often happen for reasons out of their control. Through good communication, you can communicate this with the policyholder.
ValuePenuin says the two most common insurance customer complaints are unsatisfactory settlements/offers and delays. To address these pain points, communication and transparency are vital.
Customer Centricity to Stem Customer Churn
Research from Accenture warns that insurers could lose $170 billion over the next five years due to poor claims experiences.
Technology has helped insurers in many ways, but it has also made it easier than ever for policyholders to obtain insurance quotes and shop around for a new carrier. If policyholders aren’t happy with your claims service, they’ll jump ship at the first chance. As a result, insurers stand to lose billions due to customer churn.
Customer centricity is the solution.
According to Gartner, customer centricity “demands that the customer is the focal point of all decisions related to delivering products, services and experiences to create customer satisfaction, loyalty and advocacy.”
To hold on to their customers, insurers need to put policyholders at the heart of every decision. Digital transformation is changing claims, but it’s important to keep sight of what really matters: improving operational efficiency and enhancing the customer experience.
Keeping Up with the Evolving Business of Claims
Claims are becoming both more customer centric and more technologically advanced. These changes are happening fast – the insurers that can’t keep up could face staggering customer churn.
Can your old claims system handle the future of claims? The VCA claims system leverages automation to provide superior customer experiences and optimal workflows. Request a demo.