As with almost every other industry, the digital world is bringing changes to the insurance industry. The speed and convenience of digital transactions that shoppers and banking customers appreciate are now coming to insurance claims handling.
In a study by LexisNexis Risk Solutions, 24 insurance executives described their company’s current and future plans for implementing “touchless” claims processing.
Currently, claims processes can be divided into four categories:
Traditional: the adjuster goes out to personally inspect the car or home and prepares the estimate.
Fast Track: Claims are expedited with minimal insurance company involvement, as when, for example, a driver is instructed to take the damaged car directly to a repair center.
Virtual Claims Handling: The customer or a vendor photographs the damage and the adjuster assesses the damage remotely.
Touchless Claims Handling: The claim is reported electronically along with backup materials such as invoices and photos; the material is reviewed by humans or algorithms and paid electronically.
To assess where the insurance industry is headed in terms of implementing digital strategies, LexisNexis segmented insurance companies into three groups:
Traditional: Relies heavily on traditional field inspectors for even non-complex claims. May use fast track but not using or considering virtual claims handling
Semi-Forward Leaning: Uses traditional and fast track, along with using or considering virtual claims handling
Forward-Leaning: Uses fast track and virtual claims handling, and considering touchless claims handling.
Here’s how the companies surveyed ranked in terms of which claims-handling process they currently use:
• 100 Percent Traditional
• 83 Percent Fast Track
• 38 Percent Virtual
One of the most interesting things the survey reveals is that companies with a more advanced technological approach have shorter average claims cycle times. This is mainly because the claim needs to be handled or “touched” fewer times. And this can deliver big benefits to policyholders.
• Traditional – 10-15 days (3-4 average touches)
• Fast Track – 4-6 days (2 average touches)
• Virtual – 2-3 days (1-2 average touches)
The Bottom Line: Better Results, Happier Customers
Companies using fast-track processing report achieving 73 percent better results from their claims process. This results from reduced loss adjustment expenses, better efficiency because personnel can be reallocated to more complex claims and, most importantly, better customer experiences. For companies using virtual claims handling, even more (78 percent) report better results.
When fast-track approach companies were asked if they planned to also adopt touchless claims handling, 78 percent said no and only 27 percent said yes. However, when companies already using virtual handling were asked about moving to touchless claims handling, the “yes” response was 67 percent; the no’s were just 33 percent.
Clearly, the need to satisfy tech-savvy customers, especially millennials, will drive more companies to adopt digital processes in the next five years. But the savings from reduced loss adjustment expenses, better customer retention and competition from forward-leaning competitors will also mean you’ll be seeing more digital claims processing in the future, no matter which insurance company you buy your insurance from.
Please give us a call. We’ll give you an update on how the companies you’re insured with are handling claims these days.