THE CLAIMS PROCESS GOES DIGITAL
Racing to improve their customers’ experience, insurers are turning to AI and predictive analytics.
It’s been a long-time coming, but digital transformation is taking the insurance industry by storm. And nowhere is this more apparent than with how claims are getting processed.
As other industries have set new standards for customer service—companies like Amazon and Apple quickly leap to mind—today’s digitally-immersed consumers have grown accustomed to doing business anywhere, at any time and with any device. When they file an insurance claim, those expectations are in play and they evaluate their insurers accordingly. That leaves carriers racing to ensure a positive claims experience with a whole new portfolio of digital capabilities. “There’s an imperative for insurers to implement a digital claims strategy,” says Martina Conlon, senior vice president for research and consulting at Novarica, an advisory firm for the insurance industry. “They need to do this to demonstrate their value to their customers.”
The foundation of this strategy is a modern, flexible claims system with an architecture that allows the insurer to make full use of other emerging technologies, says Conlon. Chief among these are artificial intelligence and predictive analytics. Conlon points to two major sets of applications for each.
The first is predictive modeling, which is widely being used for fraud detection, determining when subrogation is appropriate and whether litigation should be pursued or settled. Other common predictive modeling applications include estimating the severity and frequency of different types of claims and improving an insurer’s operational efficiencies.
The second widespread use of AI and analytics is straight-through processing, which makes use of rules engines, third-party data and predictive models to classify and score claims for severity and probable outcomes. Today, a significant number of insurers make use of STP for very simple claims like car towing and glass replacement, but Conlon predicts its scope will rapidly expand as insurers’ ability to gather claims data and automate the claims process continues to improve.
The future of claims data gathering is quite literally on the horizon. Drones are giving insurers a potent new data collection tool that will only get more powerful over time, as enhancements like machine vision—a variant of machine learning that helps a drone better interpret what it sees as it learns from experience—come into their own.
And while fleets of drones serve as the insurance industry’s data gathering air force, on the ground insurers are moving to deploy an army of data gathering devices also known as the Internet of Things.
In terms of auto claims, for example, “We are rapidly moving to a future where there
“There’s an imperative for insurers to implement a digital claims strategy. They need to do this to demonstrate their value to their customers.” “If you look at a lot of this claims technology, it puts people at the center of the claims interaction, while the technology takes care of a lot of the noise.” Karen Furtado, Partner, Strategy Meets Action Martina Conlon, Senior Vice President for Research and Consulting, Novarica
are sensors located throughout the car, and when an accident occurs, before the driver can even get out of the car, the insurance company will have been called, an email with data about the accident will have been sent to the adjuster, and emergency services will have been contacted with GPS information about the location of the accident,” explains Novarica vice president Keith Raymond. “Enabled by the Internet of Things, this will all happen in an instant.”
The Allstate Experience
Many of these technologies are already in play at companies like Allstate and Farmers Insurance, which four years ago introduced smartphone apps that allow policyholders to settle simple fender-bender claims without visiting an adjuster or getting an estimate from a repair shop.
Allstate’s app, known as QuickFoto Claim, allows policyholders to use their smartphone to send pictures of their damaged vehicle to the insurer to have their claim adjudicated. Directions on their phone guide them through the process, including how to take pictures of the damage and submit them. Fraud deterrence features prevent the user from doctoring a photo.
After the photos are submitted, a written estimate is sent to the user electronically. Allstate says a policyholder can expect to receive an estimate and a phone call from the insurer to discuss it within 24 hours.
The Farmers app, called EZ Estimate, is quite similar. After uploading photos of the damaged vehicle, a repair estimate is submitted to the customer, usually within three business hours. If the policyholder accepts the estimate, the claims process continues via the app until the claim payment is transferred electronically to the customer’s bank account.
A “call for help” button is available on every screen of the app, and if customers experience problems while using the app, Farmers says they can meet with a claims adjuster to conclude the process.
At Allstate, QuickFoto now processes about half of the insurer’s claims for vehicles that can still be driven post-accident, which has led to the insurer shutting down many of its drive-in claim centers nationwide.
“We now have our adjusters looking at enhanced photos, digital photos without having to drive to and from the sites,” Allstate CEO Tom Wilson told a group of investment analysts eight months ago.
“In the past, there was a lot of dead time, unproductive time, as adjusters drove around, driving to cars, driving to body shops,” he continued. “And we looked at that and realized that emerging technologies, data and analytics could rectify that and take some of the inefficiency out of the system.” Adjusters aren’t the only ones who are benefitting. The convenience of claims self-reporting apps is also winning high marks from customers, says Karen Furtado, a partner with market researcher Strategy Meets Action.
“Are you kidding?” says Furtado. “Who wants to take a half-hour out of their day to get their car looked at, because it was hit by rock?” But the real boon to customer satisfaction, she adds, is how transparent apps like QuickFoto make the claims process.
“It’s no longer, ‘I called this person and some magical mystery thing happens in the claims department. Now I know exactly what’s happening with my claim.’”
Other AI-driven apps, she notes, are also helping insurers fortify their customers’ claims experience. Chatbots, for instance, are automating customer notifications, allowing insurers to keep claimants more closely informed about the status of their vehicle repair, when they can expect to receive a check for the damages and other matters.
“If you look at a lot of this claims technology,” says Furtado, “it puts people at the center of the claims interaction, while the technology takes care of a lot of the noise.”
But for all their progress, the experts agree that insurers are just at the tip of the iceberg of what AI and predictive analytics hold in store. And as these technologies mature and move front and center, “The future of claims processing will be very different from what we have today,” says Novarica’s Conlon. “Insurers,” she adds, “are already headed very rapidly in this direction.”