Timing is everything, and nowhere is that axiom felt more profoundly than in today’s insurance industry. At a moment in time when insurance customers are demanding that their carriers provide a customer experience (CX) that mirrors the convenience and immediacy of online retailing, seasoned claims adjusters are vanishing.

Combined with increasing quests for profitability and efficiency, these issues are creating a perfect storm of worry for insurers.

First, let’s tackle the dissipation of institutional knowledge otherwise known as “the graying of the insurance industry.” Insurance Journal estimates that half of the workers in the insurance industry will retire by 2025 – just six years from now.

Today, workers over the age of 45 make up almost half the total insurance workforce, with 70% of claim handlers over the age of 40. Insurance carriers depend on the expertise, collected institutional knowledge, and intuitive reasoning of claims adjusters to manage the processes and volumes of information attached to complex claims. These professionals identify fraud, establish reserves, estimate damages, and ensure that every claim is properly and efficiently handled.

As the level of experience diminishes, so does the quality of the claims decisions being made. Shortcuts are taken, fraud goes undetected, and investigations are overlooked - all leading to insurers paying out more in claims than they should.

With straight through processing (STP), insurers can begin to capture valuable knowledge and build on it year after year by implementing business rules and artificial intelligence-based algorithms that result in better, faster, and more consistent business outcomes while at the same time reducing touchpoints and cost.

STP for a Superior Customer Experience

Customers are demanding that their interactions with their insurers be as convenient, fast, and satisfying as shopping at their favorite online store, and are ready to drop their carriers if they feel their needs are unmet. 83% of customers will switch insurers if they feel they have had a negative claims experience – and there are a host of disruptive startups waiting in the wings to snatch up these lost opportunities.

A study of repairable auto claims in the U.S. by McKinsey identified these five qualities as key to customer satisfaction:

  1. Employee courtesy
  2. Ease of communicating with the insurer
  3. Employee knowledge and professionalism
  4. Transparency and ease of the process
  5. The speed of the claim settlement

Straight through processing is the only scalable manner in which traditional insurers can meet increasingly demanding customer expectations and maintain their competitive advantage.

Insurance customer experience

Insurers have already experienced the benefits of STP for claims related to windshield damage, as well as car rental and towing reimbursement, and advances in technology are moving STP into other realms. As noted in an article in Insurance Thought Leadership:

The resulting outcomes from AI analysis can facilitate the next-generation of straight through processing, ultimately going well past the current glass and towing claims STP, as things such as machine learning evolve over time. Again, shorter time to settlement with little or no claims adjustor involvement – a win-win.

Removing Human Touch Points Reduces Costs

STP is particularly effective in the handling of claims whose financial outcomes aren’t impacted by the involvement of a human claim handler. By reducing or eliminating human touch points, insurers can reduce overall costs while focusing those resources on more complex claims such as those involving bodily injury. Furthermore, McKinsey estimates that insurers that successfully implement digital self-service options, STP, and lower call volume can reap efficiency gains of 30%.

E&Y found that “speed, efficiency and transparency” are some of the critical characteristics of the kind of claims experience today’s customers expect. There are a plethora of good data options for insurers looking to use straight through processing of claims to increase those qualities, including:

  • The use of historical data to slash estimating time and manage the cost and quality of repairs.
  • Advanced telematics that instantaneously collect accident data that can be downloaded from the cloud to automatically initiate a first notice of loss entry (underwriters can score that data to compare the extent of the loss to a vehicle’s appropriate value).
  • Drones and satellites can survey damage and collect property damage information to start the claims process before the homeowner makes contact with their insurer.
  • Smartphone apps enable claimants to send photos of damage directly to their insurance company.
  • AI can be used to scan claims for potential fraud while robotic process automation can automatically pay claims that fall within certain risk and financial guidelines.

They conclude that,

(A) quality claims experience can pay immediate dividends. In all of them, insurers can proactively engage at key points during the claims life cycle, with accurate and consistent information delivered on a timely and transparent basis. At the same time, claims teams can focus on high-value interactions, high-risk claims and other exceptions.

With pressure to increase profitability, higher customer experience expectations, and a talent crisis at hand, insurers must look to straight through processing as the only scalable way to match the retail experience consumers have come to expect, and accelerate the end-to-end process without sacrificing business results.

Nuxeo is a sponsor of the Connected Claims USA Summit 2019 in Chicago next week (June 5-6). If you’ll be there too, stop by our booth (#414) so we can show you how Nuxeo is helping insurance companies improve their claims management processes.

Connected Claims Chicago

This issue brief also explores why insurers must consider straight through claims processing as a way to meet customer demands without sacrificing business results.