Over a third of the nation’s insurers are speeding up their claims processes via virtual claims handling, and industry-wide adoption is coming around the corner.
Thanks to the increased power and photographic quality of today’s smartphones, customers and vendors can now collect images or streaming video of damage, and upload that information to their insurer for assessment. There’s no wait for a company adjuster to arrive to examine the property or vehicle, and there’s no need for multiple phone calls to get the claims process started or to move it along.
On the claims side, adjusters get the documentation they need to begin the estimating process directly from the client in a matter of minutes. Automated tools are used to gather additional documents that might be needed from external sources, such as law enforcement or manufacturers. Repair estimates, which include photos or video of the damage, are sent automatically to repair shops or the appropriate third party. In some cases, payment can also be made electronically. This is the power and value that virtual claims handling delivers to insurers and the insured.
And it’s no surprise that many large insurance companies are quickly getting on board. LexisNexis found that 38% of carriers are either using or considering virtual claims handling to cut turnaround times, reduce the cost of claims handling, and increase customer satisfaction.
When it comes to auto insurance, 95% of the nation’s top 50 carriers are already using virtual claims handling and are actively exploring the potential of touchless claims, where a claim is handled electronically from first notice of loss through payment.
Modernizing Claims Handling
Insurance customers have changed with the times, and most of them now expect their interactions with carriers to be as smooth and seamless as their preferred online shopping expeditions.
Virtual claims handling enables insurers to create superior customer experiences centered on the control they know today’s customers expect in other areas of their lives; namely, knowing that the right person has the right information to provide the help they need quickly, completely, and with as little difficulty as possible.
As insurers deal with ever-increasing pressure to reduce the costs of handling claims from the first notice of loss through adjudication and payment, known as loss adjustment expense (LAE), virtual claims handling offers a way to lower those costs. Companies handling claims virtually have seen up to a 50% reduction in processing cost per claim.
The same LexisNexis study also revealed that virtual claims handling enabled insurers to slash turnaround times from the 10 to 15 day cycle of traditional handling to just two or three days.
With the unemployment rate in the insurance industry at a record-setting 1.7% companies must find ways to make more efficient use of an ever-shrinking talent pool. Automation enables adjusters tasked with handling simple claims to be moved into more complex and potentially more satisfying work.
The combination of faster cycle times, increased processing speed, decreased LAE, an ability to better leverage talent, and the ability to deliver more seamless and satisfying customer experiences is a win for everyone involved. Yet an important question remains: how will insurers scale to meet the need?
Future Readiness – Prepare for What’s Next
These process improvements are just the beginning for forward-thinking insurers. They’re asking, “What could be done with technology that can see everything a human claim handler can see, but in greater detail and at speeds a human being can’t match?”
The answers are here, and they’re already transforming the industry.
Visual-based AI, also known as computer vision, trains computers to see and process visual information. According to SAS, the accuracy rates for object identification and classification have gone from 50% to 99% in less than a decade. Today’s computer vision technology systems are more accurate than humans at quickly detecting and reacting to visual inputs.
In addition to collecting and processing data about the many physical elements of claims – weather conditions, vehicle condition, speed, and other such factors - virtual claims handling will replace the slow, subjective nature of human based estimating with consistent outcomes based on comparisons of thousands of images of similar damage to similar vehicles or properties in a matter of minutes.
4 Steps Insurers Can Take To Make Virtual Claim Handling a Reality
McKinsey took a close-up look at what insurers will need to do to prepare for this AI-fueled future, and here’s what they recommend:
- Get smart on AI-related technologies and trends. While IT teams will implement the technology, the C-suite, your board, and the CX leaders in your company are responsible for understanding what AI can and should do for your organization. All of these stakeholders need to put in the time and resources to build that understanding across the entire business, not just for individual lines. Pilots and proof of concept initiatives should focus on business objectives rather than discrete process improvements.
- Develop and begin implementation of a coherent strategic plan. When deciding on how to use automation and technology to support their business strategy, leaders should be prepared for a lengthy transformation that involves not just the technology, but the company’s operations and workforce. As technology evolves, and certain business lines move towards a “predict and prevent” model, insurers will have to develop strategic responses to prepare for that evolution.
- Create and execute a comprehensive data strategy. We know that insurers hold the greatest repositories of data in business. We also know from the onset of the Big Data age that many carriers invested in (and ultimately abandoned) expensive data collection and management systems when they couldn’t derive actionable insights from the fragmented data they uncovered. Tools exist today to make the strenuous challenge of understanding and benefiting from tremendous amounts of internal data easier than ever. However, accessing external data remains difficult and expensive. Insurers must develop data procurement strategies that alleviate these difficulties and cultivate external data that will enhance and enrich their internal data.
- Create the right talent and technology infrastructure. Tomorrow’s insurance carriers will need to be staffed by agile, engaged workers who are tech-savvy, creative, and willing to develop the skill sets required to serve a new generation of customers with new demands and expectations. Data scientists, data engineers, cloud computing specialists, and experienced designers will be as important to the health of the business as adjusters, underwriters, and sales professionals will also continue to be.
The end result of virtual claims handling is more accurate estimates, fewer touch points, and lower cost for the insurer, while delivering faster settlements, and a superior claims experience for the insured – but only if you’re well prepared.