The advance of automation in the auto insurance industry could have come at the expense of the personal touch that consumers expect. But recent research shows that auto insurance carriers are succeeding in striking a balance.
A
2018 survey of 24 of the top senior-level auto insurance executives combined with 1,755 auto insurance customers by LexisNexis Risk Solutions found that carriers are increasingly using automation to be more efficient, reduce costs and improve their competitive edge through better customer service. Consumers are enjoying the gains of automation, as well. They now expect the carriers they do business with to offer easy digital access to products and services, but while also providing a personal touch, including being empathetic.
Much innovation is taking place across the claims automation continuum – from traditional to touchless handling. For example, the research found that carriers are:
- Continuing to embrace virtual claims options with 95% of respondents using or considering virtual claims processes.
- Touchless claims is growing in popularity as well, with 79% of carriers surveyed saying they are considering or are open to the idea.
- And carriers already using claims automation are reporting a reduction in touches, faster cycle times, increased employee productivity, lower loss adjustment expense (LAE) and higher customer satisfaction.
On the consumer side:
- 57% of consumers indicate they are fairly or very comfortable with automated processes.
- Customers with prior claim experience quickly become dissatisfied when they have to talk with more than one person.
- One in five consumers prefers claim self-service options, mostly driven by the younger generations, but complain that the self-service first notice of loss (FNOL) process asks too many questions.
- Customers prefer fewer touches and expect fast cycle times, as they have become accustomed to the speed of digital service in other industries.
- Even the consumers who are the most supportive of automated processes still want a personal touch when they need it (for example, first-time claimants).
See also: 21st Century Claims: Boosting Efficiency
These findings suggest that carriers need to carefully align their automation strategies with customers’ needs. Automation adoption can be accelerated by matching data and technology solutions to consumer needs and sharing information with consumers. Done correctly, carriers can extend automation for greater mutual benefit ― as long as they maintain an empathic, personal touch with their customers through the communication method of their customers’ choosing.
Yet, while many carriers said their automated processes have increased significantly over the past three to five years, that doesn’t mean they’re using a broader array of automation. Rather, it’s most common to see automation in the form of rules-based logic and software-driven photo estimation for non-complex claims at specific parts of the claims process. For example, some carriers are employing automation to simplify and accelerate documentation gathering, enabling customers to upload digital documents and photos via an app, text or website and using automated tools to pull other relevant external documents like police reports. Similarly, automation is being used by some carriers to improve the customer experience to quickly automate claims payments based on a rules-based system (such as those with low dollar value or who use a direct repair program shop).
The Need to Simplify Self-Service
The study also found that as carriers make small advances toward virtual claims handling, they are also becoming more receptive to touchless claims handling in the quest to fully automate claims. This includes deploying automation solutions such as data prefill to make self-service options easier for customers.
However, they need to keep in mind that full automation doesn’t suit everyone. The demand from consumers for self-service options is growing but overall still low and tied mostly to millennials and the younger generations. Until these generations compose a larger portion of the customer base, cost reduction and improving the customer experience will likely remain the key drivers behind further automation. The findings also suggest that low customer demand for self-service is related to customer dissatisfaction with the vast number of questions asked at FNOL and carriers’ failure to fully integrate data upfront in the claims process to simplify self-service for customers. Carriers need to rectify these issues before investing too deeply in touchless claims handling.
Though consumers are receptive about increased automation, they still want support in the form of a real person ― particularly if they’ve never filed a claim before and are uncertain about the process. Even millennials don’t want self-service for every situation; they also want human interaction easily available when they need it. It’s critical that customers still get the human touch they want at the relevant parts of the claims process.
Remaining Challenges
As carriers adopt greater automation capabilities, they’re finding that integrating more data earlier in the claims process leads to more efficient handling. Carriers need to integrate more data prefill solutions that leverage external data sources into the claims process so that self-service options are as easy and painless as possible for customers.
The study found that carriers that use a data prefill solution at FNOL experienced a 14% improvement in days-to-pay for bodily injury claims, a 10% reduction in severity as compared with the industry and a 15% improvement in their shopping-rate ratio as compared with the industry.
Additionally, while automation progresses in the industry, the research uncovered reluctance to automate. This reluctance is driven by the concern that it will introduce more error and a higher risk of fraud into the non-complex claims process. Carriers are not fully confident that systems are mature enough to counterbalance these types of situations.
It is a concern shared by consumers, as well. Consumers’ reluctance ranges from the fear of making a mistake to potential glitches or technology issues that could hurt their claim. These concerns are significantly higher among those who have not had a claim than respondents who have recently filed a claim. Perhaps there is an opportunity for carriers to share more testimonials of customers who have had a positive experience with automated claims processing.
See also: Claims Technology: One Size Won’t Fit All
Final Thoughts: Balancing Automation With Empathy
The research shows carriers and consumers are largely in sync when it comes to automated claims processing. Even though improving the customer experience may not have been the first or
top motivation for embracing automation, the good news is that they’ve achieved it anyway.
To retain those customers, they will need to employ a soft variable ― empathy. While consumers, especially younger consumers, increasingly demand self-service and digital access, there are times their biggest desire is a human touch.
In summary, automation can help carriers deliver this human touch by freeing representatives to be available when a customer needs personal attention. Carriers must also find ways to customize how they integrate the human touch into the claims experience. Tailoring the claims approach with a blend of automation and human touch to meet the customers’ preference will help carriers do a better job of personalizing the claims process. While the human element of treating others with empathy may be more difficult to improve upon than adding more automation, data and analytics can be deeply incorporated into the claims process to improve accuracy and efficiency. Those factors affect how customers feel about their claims experience.
