Focus on Evolution, Not a Revolution

Of all the shiny new tools piquing insurers’ interest, blockchain is among the shiniest: 46 percent of insurers plan to use blockchain within two years, and 84 percent say it’s reinventing the way they engage with new partners, according to research by Accenture. But while blockchain presents enormous potential to revamp claims and contract management, detect fraud in real time and more, most insurers aren’t ready to adopt blockchain. Why? Because they struggle to leverage less shiny digital technologies to create a more seamless claim processing experience, a fundamental aspect of policyholder satisfaction. Focusing on a technical evolution rather than holding out for a complete revolution, with claim processing at the center, will position insurers to make deep gains in performance now that can continue seamlessly into the future. It’s an approach that offers strong potential to increase not only policyholder satisfaction, but also profit. How can insurance companies make the right technology plays for an elevated claim processing experience? Here are three strategies to consider. Expand self-service options via a mobile app—and ensure staff support an all-digital experience. Mobile apps are an easy and fairly inexpensive digital innovation with high return: 42 percent of auto insurance policyholders use mobile apps to upload photos or videos of vehicle damage directly to their insurers, a J.D. Power survey found. And when insurers use these images, policyholder satisfaction surges. The problem is, insurers only use these images about half the time they are received. When this happens, the delight policyholders gained from self-directing the claim experience diminishes, and satisfaction plummets, the survey found. See also: 3 Techs to Personalize Claims Processing   Bringing customer service representatives and claim adjusters on board with an all-digital claim processing experience ensures policyholders get the seamless experience they crave. Make sure staff understand the importance of using the information policyholders provide—including images of damage incurred to their vehicle or property. Seek to limit duplicative inquiries, and continually look for ways to raise the bar around the digital experience. One survey points to five factors that distinguish outstanding mobile apps for insurance from those that are just so-so:

• Ease of navigation
• Appearance
• Availability of key information
• Range of services
• Clarity of information

Also critical: digital tools that offer timely, highly personalized guidance and support real-time customer interactions. Leverage data intelligence to speed claim processing. A McKinsey study found insurers could reduce claims expenses by 25 to 30 percent by automating claim processing—an approach that also boosts accuracy. Three opportunities for insurers to explore include:

• Intelligent case management. Machine learning automatically determines the next step in the policyholder’s claim processing journey, such as the need to schedule a repair appointment. Then, data-driven tools enable policyholders to perform these tasks digitally.
• Digitizing complex tasks. Using data analytics can simplify and standardize tasks such as estimating the value of a loss. When these tasks are performed annually, amounts can vary by claim adjustor—a major dissatisfier for policyholders.
• Automating front-end and back-office processes. Digital frontrunners use automated tools to send estimates for damage, verify repair invoices, and reimburse policyholders or service providers according to their preferred method of payment.

Make the move to electronic claim payment. Claim payment is the final step in claim processing and adjudication, and it’s the single aspect of the claim experience policyholders remember most. But insurers overwhelmingly default to paper-based payment, even as check-based payments in other industries continue to decline. The positive impressions gained from digital touchpoints at other points in the claim journey are erased when policyholders must:

• Wait days for a paper check to arrive in the mail
• Physically transport paper checks to a service provider or bank for payment or reimbursement

Making the move toward electronic payment—which is 10 times cheaper than paper checks—speeds processing time and payment receipt How can insurers build the right digital claim payment strategy—one tailored to the needs of individual policyholders and service providers? The right solution should include more than one payment option for policyholders, such as ACH, push-to-debit or check. For service providers, payment options may include ACH, virtual card payments, or checks. See also: Transformation of Roof Claim Processing   Some insurers have the expertise to build an electronic payment approach internally. Others purchase digital payment technologies or partner with banks and/or fintechs to provide this service. Determining the right approach involves careful consideration of cost, time to market (speed is critical), options for expanding services as new payment modalities are introduced, and the ability to protect sensitive policyholder data and comply with financial regulations. A Tried-and-True Model for Innovation As policyholders demand a standout digital experience, there is a temptation among insurers to build out their blockchain strategy. Blockchain generates a lot of hype for its potential to unlock significant value by simplifying complex, highly manual processes. However, there are challenges to blockchain adoption, including around scalability and deployment. Instead of waiting on blockchain, putting claim processing at the forefront of a company’s innovation agenda now empowers insurers to transform key capabilities today, setting the stage for more advanced technology adoption in the future.