Since the COVID pandemic, there's been a dramatic rise in costs associated with insurance claims. Many factors, including climate change, inflation, and the increase in the price of repairs or replacement items, have driven the increase. There is now enormous pressure to reduce insurance claims costs.
The good news is that several technologies can help. Leveraging AI and cloud computing and combining with rich data sets and low code/no code platforms can reduce costs and the time it takes to service claims. The hidden bonus is that these technologies go a long way toward improving the customer experience.
The key is to use these technologies to develop and deploy a comprehensive multiyear strategy with agile, incremental capability delivery—what we like to call the "perform while transforming" journey.
However, embarking on a claims transformation and cloud adoption voyage can often lead to cost and schedule overruns. Migrating from legacy platforms to newer solutions is fraught with issues, including difficult business processes, manual, time-consuming tasks, and challenging integration issues. In addition, shuttering legacy systems, saving valuable records, and coming up with ways to address integration issues across multiple claims platforms can be very taxing.
Understanding the potential issues is critical when heading down this path. Insurers must take a strategic approach to claims transformation to ensure short- and long-term success.
Experience shows that using a modular plug-and-play architecture simplifies the transition. One strategy is to map a series of micro-transformations in three- to six-month increments to complete the transformation in one to two years. Taking a "bite-sized approach” to transformation leads to better results in both productivity gains and creating a better customer experience. For example, adding a claims tracker to customer-facing applications offers customers real-time insights into the claim status, reducing the number of calls to the agent.
One key to success is sourcing the correct data from existing platforms to ensure it matches what claims servicing agents see when fielding customer calls. For payments, it's the same—accessing information in digital apps in real time instead of via mailing checks leads to a better customer experience and improved customer retention.
See also: How to Optimize Insurance Claims Management
Build a better data hub
Going down the path of claims transformation begins with a journey toward creating a solid data hub that democratizes valuable data. When a single data source is used throughout the entire company, all departments benefit. However, it's essential to establish access and control guidelines to ensure that data is used to generate positive results. IT leaders must design and implement data governance and access controls.
One strategy is to use a multi-tenant architecture to separate company data and data from outside resources. Another option to get the most out of claims transformation is to design a system where the data hub can be segregated into domains with specific purposes for staging, transforming, testing, and providing data to the claims applications.
A benefit of this process is that IT departments don’t have to tackle challenging and complex legacy applications, reducing the core systems’ reporting and analysis workload. This helps reduce the time it takes to process claims since legacy applications frequently were built as “mods” or customized to meet the needs of the vendors’ products. IT leaders should also consider that new and improved data hubs can train GenAI solutions to create synthetic test data, which helps simplify test scenarios while not potentially tainting the original customer data. Over time, data hubs can deliver important training data for customer-facing AI solutions.
See also: Why Do Insurance Claims Take So Long?
Keys to success for a claims transformation journey
While claims aren't the most exciting part of the insurance sector, they are a critical part of the overall success of any insurer.
In today’s highly competitive insurance industry, company leaders focusing on designing and implementing a claims transformation increase their odds of financial success. Modernizing claims platforms, designed with incremental improvements to showcase benefits to stakeholders, will put insurers on a better path.
While large-scale cloud reinvention and digital transformation may take a few years to implement, this type of agile approach greatly improves the claims ecosystem. It reduces costs, spurs innovation, streamlines operations, and leads to a vastly superior customer experience.
