In a changing world, how do you build a claims function with a smarter edge?

Authors

EY FS Insights

Minds Made for Financial Services

Preetham Peddanagari

EY EMEIA Digital Insurance Leader

Digital leader in insurance. Passionate believer in leveraging technology to improve businesses. Sports lover. Dad.

4 minute read 14 Mar 2019

Claims department is the “shop window” of insurers – and the quality of service delivered there will influence perception of the brand.

Insurers are being disrupted by forces from inside and outside of the industry – with changing customer expectations and advances in technology topping the list. Although the recent wave of platform modernization in claims has improved indemnity performance and reduced costs, considerable scope remains to transform the claims function further and create a truly future-ready organization. 

Such transformation is vital because the claims function is increasingly considered central to delivering on the customer promise and providing competitive advantage. Insurers need to focus on how to service claims in more effective, efficient and customer-focused ways. 

We believe huge scope exists to transform claims functions and unlock significant benefits for both the insurer and the end customer. Success depends on the intelligent use of new technology, processes and human resources.  Developments in technology, particularly increased automation and intelligent use of data and analytics, will inevitably have an impact on people and capability requirements – with increased demand for higher skilled individuals in many areas.

Claims technology will be underpinned by an engagement platform to support effective communication and interactions with customers, brokers and third-party suppliers. Core claims and data management platforms will then enable high quality claims management. Intelligent automation and sophisticated data analytics will improve efficiency, customer service and decision making across the claims function. Finally, a smart services layer will further enable data analysis, as well as plug-and-play partnerships with InsurTechs. Putting all these elements together will create the “smart platform” insurers need to support the claims function of the future: one that is more connected, customer-focused and efficient.

In a changing world, how do you build a claims function with a smarter edge?

Building the “smart claims” function of the future with customer needs at its heart depends on effective use of both technology and people.

Six strategic priorities for insurers to create future-fit claims functions

Given the scope to transform claims functions by investing in technology and people, insurers must plan their actions carefully. Most insurers will need to focus on six strategic priorities in order to create the future-fit claims functions they need.

  1. Re-platforming core claims. Re-platforming to a modern core is an essential step.  A modern core platform enables an API-driven, smart services architecture to support analytics models, digital portals and partnering with InsurTechs. It drives automation across the claims business and enables efficiency and indemnity benefits.
  2. Maximizing claims data and analytics. This is an iterative journey, starting with the optimization of the overall architecture and tooling and using current forms of structured data to gain insights. Phase 2 focuses on creating new structured data through optical character recognition (OCR) and NLP tooling to gain additional insights. Phase 3 will see claims functions ingest external data sources from the market to improve analytical modeling. Ultimate benefits will include more straight through processing and better decision making.
  3. Implementing digital portals. New digital front ends are needed for customers, suppliers and brokers to enable new ways of working. Digital portals for customers must enable online FNOL, document and photo upload and claims tracking. Suppliers will be looking for automated instruction and fulfilment, as well as self-serve management information. The success of new digital portals will depend on simple integration with the core claims platform and clear processes for managing omni-channel experiences.
  4. Developing claims-of-the-future operating models. The claims organization and supporting functions need the right skills and capabilities to capitalize on a modern core platform, increased data and analytics and increasing interaction through digital channels. Technical expertise should be focused on improving areas most critical to indemnity control. Building the claims workforce of the future will depend on sound strategies for attracting, training and retaining the right talent.   
  5. Creating market-leading customer experience. Claims functions must focus on what customers really want, drawing on primary and secondary research. Any aspects of customer journeys that are negatively affecting customers, brokers, suppliers and employees need to be identified. Customer priorities should underpin any changes in technology, process and people – with the goal of delivering the optimal experience for all parties across all channels.
  6. Optimizing supplier and partner management. Creating supplier portals and achieving the complex integration of multiple external data sources with internal platforms should enable automated instruction, fulfilment and payments, as well as self-serve management information to monitor service levels and costs. Alternative supplier arrangements should be explored, including the use of reverse auctions in supplier management. Engaging with InsurTechs could support innovation within the claims organization, aiming to improve experience, indemnity performance and costs.

The degree to which insurers choose to digitize their claims functions – and at what speed – will depend on the level of their ambition and their starting point. We recognize that some entities are further advanced along their digital journey than others. It is also likely that insurers will want to focus on specific areas or opportunities – rather than try to digitize all areas at once.

Regardless of the start point, decisions about how to create a customer-focused claims function need to be taken – and taken now. The disruptive forces challenging the industry are not going to disappear. Insurers that rise to the challenge can create a “smart claims” function capable of driving their organization’s future success.  

Summary

The wave of claims platform modernization over the last three to five years has improved indemnity performance and reduced costs. But considerable transformation is still required across the claims function to create a market-leading, future-ready organization and unlock significant benefits for both the insurer and the insured. Download the full report (PDF)

About this article

Authors

EY FS Insights

Minds Made for Financial Services

Preetham Peddanagari

EY EMEIA Digital Insurance Leader

Digital leader in insurance. Passionate believer in leveraging technology to improve businesses. Sports lover. Dad.