The insurance industry is witnessing a lot of change, driven by current technological trends, like the Internet of Things, Big Data and Analytics, Blockchain which are dynamically and irrevocably changing the way it functions. Let’s look at the top trends impacting the industry and discuss the various challenges which are driving the current InsurTech priorities and see if we can call out the most important of them all.
Every industry has its leaders and its laggards and the insurance industry is not an exception to this. Deep pockets are helping some insurers to take advantage of digital technologies to change the way they function and to:
- Offer new models and personalized products to meet changing customer expectations, which are driven by online retail sales models,
- Partner with technology players to ensure that they keep up with the emerging trends in technology and to take advantage of the Internet of things to adopt connected sensors or devices to collect data for loss prevention and employ better pricing methods in property & casualty, life as well as health insurance.
- Establish a cyber-security strategy to protect the sensitive personal and business data stored by them and comply with privacy regulations.
- Adopt cloud computing, AI and automation to improve speed and flexibility and to settle claims faster to offer better customer satisfaction,
- Use advanced analytics to derive strategic insights and proactively plan future business offerings and gain competitive advantage.
- Consider the use of blockchain technology to add “smart” contracts and secure, decentralized data collection, processing and dissemination to their processes.
Are these strategic initiatives sufficient to enable companies which adopt them to enjoy industry and market leadership, and ultimately, success? What capabilities are needed for insurers to prepare themselves to meet the demands of the industry, in channel expansion or business model development, as it evolves? How can insurers prepare for the demands of tomorrow even as they meet today’s expectations from them? The aim of this post is to postulate that many insurers are failing to recognize the importance of claims management to their business, even as they are focusing on many of the other strategic imperatives facing them. Let’s explain why we would say so.
It is an open secret that customers are always happy with a good claims settlement experience, but tend to get very upset and start posting strong negative online feedback when their claim is delayed, disputed or rejected. Though claims satisfaction is an extremely critical component of an insurer’s overall customer relationship management challenge, it is only a work in progress for most at the current time. Instead, they need to pay attention to the customers and also focus inward, as they delve deep into the reasons for a customer’s dissatisfaction:
- Insurers need to pay close attention to customer feedback and satisfaction levels with their claims filing process and settlement experience, especially when they are rejected.
- Insurers have to capture customer feedback and factor it into the way their processes are functioning and question the clarity of their sales pitch itself, and see if the claim was fairly rejected.
- They need to pay close attention to their reputation in this key area of customer satisfaction, which could impact their ability to retain a customer.
- It must be remembered that dissatisfied customers never come back for additional coverage or another policy.
- Even agents who find too many customers raising their voices against an insurer’s claim settlement process tend to move business away from them.
- The seamlessness of customer experience needs to extend to claims handling, as claim filling becomes a smooth process.
- Insurers can use technology to provide more options for filing a claim, including the uploading photos and videos, with increased speed and accuracy and reduced contact points with humans.
- As algorithms detect fraudulent claims more easily, claims handling is improving in efficiency. Data driven claim prevention can help decrease costs and deliver value by predicting actual risk and reducing premiums.
In managing the delicate balancing act between identifying fraudulent claims and paying legitimate ones, insurers could create a negative relationship with a customer by being too strict or overly suspicious. But that doesn’t mean they can be trusting and keep approving every claim in a lenient manner. Any unfairness, whether real or assumed, could determine whether a policy gets renewed again, or our online reputation suffers, or the insurer could face a legal dispute in a court. Even as insurers work hard to identify the technologies needed for them to expand their distribution channels and ensure that they create optimized customer journey; they cannot lose sight of the importance of eliminating fraudulent claims from their list of priorities. Which is why, we feel that claims management could challenge InsurTech priorities for the insurance industry. What do you think? Please write in and share your thoughts.