Claims are the pivotal moment for every insurer, representing an opportunity to enhance customer experience and gather valuable data. The impact goes beyond the insurer–customer relationship as it also involves the beneficiary. A satisfactory claims process can convert beneficiaries into new customers. Comarch, a global IT products provider, delves into its significance.
Sales mark the beginning of the insurance journey, with a significant focus on the agent–customer relationship.
This relationship has evolved into a digital experience, with agents utilising online portals equipped with the necessary tools. However, claims management remains a critical interaction point post-acquisition.
Poor claims experiences can lead to client churn, making it crucial to avoid a complacent “it will be worked out somehow” attitude after policy purchase. According to the 2017 EY Global Consumer Insurance Survey, 87% of policyholders state that the claims experience influences their decision to stay with an insurer.
The crossroads
Claims are essential for building customer loyalty and managing costs. Losing clients is costly for insurers, and the expenses associated with handling claims have been rising due to the current macroeconomic environment.
Offline servicing costs, particularly manual tasks and paper-based procedures like life claims, further increase operational expenses and extend process durations.
The primary business challenges in the claims process include lengthy processing times due to documentation collection from various stakeholders, quality issues in manual processes, data loss, and outdated systems.
Transparency issues, such as a lack of real-time reporting and a comprehensive view of current and historical claims, hinder risk valuation.
Additionally, there are gaps in real-time control processes and insufficient tools for interactive claims and KPI analysis. Insurers also struggle with preventive and predictive monitoring practices and playing a proactive role in supporting customers to minimise losses.
Despite efforts to optimise claims, technological challenges persist. Legacy back-office systems and outdated processes, lack of integration between internal systems, and ineffective communication with third-party software create bottlenecks.
Gaps in the claims value chain lead to longer settlement times and higher costs. Modernising legacy systems is a significant challenge for insurers who often operate multiple policy management systems with varied claims submission processes.
Comprehensive implementation of new systems remains a goal that many insurers have not yet fully achieved.
Digitising claims processes, from data entry to payment, requires a comprehensive action plan. Insurers must rethink their operating models and build fully connected organisations, integrating various stakeholders like secondary insurers and third parties.
Technological obstacles such as lack of cloud nativeness and open architecture are compounded by customer concerns about data security and privacy, along with rising compliance costs.
The only way to transform the claims is by digitising it
In their 2021 report, KPMG predicts that within the next 5 to 10 years, many claims functions will digitise and automate, allowing some claims to be reported and settled without human intervention.
KPMG recommends “resetting the foundations within claims” by increasing flexibility, advancing automation, creating a core data strategy, enabling machine learning, augmenting the use of wide data sets, and focusing on prevention.
Future solutions must redesign supply chains using automated tools and virtual technology to address manual process issues.
According to Capgemini, the insurance industry is entering a high-payout period where asset retention is crucial.
“The Great Wealth Transfer” will see the baby boomer generation pass over $68tn to their children over the next 20 years.
Building relationships with beneficiaries can help insurers close the insurance ownership and retirement gap. Retaining even 0.5% of these payouts through new policies with uninsured beneficiaries could significantly impact the industry.
There is no time to wait and see. Digitised customers demand efficiency.
The light at the end of the road
For customers already accustomed to digital experiences, a fully digital, real-time claims process is ideal. This process would allow for immediate data transmission and recording, with all necessary documents available in the cloud.
Self-learning algorithms would automatically analyse data, validate claims, auto-complete notifications, and queue tasks. Automatic communication would handle missing data, and decisions on compensation would be sent automatically to the client’s portal. Payments would be made digitally and directly to the client.
Achieving this ideal state requires a flexible, open IT infrastructure based on cloud technology, integrated with automation tools.
Even with a perfect digital system, insurers should offer the option of direct contact. Customers want 24/7 service and the ability to choose between human and virtual interaction. Omnichannel platforms are ideal for this purpose.
Ready-made solutions
Insurers should seek ready-made solutions offering pre-configured process flows to manage claims transformation effectively.
Comprehensive claim handling software should support all insurance lines, including life, pension, and health, and accommodate all communication channels. Cloud-based, service-oriented architecture (SOA) software facilitates integration with external systems, while user-friendly interfaces allow efficient claims service and fast benefit payments.
Partnering with an experienced IT provider can make modernising claims more effective. While transformation requires investment, ready-made solutions, already tested by other insurers, present less risk.
This is where Comarch can come in and help modernise an insurers claims process.
Read the full blog from Comarch here.
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