3 leading data trends shaping the future of insurance claims management

As technology delivers greater and greater potential for optimizing risk assessment, improving the customer experience and streamlining processes, many insurance carriers are doing some deep thinking on how best to leverage these new tools. According to a report by Deloitte, insurance spending on artificial intelligence and data technologies is expected to rise 48% year-over-year, reaching $1.4 billion by 2021. The sectors that will see the greatest spend increases will be automated claims processing and fraud investigation and analysis, at 50% and 47% respectively. At this point, it’s not a question of if, but when carriers plan to implement these technologies in their claims departments — and current storm forecasts suggest that time is of the essence for carrier adoption.

Carriers took a significant hit to profits in 2017 — a record-high year for losses owing to natural disasters. Hurricanes Harvey, Irma and Maria resulted in combined insured losses of $92 billion. And if this year is any indication — the National Oceanic and Atmospheric Administration forecasts five to nine hurricanes in 2018 — major cat events will not let up. The growing pace of digital transformation, however, can prepare the claims department to face these external factors. When carriers focus their efforts on improving claims efficiencies and strengthening interdepartmental communications, the entire organization gains a competitive advantage.

Here are the latest trends driving the future of insurance claims management.

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Catastrophic events demand data-driven efficiencies

When a natural disaster strikes, it’s important for carriers to focus on a positive customer experience by providing insureds with speedy responses to claims submissions. Claims departments that leverage the right data tools can strengthen automation workflows, affording teams real-time visibility into the status of a claim from first notice of loss to closing. A significant influx of claims following a natural disaster or large-scale event can create operational challenges for the claims department. The sheer number of stakeholders involved in a claim, including the policyholder, carrier, permitting authorities, contractors, subcontractors and adjusters, is illustrative of the problem. Natural complexities involved in a claim, magnified by a natural disaster, inevitably lead to some level of miscommunication between stakeholders. Without the right technology or data tools in place, it can be costly for carriers to scale up efficiently during a natural disaster.

New data analytics and machine learning tools can help carriers more quickly and accurately process claims. Carriers can save valuable time and money by streamlining the entire claims process with advanced data services to better understand the state of the property pre-cat event, calculate depreciation, and validate replacement cost at scale. Additionally, carriers that use these tools can more effectively optimize their limited adjuster resources to prioritize certain properties. When it comes to leveraging new technology — and considering the limited resources after a severe weather event — carriers can leverage data to optimize processes and deliver quicker responses to customers.

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The shift in customer expectations and behaviors

In today’s fast-paced digital world, customers demand a seamless customer experience. With approximately one in 15 insured homes submitting a claim annually, according to the Insurance Information Institute, technology adoption is particularly advantageous for a carrier’s claims department given the high volume of customer touch points.

Carriers can leverage advanced data services to streamline the initial claims filing process. More often than not, customers have a lot on their plate when they file a claim as they arrange for repairs to their property. Instead of relying on a homeowner to provide detailed, up-to-date information in the claim submission, carriers can leverage advanced data services to prefill certain form fields with accurate estimates that consider depreciation and recent maintenance when calculating a property’s condition and the actual cash value of major systems. Integrating accurate, valuable data directly into the claims workflow simplifies the claims submission process for customers.

Automation is also integral to faster response times. Armed with detailed, verified property-level data, carriers can provide customers with immediate estimates on damages to their property, providing insureds with both prompt service and transparency. This is a particularly valuable service following severe weather events when claims volumes are high and property owners are looking for a high level of communication from their carriers.

When carriers can respond to claims faster, armed with the data they need to make intelligent decisions, the insured will benefit, ultimately leading to increased retention.

Related: 3 tips carriers should know when it comes to customer retention

Combat claims fraud with proactive monitoring

Insurance fraud is a complex and ever-evolving problem. In fact, property & casualty insurance fraud losses totaled $34 billion annually between 2011 and 2015, according to the Insurance Information Institute. Data and analytics, even as much as improving data accuracy, can redress these imbalances and provide carriers with prompt course correction. With accurate data insights into property repair and contractor performance, carriers can retroactively review paid claims by verifying project completion or abandonment, identifying negligence and evaluating contractor efficiencies.

Trends in data enable carriers to identify patterns that point to fraudulent activity, such as inflated claims. The right data sources will also allow carriers to match fraudulent claims with certain contractors who are most often associated with these projects. Advanced data services may even provide enough granular data to support subrogation efforts.

Using proactive monitoring tools, carriers can track the reconstruction progress and know with confidence that a property has been made whole again. This gives the underwriting department the post-claim insights it needs to renew policyholders. Conversely, knowing when damaged properties have not been properly or completely repaired throws a red flag for underwriting. This data-driven, cross-departmental collaboration is a major opportunity for carriers. Carriers that invest in data and technological advances to improve the claims processes will see tangible effects on overall performance. Resulting revenue growth and operational savings from investing in the right data services can strengthen claims business efficiencies but, more importantly, deliver positive experiences for policyholders.

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Holly Tachovsky is the CEO and co-founder of BuildFax, the leading provider of property condition and history insights. She can be reached at holly@buildfax.com.