Retooling for tomorrow's claims

It used to be that nothing in this world was certain except for death and taxes. Now, we have death, taxes, and the steady march of automation.

It’s invading everything — and at face value that’s frightening. It promises to drive our cars and make our roads safer even as it threatens to displace the entire professional workforce that supports the trucking and taxi industries. It powers intelligent search algorithms in thousands of apps, but it is also changing the professional landscape for the millions who work in IT.

Automation — the modern, scary, brilliant AI-driven kind of automation — has made its way into the world of claims estimating.

Photogrammetry algorithms can now determine precise property measurements from the aerial photos captured by satellites, airplanes and drones. Policyholders can use their phones to share pictures of simple property damage with automated chatbots capable of navigating their questions — in plain English — and issuing payouts.

Changing the world of claims

Automation is changing more than the tools adjusters use to do their job. It’s changing the job itself. Policyholders now expect faster resolutions and more contact with their adjusters. Innovations like video collaboration and the incredibly high fidelity of phone cameras have made them more interested in working alongside adjusters to complete their claim. They’re a new breed of policyholder, and they’re here to stay.

The good news? The InsurTech innovations sweeping our industry will significantly affect the claims adjusting profession. Revolutionary? Yes. Apocalyptic? Not by a long shot. Yes, a much larger percentage of claims will be automated by tools and data sets. However, those same tools and data sets will continue to serve as companions to the adjusters who — in the midst of a naturally shrinking workforce — will be more important than ever. Innovations have created new expectations, automated repetitive, simple processes and eliminated the need for self-endangerment, but they haven’t replaced human expertise, empathy or effort.

Right-touch claims handling

Right-touch claims, as a concept, marries the potential of automation with the evolving expectations of policyholders and carriers. In a nutshell, it’s a model for claims handling that ensures adjusters have the tools they need to spend the right amount of time, handling costs and energy on the claims they face, regardless of how sophisticated those claims are. Right-touch means very simple claims can be remotely resolved from the desk (more on that later), while more complicated cases can be handled with a suite of tools that does much of the work and keeps the claims process organized and the claims team connected.

Consider drones (or, more formally, UAVs). A few years ago, they were a gimmick for hardcore aerial enthusiasts and mad-scientist hobby engineers. However, with the advent of photogrammetry algorithms, they can reliably capture high-resolution roof images, help identify damage and intelligently recommend line items.

Combined with the widespread adoption of UAV licensing and the development of commercial fleets and drone pilot networks across the United States and Canada, scheduling a drone assist or integrating your estimating software with your own drone is accessible and affordable. Drones won’t eliminate the need for human-supported roof estimating, but they will continue to make doing those jobs safer, faster and easier. The trick will be to adopt the new technology into your current workflow or expand your offering to encompass what UAVs allow you to do.

Virtual claims (or desk adjusting) is another avenue where innovation has changed the way adjusters work — for the better. Until the last few years, adjusters sometimes tried to settle small claims by phone, but often had to visit the site whether it was as complicated as a collapsed roof or as simple as a broken fence. With the arrival of virtual claims-handling tools, policyholders can now video-share damage from their cellphones. This means adjusters can begin their claim before they have even left the office or even outright settle claims without ever visiting the loss site.

Technologies like drones and virtual claims have not replaced or displaced adjusters. They’ve made settling simple claims easier, handling dangerous claims safer, and created bandwidth for experienced adjusters to handle the more complicated claims that still require a human’s touch.

Even the Internet of Things has a part to play in the evolution of claims handling. The growing trend of automated leak-detection devices built directly into new homes (or added to old construction) is set to save carriers and policyholders $10 billion a year in water damage costs. However, these early detection systems, while facilitating a more proactive approach to handling property damage, do not eliminate adjusters. On the contrary, carriers will need to deploy human adjusters to review properties when these sensor systems detect damage. Rather than showing up after the basement is flooded, adjusters may be called upon to estimate the damage of smaller instances of water leakage.

More robots and less competition

Yes, the emergence of automated InsurTech is going to reduce the amount of work available. Nevertheless, there are two incredibly important things to remember: 1) most of the jobs being automated away are simple, repetitive and unpleasant, and 2) there is a massive encroaching talent drain that has already begun to affect the industry. There are far fewer new adjusters entering the field than there are adjusters retiring out of it.

In a twist of irony, the age of automation has ushered in widespread concern over job loss even as carriers are struggling to find enough professionals to do those same jobs.

Carriers are turning to automation in part because they can’t find enough qualified people to cover new claims and while smaller, high-frequency, low-severity claims can, in fact, be handled by AI, automation won’t easily replace the need for humans to handle more complicated claims. With catastrophes on the rise and aging property infrastructure across the United States, that need will remain present and real for many, many years to come.

A world full of opportunity

The claims adjusting profession has a healthy future. New technology will mean new demands, but it will also mean new and creative ways of tackling everyday problems. Claims handling will undergo the same changes that all professions undergo when innovated by automation: simple, repetitive jobs will go away, and humans will focus on the tasks more worthy of their attention and expertise.

Jason Love (jlove@verisk.com) is vice president of training and professional services at Xactware.

Related: Claims in 2030: How digital can help insurers rethink their role