Balancing insurance technology & personal service
As carriers look to reduce overhead, the use of InsurTech and other cost-effective measures may increase.
In just a few months, COVID-19 has already had a major impact on how the insurance industry operates. The future is unknown, but the one known is that COVID-19 will continue to affect the industry over the coming weeks and months in myriad ways. As carriers look to move forward with leaner staff, lower operating expenses, and fewer brick and mortar locations, they will need to downsize salaried staff and rely more on technology to reduce financial risk and increase efficiencies.
Stay-at-home orders were issued in most major markets across the country; people were forced to stay at home or limit their time spent outside. With fewer miles driven and a lower frequency of insurance claims filed, insurance carriers are shifting their strategies in terms of their staff and the way they process claims. Many changes have already been put in place, and many more are still to come.
The initial impact
When COVID-19 hit, many companies across the country began furloughing or laying off staff, resulting in the highest unemployment rate the country has seen since the Great Depression. To help offset this, insurance carriers began offering discounts to their policyholders for using their vehicles less frequently.
With fewer miles driven and fewer claims filed, insurance carriers were forced to assess their claims department staff, as well. As the number of claims dropped, carriers were still incurring fixed costs like salaries for their teams. To reduce those expenses, many carriers furloughed or laid off staff, which sets the table for a “new normal” as states reopen and people start driving more.
How technology will shift the industry
Pre-COVID-19, many insurance carriers were exploring how to utilize technology to resolve claims more efficiently, but it came with some reservations because the insurance industry is built on the relationship between the carrier and the policyholder, and those interactions are mostly limited to the claims process. The policyholder is trying to resolve an incident, and the carrier provides support through that process. If the carrier doesn’t provide empathy or meet a policyholder’s expectations, it affects overall satisfaction and retention.
Social distancing requirements forced insurers to quickly move to virtual claims processing such as using drones, and photo and video submissions from policyholders. Given the circumstances, policyholders are more willing to accept an automated claims process to facilitate closing a claim without physical interaction. However, in a post-COVID future, it will be imperative to strike a balance between using technology while providing the same claims experience policyholders expected pre-COVID-19.
As the claims landscape changes, carriers will need to have resources that allow them to efficiently handle all types of claims, including automobile, property, specialty and heavy equipment. This may include utilizing technology solutions to assess damage, outsourcing claims to an independent adjusting firm, and finding other ways to communicate with policyholders such as text messages, chatbots and mobile apps.
In this uncertain world, the insurance industry, like all others, will continue to shift how they do business. Carriers must strike the right balance between using technology and providing excellent customer service and find alternative solutions to process claims quickly without carrying unnecessary fixed costs.
Tom Slimak is the executive vice president of Property Damage Appraisers, a nationwide damage appraisal firm. PDA completes over 420,000 estimates a year for auto, property, and specialty and heavy equipment damage. He can be contacted through julia.bolt@pdaorg.net.
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