Challenges and solutions in streamlining the P&C claims experience
To compete with customer-oriented disruptors, insurers need to step up their game and provide intuitive, user-friendly, and fully digital claims processes.
P&C insurers face a myriad of challenges: dwindling pricing power, erratic investment yields, recent heightened catastrophe activity, and the still ongoing COVID-19 pandemic. Growing competition in the traditional products and services, coupled with weak demand, are expected to continue to push down rates.
COVID-19 is impacting property and casualty (P&C) insurance companies across multiple lines of business. The lines that are particularly affected include workers’ compensation, medical malpractice, business interruption, general liability, and travel insurance. And the pandemic is expected to continue to affect claims and premium trends over the next several months — and potentially for years to come.
As the world continues to combat COVID-19, the impacts on P&C insurance policies will continue to evolve. We have only begun to identify “lessons learned” from the early phases of the pandemic. But the experience of recent months has better prepared them to some extent for what is to come.
Claims experience in 2020 must be digital
One thing is clear: Digital transformation across the industry picks up pace as a direct result of the COVID-19 pandemic. As lockdowns affect employees, brokers and agents, and customers, remote servicing for claims handling is no longer optional.
P&C insurers often spend up to 80% of total premiums on claims handling and indemnity. It stands to reason that optimizing claims processes should be one of the top priorities in an increasingly difficult environment.
Why does it cost so much? Inefficiency is the culprit.
To a large extent, claims process expenses are caused by inefficiencies in the data collection processes that often rely on manual processes and paper forms. Non-digital solutions for data collection inevitably result in incomplete or missing data, slow speed of claim handling, and lack of transparency.
Another consequence of outdated data and signature collection methods is bad customer experience, which results in loss of competitiveness in an increasingly consumer-driven market.
Among other issues, paperwork-based claims processing results in inefficiencies due to several factors:
- Manual data-entry: Manual data entry results in high error-rates and high labor costs.
- High error-rate and unreadable forms: On average, over 60% of manually filled forms have mistakes, unreadable handwriting, or unreadable scans. Lost documents is another issue. When receiving incomplete or mistaken data, adjusters must communicate with the claims intake department to clarify inbound data and gather additional information. Then, customer representatives must contact the insured, creating friction and causing delays.
- Incomplete data submitted by customers: Errors can also be introduced to both the data-entry team and the customers themselves. Such errors require back-and-forth communication with the customer to correct the mistakes, resulting in friction and delays.
- Multiple data formats: Customer inputs end up in multiple media formats: paper, PDFs, electronic documents, scanned images, emails, or apps. All those disparate formats must be reconciled to streamline processing.
- Lack of integration requires expensive automation solutions: The lack of integration capability between legacy apps that drive core processes and newer technologies require insurers to invest in automation solutions such as RPA technology to streamline processes. However, those projects are often lengthy and expensive.
- Changing compliance requirements: Significant changes in regulations and compliance are a commonplace occurrence, greatly complicating the claims processing. In fact, following certain regulatory changes, the whole process might have to be completely overhauled. This can become a major drawback as far as claims experience is concerned, especially for insurers who operate across state lines and countries, each with their own set of laws and regulations.
- Supporting technologies are expensive: RPA and OCR technologies significantly reduce the manual labor overhead, speed up claims, and streamline the back-end processing. But these technologies are not cheap, especially at scale. ZDNet estimates that the largest organizations are planning to invest $10 million to $20 million annually in RPA systems alone.
- Bad customer experience: Manual claim processes cost insurers millions in direct costs. But the subpar experience during a sensitive claim process also costs them their customers and results in skyrocketing churn rates.
The paperwork crisis in insurance
To stay competitive, insurers must deliver outstanding experiences at every touchpoint. But claims experience is especially crucial: in the eyes of the customer, claims experience is probably the most significant interaction with their insurer.
Despite the importance of claims experience, more often than not, insurers fail to deliver. It is clear that to compete with customer-oriented disruptors, insurers need to step up their game and provide intuitive, user-friendly, and fully digital claims processes.
Why no-code platforms are essential for better claims experience
When it comes down to claims experience, a fully digital process boosts the speed of settlement and improves transparency — the two key contributors to improved customer experiences and reduced customer churn.
At the same time, a fully integrated digital front-end ensures that the data is directly integrated into internal systems, ensuring data integrity and error-free processes.
The question is: how do we get there?
No-code development is one technology that can bring the insurers into the digital age quickly, efficiently, and at a fraction of the cost.
A no-code development platform is a tool that makes it possible for business users without a technical background or coding skills to create digital processes through a visual, drag-and-drop environment.
No-code platforms reduce over-reliance on internal and outsourced IT teams, speed up development cycles, and reduce development and maintenance costs associated with digital technology. With no-code tools, traditionally slow-moving insurance carriers can quickly bring their claims experience into the digital age in order to compete with the digital-first newcomers to their previously sheltered markets.
Tal Daskal (t.daskal@easysend.io) is the CEO and co-founder at EasySend, a SaaS company with a no-code platform for building and optimizing enterprise-grade digital customer journeys. Daskal is an expert on all things digital transformation in banking and insurance and is a passionate advocate for the paradigm shift towards no-code application development in the financial sector. The opinions expressed here are the author’s own.
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