ClaimsTech can exceed today's insurance customer expectations

Claims present a timely and important opportunity for insurance carriers to improve customer satisfaction and profitability.

Customer satisfaction remains a challenge for so many in the insurance industry, and often, it’s all about claims. (Pixel-Shot/Adobe Stock)

The onset of the COVID-19 pandemic sent shock waves through organizations charged with the processing and payment of insurance claims.

The traditional way of paying claims manually through paper checks instantly became more of a burden than ever and, in some cases, treasury personnel were taking checks home and printing them on their own printers. Even the rebate of premiums asked by many DOI’s created huge logistical problems.

The check has long needed a replacement. COVID-19 sped up its demise.

Carriers are now eyeing lessons from the pandemic as the economic recovery continues, and re-examining their digital strategies. The focus is now on the idea of fewer touchpoints and increased speed, especially with complex issues like multiparty claim payments.

The profitability inherent in an improved claims process is easy to grasp. Lowering the claims expense and underwriting costs can directly lead to a lower loss ratio and lower allocated loss adjustment expenses. Further, better managing these activities effectively and paying them out without fuss or delay will be crucial as insurance choices become more elastic, InsurTech-fueled competition rises, and customers measure their overall satisfaction more than ever against this classic pain point.

Carriers have a long way to go in the claims payments process. While the pandemic has increased the adoption of digital payment methods among all generations, some in the industry estimate that three out of four P&C carrier claim payments are still mailed by check.

Failure to act can increase cycle times, severity

There are several reasons why digitization can be a big ask. Multiparty claims provide a good illustration, as they’ll usually exhibit the following issues:

In aggregate, this friction adds up to lots of time wasted, impatience and a hassle-ridden customer experience. This greatly increases cycle times and ultimately increases severity for carriers. And, importantly, customers find it simply inexcusable in a post-COVID environment when we have all grown accustomed to completing most financial tasks digitally with transparency at every step.

Customers who already viewed the legacy insurance industry as slow to adapt and lacking innovation will only further sour on claims processes that seem slow and creaky by comparison.

Start with ClaimsTech

The recovery offers a tremendous opportunity for carriers to originate new business on the back of more than a year of pent-up demand — for new purchases and new activities. But first, they must learn to adapt.  ClaimsTech is a good place to start.

Investments in ClaimsTech today should reflect insurance consumers’ changing mindset. Solving this much bigger and more complicated issue begins with building a strong foundation of emerging technologies. For carriers, this largely lies in payment workflow and automation. Certainly, companies will try to make these efforts visible, for instance by building more intuitive front-ends and user experience around claims that bring a bit of accessibility and elegance to something customers can see and feel.

Carriers that invest in automating their ClaimsTech and payments processes will find that the benefits extend from customer satisfaction to profitability. Not only are the two directly linked, but the ability to improve cycle times will also lead directly to lower processing expenses.

The pandemic has no doubt raised the need to improve digitization and both the back-end technology infrastructure and the front-end experience. And as carriers look to exercise greater control over their balance sheets and ability to drive a high-quality customer experience, ClaimsTech is a natural place to kickoff.

Chris Ewing (cewing@oneinc.com) is CEO & Founder of One Inc, a digital insurance payments platform that helps more than 170 insurance companies process over $15 billion in payments annually. These opinions are his own.

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