Tools & talent: Insurers need both in claims

When property & casualty insurers peer into the future of claims operations, most envision digital technologies playing a dominant role. Although digital transformation is occurring and necessary in claims departments, there will always be a need for the human touch, especially on more complex losses. Indeed, to be successful in managing claims and enhancing the customer experience, insurers will need to balance both technology and talent.

Finding the balance between tech tools such as artificial intelligence and human skills will require insurers to think more strategically about their claims operations and how they deploy resources. Terms such as “claims automation” and “no-touch claims” tend to scare claims teams and trigger fears their jobs will be eliminated. Insurers should not let their staffs’ imaginations run wild during digital transformation projects. Digital technology, artificial intelligence (AI), machine learning and advanced analytics are useful ways to increase efficiency and augment — not replace — human involvement in the claims process.

Mixing traditional and digital in claims

Currently, there are four typical modes of claims handling. P&C insurers may use some or even all of these, depending on the type of claim.

• Automated: An automated claims model works in conjunction with parametric or episodic insurance policies, which are triggered by a defined set of conditions and may not even require claim reporting.
• Pass-through: A pass-through model is a low-touch method of claims handling that generally uses a digital-first notice of loss (FNOL) for simple property damage and applies AI to screen claims for fraud.
• Self-service: A self-service claims model uses a digital ecosystem for FNOL and connects claimants with adjusters.
• Traditional: A traditional claims model uses a call center for claim intake and refers claims within the carrier organization, which assigns a claims adjuster.

 In general, the simpler and more straightforward a claim, the better suited it is for digital models. There is no way to remove human involvement from complex claims. Technology can help in capturing data and assessing complex claims, but ultimately experienced claims professionals are needed to achieve the best outcomes.

Impact of AI

So where can technology make a difference in claims? Artificial intelligence can play a valuable role in critical claims functions. Two of these functions are first notice of loss and straight-through processing. For example, carriers can use AI in FNOL operations, including claim setup and automating the adjuster assignment process. Similarly, in automobile claims, AI can integrate FNOL analytics with vehicle event recorder data and evaluate claims for fraud prevention, litigation potential and screen for bodily injuries, which add complexity to property damage claims.

Another way AI can have an impact on claims is straight-through processing (STP) on low-complexity property damage claims. For example, AI can integrate STP photo estimating with claims estimating software. In addition, carriers can use AI to automate document indexing and attribution, to reduce manual costs — especially for low-severity, high-frequency auto and property claims. 

A paradigm shift

In claims, a paradigm shift is occurring that requires the integration of technology and teams of people. These components work together to reduce costs, allowing for more focus on the customer’s claim experience. Elements of this new paradigm in claims are:

• Eliminating waste or unnecessary tasks. Cost and time are expended, often unnecessarily, on desk versus field adjusting and unneeded auto or property inspections. STP can make a difference in eliminating unnecessary steps.
• More focus on the customer claim experience. Using technology to free claims teams to enhance the experience for each customer is a critical step in attracting and retaining customers. Useful tools include customer experience training for adjusters and claims surveys.
• Multi-channel loss reporting. P&C carriers can improve their customer communications by offering multiple ways to interact with the claims team. These can include a call center, text, email and online chat.
• Better management oversight. Claims oversight designed to manage all claims inevitably leads to wasted resources. A better oversight strategy that can scale to meet higher claim volume is to use technology and exception reviews. Instead of manually overseeing each and every claim, technology can scan and flag claims that require a closer look, enabling carriers to train and coach their leaders to be even more effective claims managers.

While technology and people will clearly play vital roles in claims in the future, it’s less clear how the insurance industry will recruit more talent to claims jobs. A significant number of baby boomers will retire in the coming years. The industry has an opportunity to make careers in claims more attractive for talent that is already comfortable with digital technologies while they continue to think strategically about how they deploy their resources and seek partners to maximize their teams’ ability to improve customers’ experience.

Richard Vonesh is a senior management consultant in the carrier practice of The Nolan Company, a ReSource Pro company that specializes in strategy, operations and technology for insurance companies.

Opinions expressed here are the author’s own.

Related:

• Hyper-personalization is key to building claimant trust
• P&C industry’s future hinges on people & technology
• 4 pandemic employment, tech trends challenging insurers