How data and technology can be used to restructure costs in insurance claims
16 February 2017
In 2015, £37.4bn was paid out in insurance claims in the UK. This is the largest area of expense for insurers and it is therefore not surprising that claims is a key area of focus for delivering savings. 60% of Insurance CEO's confirmed that they plan to restructure costs in the next 12 months.
Traditional cost restructuring
Within claims handling, the insurance industry has traditionally focused on reducing indemnity expense costs and fine tuning processes, but the way a claim is handled today is no different to the way it was handled 20 years ago. Customer service and claims management within insurance remains behind the times.
Many insurers have reduced labour costs through automation or relocating their claims business to cheaper locations but this has made very little difference to the overall claims bill.
Cutting costs and delighting the customer with data
Some insurers have begun to use data in claims but are using it simplistically or to tackle large scale problems such as fraud. This is barely scratching the surface of what data can do. Data is being used defensively, not as a business enabler, and is not currently benefitting the customer or adding real value to the business. In our survey, 75% of Financial Services executives believe the most important change brought about through FinTech’s will be meeting changing customer needs with new offerings.
So how can technology and data reinvent the claims process? Here are four examples:
- Resolving claims at first notification of loss. It takes 18 months to resolve the average motor insurance claim. If you take a claim involving two cars and no injuries, data exists for millions of similar claims that have been settled, and from this we can calculate the average pay-out for this type of accident.
Rather than treating every claim as a new one, what if, when a customer first makes a claim, you can resolve it there and then, by arranging the recovery and/or repair of the vehicle, providing a replacement vehicle (as needed) and cutting out the rest of the claims process, saving time and money, and resulting in a very happy customer.
- More online interaction with customers. Apps and online tools are the future for UK Insurance. In the US market apps already exist where customers can download photos and details of their claim, speeding up the claims process. Although, there is limited incentive for customers to download an insurer’s app unless it is linked to added value such as telematics. General insurers could take an omni channel approach, when a claim is initiated on the phone a text message is created, which directs the customer to an online interaction.
- Accident prevention. From their data, insurers can pinpoint road accident hotspots and this information could be shared with local customers. In a similar way, Insurers have the data enabling them to inform their customers when there has been a spate of burglaries in the neighbourhood and encourage them to take extra security precautions. You could also use weather forecasting to help customers avoid flooding when it is very cold, with a reminder to protect their pipes.
- Contents insurance and retailer data. By tapping into digital receipt data from retailers, the process of contents insurance claims could be made seamless. Customers wouldn’t have to send photographs and receipts of their possessions, removing another lengthy stage of the claims process.
If you don’t feel you have the right talent within your organisation to make the most of this technology, many insurers are choosing to partner with an insurtech start-up in order to gain access to new skillsets. With a focus on disruptive insurance innovation, the startupbootcamp initiative can put you in touch with the most promising start-ups in the world.
So are you using data to potentially prevent claims, engage with your customers and re-invent your claims business? To make the most of these opportunities, it’s important to look beyond traditional boundaries to embrace new ways of interacting with customers, new ways of working, and new possibilities in what your claims business can deliver.