Is insurance claims handling fit for the digital consumer?

This content was written by BLM prior to its merger with Clyde & Co.

New Evolution of Claims report, sponsored by BLM, uncovers claims professionals’ views on technology capabilities, the claims handler of the future, vulnerable customers, regulation and the impact of COVID.

The pandemic has accelerated the pace of digital transformation in every walk of life. The digital consumer that was just a theoretical abstract a few years ago is now a reality. That poses a profound challenge to the insurance industry, nowhere more so than in claims.

A new Evolution of Claims report, produced by Research in Insurance, is now available to download. The results of the mixture of qualitative and quantitative research among claims professionals from carriers, MGAs and brokers, perhaps unsurprisingly, reveals the urgency of claims transformation.

The report, which is available to download here, uncovered a range of achievements and wins for the sector, but also a number of concerns and doubts among frontline claims professionals, notably whether they have the right technology in place to match and support the quality claims service they are providing.

Claims and technology

Over half of surveyed professionals in claims, or working closely with claims, think their firm is ahead of their peers in terms of the quality of claims servicing. This goes up to 64% of those surveyed among carriers. But 53% of carriers believe their firm’s claims technology is behind the times, while just 13% believe their firm’s claims technology is cutting edge.

Many who took part in the research acknowledge that meeting rapidly changing customer expectations means stepping back and looking at processes from customer perspectives: from that of the digital-first users to the digitally-disadvantaged.

The list of potential applications of technology in the claims process, highlighted by research participants, is varied:

• Claims portals, via apps and mobile tech, will tell customers how a claim is progressing.
• Greater use of chatbots, although many respondents see them as having limitations.
• Accelerated payment processes.
• Guarantees of payment for certain types of loss. For example, one insurer is guaranteeing payout on business insurance within three hours if tools are stolen. This could point the way to more forms of parametric insurance becoming commonplace.
• In motor, driver first notification of loss (FNOL) using apps, telematics and automatic incident reporting.
• In home, video FNOL and use of drones to survey property damage.

The claims handler of the future

As automation inevitability strips out many routine claims, and also the routine tasks within claims management, it will free up claims handlers to give customers the human attention and judgement where it is needed most.

This will give the claims handler of the future:

• An enhanced ability to put the customer at the heart of the claims process.
• More information at fingertips to make decisions.
• More empowered, easier decision-making.

“Automation will underpin transparency. The skillsets in customer service will evolve. Insurers are investing in data and analytical skills and are partnering with tech companies that will bring these skillset.”
David Caswell, Head of Claims Solutions Business Stream at BLM

Vulnerable customers

Attention has been focussed on how well companies are adhering to the Treating Customers Fairly objectives with the Financial Conduct Authority set to extend this further into the claims area. Some insurers believe this creates pressure to keep claims handling in-house, while others say it reinforces the need for a very close working relationship with all outsourced providers. 

The results of the survey show that most of the industry is trying to respond positively to the need to identify and respond to customer vulnerability. In many instances, it is very much part of the customer conversation at point of sale and when a claim is made. Nevertheless, parts of the sector are finding it a challenging topic. 

“In addition to screening customers for vulnerability during the sales process, it is critically important to do that again at the point of claim. The pandemic has shown how quickly customer vulnerability can change.”
Alistair Kinley, Director of Policy & Government Affairs at BLM

Impact of Covid

Some of the biggest impacts were on claims volumes with significant declines in motor claims and travel after the initial wave of cancellation claims. These were offset by rises elsewhere with cyber topping the list. 72% noticed an increase in cyber and business interruption claims since the start of the pandemic. Carriers have noted seeing an increase in property damage, data breach and mental health claims.

“Cyber issues and the risks arising are subjects constantly mentioned. Recent infrastructure targets, the vulnerability of global, medium and small businesses and that of the claims supply chain and the attacks we each experience on an almost daily basis seem very likely to present challenges to the defendant claims community as ‘opportunity’ is seen by others.”
Jonathan Clay, Head of General Insurance at BLM 

Survey sample

32 in depth telephone interviews were conducted with senior claims professionals or senior professionals who work closely with claims in the insurance industry from the UK and Asia. The interviews took place between 29 September to 30 October 2020. 

The interviews were followed up with an online quantitative survey among 149 individuals based in the UK who are either claims professionals or those who work closely with claims teams. The fieldwork for the survey ran from 3 February to 12 April 2021.