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Insights from EY teams' Nordic insurance clients on considerations that are pivotal on the path toward a highly automated claims experience.
In brief:
- The claims experience has a strong influence on customer relationships —insurers who do not automate the claims process risk losing market share.
- Claims automation can help employees move away from redundant tasks and spend more time on prioritized claims and personalized customer services.
- Based on the experience working closely with Nordic insurers, EY teams have identified five leading questions that can support the claims automation journey.
The insurance industry has long been plagued by inefficient and complex claims processes. The traditional claims process typically involves multiple steps that can be time-consuming and prone to errors, leading to frustration for both customers and insurance companies. Manual intervention is often required, leading to errors and a lengthy claims process, which can negatively impact the customer experience.
The increasing demand for more efficient claims processing, combined with advances in technology, has made claims automation an attractive solution for many insurance companies. By automating repetitive tasks and reducing manual intervention, insurance companies can address these challenges and improve the efficiency, accuracy and speed of the claims process.
In this article, we explore five leading questions which can guide insurers and lay the groundwork for a successful claims automation process.
What are the main drivers behind automation?
The more often cited drivers for automation are customer satisfaction and cost efficiency. Technology companies around the world are setting new standards for smooth and hassle-free digital customer interactions. Many insurers still rely heavily on manual processes in their claims customer journeys, making it difficult to meet expectations, as well as costing the organization more resources. On top of this, there have been increasing Property and Casualty (P&C) claims costs in the Nordics over the past years, which the current surge of inflation is likely to fuel. Apart from industry-wide trends, drivers for automation may vary among insurers, especially when it comes to operational efficiency.
To address the first key question, the insurer needs to understand the drivers of cost and customer satisfaction. This can be done by analyzing current customer journeys in detail and performing a robust and data-driven segmentation analysis of the insurer’s claims data. This will help identify the steps that can be automated and the claims that are suitable for such automation. The output from the analysis can serve as a foundation to create buy-in for automation initiatives in the organization.
What prerequisites need to be in place to gain the full benefits of automation?
Automation alone cannot guarantee improvement in overall process efficiency and customer experience. Many insurers automate process steps but fail to see the results they expect at the end. One common pitfall is that the prerequisites that must be in place to unleash the expected effects are often overlooked. Automation can be associated with increased risk-taking, as process steps and decisions that were previously entrusted to human judgment will be shifted to machine logic. It is important to understand the implications that may arise and the prerequisites that the organization must have in place to mitigate them.
Sufficient fraud detection capabilities and well-adjusted thresholds for automated claims are vital to prevent unforeseen increases in claim costs. Another prerequisite to enable end-to-end automation is a high degree of digital claims reporting and ensuring that the claims data is collected from the customer in a format that is optimal for automation. The insurance company must also verify if there is adequate data from business intelligence (BI) systems to track results (such as claims costs) once automation initiatives are implemented.
Ensuring that the right prerequisites are in place can decrease risk and enable the full benefits of automation to be realized.
What should the ecosystem view of an automated customer journey look like?
EY teams predict that ecosystems will play an increasingly important role in the insurance market going forward. We already see the boundaries of insurance companies becoming blurred — it is no longer about compensation but about providing a one-stop marketplace where customers can interact with several external partners throughout the process.
For example, the claims process may include obtaining the valuation of a damaged item from an external company, visiting an external portal to shop replacements for damaged items, and receiving repair services and health advice, to name a few. It is important that automation initiatives are aligned with long-term business strategy — in terms of the level to which an insurer is willing to partner with external actors and how that will impact the customer journey.
What are the technology investments needed to enable automation?
There are several options to consider when investigating technology solutions to support the claims automation journey. Typically, it all starts with understanding long-term goals while being aware of the opportunities and limitations of existing tools and legacy systems. The integration strategy is also vital, especially when considering external partnerships. Many Nordic insurers are in the process of modernizing their core insurance platforms. Doing so can be an important step in laying the groundwork to facilitate automation.
A trend that we see — not limited to the insurance sector — is that companies are investing in low-code case management solutions on top of legacy systems, which can allow for easier and user-friendly automation. However, there is no one-size-fits-all approach. Some insurers have instead invested in Robotic Process Automation (RPA) where one big advantage is the speed of implementation. It’s recommended that insurers review different options using objective criteria in line with their goals and evaluate the potential of both external and existing internal solutions.
What factors determine the successful implementation of an automated claims journey?
Creating a detailed segmentation model to understand the current state is an important first step in exploring the automation potential for different claim types. Such a model will help visualize and plan a roadmap and identify low-hanging fruits.
The key to success is to follow a data-driven approach where effects are measured, and changes are based on facts.
An agile implementation approach is another key success factor, as automation initiatives are very well suited for continuous improvements that can be measured and fine-tuned along the way. Furthermore, encouraging an innovation mindset in the organization can be a game changer — allowing teams to be fearless in trying new things at a small scale for the sake of learning (e.g., adjusting automation thresholds for a small number of claims to learn about the effects on claim costs).
It is better to fail fast and learn rather than spend a lot of time writing requirements that may still not achieve the desired results. Finally, it is vital not to underestimate the impact of having the business onboard and understand that increasing the levels of automation is a continuous learning journey.
Summary
Insurers today face increasing pressure to achieve a seamless customer experience and stay cost-efficient amid rising claims costs. While claims automation is a great way to address these challenges, insurers must be aware of the most important questions they must explore before embarking on their automation journey.