I was recently asked to consider where the claims industry is heading…..and what we might expect to see in the year 2025. So looking at the crystal ball, which is a little foggy at the best of times in insurance, I think we can decipher some possible trends and changes – although given some claims processes haven’t changed for 50 years or more, maybe we should extend our time horizon!
1. People and skills
I see a divergence in the market – those who see people driving technology, who are customer focussed and obsessed with the customer experience. I expect them to win over the alternative model of high tech solutions driving process and a less skilled workforce.
There will be some automation attrition but I see that more at the less skilled administration and process level where we will eventually all do things smarter. The high value processes need people and their skills; analytics and smart systems can help productivity and decision making but they won’t, by 2025, be able to replace those people skills.
To compete in future the insurance industry will need to provide a great customer experience. That has to be driven by people and companies completely focused on the customer. A lot of what your Mum and Dad thought insurance was is going out the window but we can learn a lot from their generation about true customer engagement – we have the tools now to make it really special.
I have never been more convinced that the secret to a great customer experience is in the people you employ. To get the best from them they need meaning in their roles, autonomy in their day to day and growth in mastering skills. They really need to feel like they are being their best. So expect those companies with smart, engaged people to win out.
More and more the creation of meaning around people’s roles will be critical to success. Which will enable winners to create ‘a movement’ pushing to provide great customer experiences
2. Customer/Insured preferences and expectations
I see less of the broker at the transactional level. Most of that commercial insurance (a lot of which currently goes into a bucket in any event) will be transacted on-line with claims handled by a shared services model which will increase speed and reduce cost. Speed and service will be key.
At the higher end brokers will reinvent themselves as consultants and placement experts. They will be claims advocates but the claims experience will be driven more by the client than the broker. Brokers will compete with consultants and lawyers in that space.
Claims people will more and more engage direct with policyholders and aim to develop meaningful and lasting relationships. Brands like Chubb will revert to powerful branding around the quality of the claim experience.
3. Technology and automation
There will be greater customer interaction. Claims decisions will be made faster with portal style engagement (tasks awaiting action, etc.) at different levels of authority. More authority will devolve to the field so higher expertise and engagement will be required at the front line. Systems will enhance engagement and track progress of life of claim. Policyholders will see their claims progress through a pipeline to payment. Data analysis will be a key function of claims teams.
To illustrate where this is going, here is an extract from a recent McKinsey publication on Customer Journeys versus touchpoints.
Consider the case of the local operating entity of a global insurance player. Market leadership in one of its largest lines of business, car insurance, was under siege by both established players and new entrants. Executives knew that they would have to innovate in order to differentiate their offering. They also knew that for a long time the fragmented nature of their customer experience had been a problem: many of their customers bought their product and managed their claims via a broker. When a car needed repair after an incident, a local mechanic typically managed the process, with little involvement from the car insurer. With so many individual touchpoints outside the company’s control, the insurer struggled to provide a consistently high-quality and repeatable experience.
Research identified consistent and clear communications as one of the most important elements of customer experience. Improving the experience started with offering insurance policies that were easy to read, understand, and compare with those of competitors. But even more important to customers was securing answers to questions regarding the status of their car while under repair. What was being replaced or repaired? When would they get the car back?
The effort made it apparent that there was potential to resolve a critical frustration for customers during a very important part of their overall customer journey with the insurer. It also revealed the opportunity to build a deeper engagement and relationship. So the company set out to provide an end-to-end communications “glue” to what had been a multitouchpoint, multiparty customer journey.
Executives rapidly created a prototype using a sample of 20 current customer cases. Each day, the company would track where the case was and provide a simple update to the customer via email or text. The company set up “personal contacts” for each customer who would send the emails, serve as a single source of contact, and phone the customer directly if there was a material update to be announced, such as a delay in finishing the work. Overall, every effort was made to personalize communication during an important phase in the customer’s journey. By the end of the pilot, the company had learned a number of lessons related to the appropriate frequency of contact, the importance of using the customer’s preferred channels, and timing communications. The company also learned how to scale the service without adding substantial costs, largely by using underutilized call-center resources at off-peak hours.
4. Data Analytics and connectivity
Data will be big business and used in 2 main ways. First, there will be extensive analysis of metrics and trends via dashboards. As we have seen from the current demands of Lloyd’s, there is a trend towards a more standardised set of performance indicators for claims. Expect this to evolve and grow to a point that there truly can be benchmarking of performance
Second, data will be mined to give predictive modelling for each and every claim that comes in. When Joe from Bankstown falls over and breaks his leg, the Account Manager will be shot an email around the potential of the claim and know how to kick off the management of the claim.
Some Insurers will make the error of thinking you can rely more on Data Analytics and less on human intervention. They will be the losers, as in 2025 the quality of the people working with the data will remain key to success.
5. Claims adjusting and severity management
Loss adjusting companies are diverging between boutique, focused loss adjusters with high technical skills and those large adjusting companies aiming to provide adjusting, claims management and affiliated risk services. As metrics more and more focus on key performance indicators like spend on loss adjusting, the larger adjusting companies will find their services under increased pressure. There will be a flight of quality talent to the boutique firms.
As MI flow increases with greater standardisation of KPIs some of the current services that have conflicts of interest – which often support unproductive and unfocused services – will lose out to specialists.
When catastrophes occur there will be more reliance on external networks of people – from retirees to overseas adjusters, to fill a temporary need that can’t be justified in the general day to day, as most companies will be operating lean claims teams.
6. Specific issues surrounding life, general, government and health insurance
The major changes will be in the life Industry, which will have an awakening. Claims will be a key focus and everything from process to people will be reviewed and revised. Claims people will be more highly qualified and they will be expected to manage a larger number of claims more productively, using system tools that enhance their ability to manage the claims.
A sense of urgency will be injected in to the system to reflect the critical responsibility attached to the effective handling of these claims. As commission structures of agents unravel we will see more consumer loyalty and less shopping of policies and as such a greater opportunity for product and claims differentiation, and loyalty. Which in turn creates a great opportunity for organisations to instil skilled people with meaning and their values as the life companies revise their market