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.
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.
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.
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.
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:
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.
