Digitising the claims journey for customers is just ’one piece of the jigsaw’ that insurance firms should consider when plotting business goals and ambitions
An oft repeated maxim in the insurance sector emphasises that the claims experience is what policyholders are really paying for when they purchase an insurance policy.
While this is not strictly true, the claims process is the primary time that a customer will really interact with their insurer and their experience can make or break their opinion of their policy provider.
One factor that is increasingly influencing the relationship between insurers and customers at point of claim is digital transformation. Firms implementing this aim to improve the claims experience for policyholders by creating a claims process that is as frictionless as possible, while also providing back office advantages.
While claims processes can be digitalised to varying degrees, they generally allow for customers to make claims entirely online, with differing degrees of human involvement.
Research published by McKinsey and Company in May 2021, which polled 1,140 senior leaders, emphasised this market-wide development - it found that 51% of respondents wanted to invest in digital and technology to differentiate themselves from market competitors.
An additional 21% believed that digital technology needed to be embedded into their companies’ business models in order to stay economically viable by 2023 - this is underlined by the fact that the consultancy found that organisations’ overall adoption of digital technologies had sped up by three to seven years as a result of the Covid-19 pandemic.
Online services during the pandemic also pushed consumers towards an expectation that they are able to access a whole ream of services digitally.
This digital transformation trend is “only going in one direction”, according to Gary O’Brien, chief marketing officer at Minster Law. “It’s accelerated over the past two years to 18 months, probably as a result of the pandemic,” he continued.
Robin Challand, claims director at Ageas, added that digital transformation had become a must-have for insurers. He said: “[Digital transformation] is actually something that’s essential for insurers to do as they continue to evolve their propositions.
“It becomes an expectation – as the world around us evolves and becomes more digital and data led, everything increasingly has a digital touchpoint.”
Alongside providing customers with a more accessible claims experience, digital transformation also provides advantages to insurance firms.
O’Brien explained: “What digitisation of the claims process will allow organisations to do is release the resources from manually executing some of those more mundane administrative tasks and use that freed up resource to do more value adding work.”
O’Brien added that digitalisation can also increase scalability, efficiency, speed, profitability and predictability within business processes, as well as improve simplification from a customer perspective.
Challand noted that having all of the vital information needed to progress a claim stored in one easy to access place can help claims handlers when they are required to step into the claims process to support digital experiences.
As an example of the benefits that a digital claims journey could provide customers, Challand said: “We have a number of claims journeys – including replacing freezers, flooring or tech goods – where the customer can go online, validate their claim and their policy in real-time and receive an output straight away.
“That can mean that your replacement is in the post straight away, or if you’ve selected flooring, you select the date for when the flooring company will come along and install it. That can be completed in under two and half minutes, from notification to a payment heading into your account.”
A frictionless, digitised claims journey is excellent for those customers who are able or willing to engage with it, but the insurance sector should be conscious that not all customers will welcome a lack of human interaction.
Eddie Longworth, founder and director of Jel Consulting, said that while digital transformation is one of the biggest areas of development in the claims arena, “it can be a bad thing for some customers who don’t want anything to do with it”.
O’Brien agreed that while an increasing amount of customers wanted at least a partially digital claims experience, there were still customers who could not engage with a digital system, or simply preferred not to.
He said: “Age can be one of those factors [influencing people to want an in-person claims experience].
”In our instance, where we work on personal motor injuries, there can often be certain conditions that customers have as a result of an injury which prevents them from using an online service.
“The last thing we would want to do in this instance is to alienate or create barriers for those customers.”
Therefore, firms seeking to enact digital transformation should be careful to pursue it for the right reasons, rather than out of a misplaced sense of being left behind in a digital arms race.
Longworth said that, in some cases, the rush towards digitalisation was as much about “the competitive instinct” as it was about “the desire for structured change”.
“There’s an attitude of ‘if everybody else is doing it, then I better do it as well’,” he said. “There’s a rush to get things done without actually fully working on what it is that needs to be done.”
It is also the case that digital transformation should be carefully planned to maximise the customer experience and pursue specific goals, rather than companies implementing shiny new software for the sake of digital transformation alone.
Challand said: “The level of skill and knowledge within our business still needs to be there - the machines can’t do everything.
“We have to think around customer outcomes and vulnerabilities and all those things. They can be built into digital journeys, but equally we need to make sure we have people there for our customers.”
O’Brien agreed: “There’s a risk [during the digital transformation process] that you end up viewing digital as some sort of panacea or golden bullet to all of your claims. There’s a risk if you take that mindset that you see digital as an application for all customers and it’s certainly not.”
Although there is no one-size-fits-all blanket benefit to digital transformation, technology led services do largely improve the claims experience for insureds and provide myriad advantages for the insurance firms supporting them.
So, firms pursuing digital transformation should approach it in a considered way and ensure that new services are both accessible and useful.
Ahmad Mosa, chief technology officer at software company Iotatech, said: “The most important factor is the agility of the insurer, its people and processes and that can only be achieved through a programme to instil a culture of change and eliminate or reduce as much as possible the natural fear of change.”
Challand added: “The thing we all have to think about is the cost of the benefits – there will be things that are very nice to do but don’t necessarily deliver those benefits.
“You have to put all those things together - business logic doesn’t go out the window. You do still have to think about how you operate and deliver your business.”
Digital transformation is more a tool for reaching goals, rather than a goal in and of itself.
Longworth explained: “With digitisation, it’s about standing back and making a full plan for the next five to 10 years. Then you design your digital transformation around that.
“You will have to have other elements – you will have to have skill and logistics elements for your claims handlers, you will have to have training and change management and even behavioural psychology stuff.
“Digitisation is just one piece of the [claims] jigsaw - it is not the whole puzzle.”