With the spread of digital claims, major changes are upon us, such as rising adoption in virtual estimates for auto and property claims and telemedicine for injury claims. For simple claims, fully digital processes are taking center stage with claims staff tasked with covering blind spots from artificial intelligence (AI) and ensuring superior customer experience. For complex claims, handlers continue as usual, bolstered by AI-led decisions to improve automation.
A car insurance claim is a disruption in daily life, requiring a person to contact the carrier, get repair estimates, go to an auto body shop, likely needing alternative transportation. Typically, this is done telephonically with a claims handler who guides step-by-step. Often this unstructured process leads to significant delays in claims resolutions, frequently affecting customer satisfaction.
With technology advances, insurers are implementing more and more digital tools. Today, customers can file a claim, schedule an appraisal, find a shop and get updates on the carrier’s app. There is a 20% increase in customers using these tools over the past three years, per a J.D. Power study. The vehicle insurance sector accounts for a substantial share of global insurance, expected to reach US$1,096.2 billion by 2027. AI in auto insurance market is expected to reach US$5.5 billion in 2027, up from US$1.0 billion in 2018.
Optimizing claims management with AI standardizes claims management operations, improving the rate of resolutions. Customers get claims processed within days, sometimes minutes, not weeks or months – benefiting both insurer and insureds.
A leading Israeli insurance provider worked with Stat-Market to use AI technology to optimize its claims management processes. It achieved a reduction in claims processing time by 54.4% and a 1.5% reduction in unnecessary and fraudulent pay-outs leading to significant annual savings.
Aviva has digitized half its customer journeys with some now entirely digital. Direct customers of motor and home log claims digitally, tracking end-to-end progress of repairs. Motor customers who report online can access straight through processing, going from claim reporting to repair booking without contacting Aviva. However, surveys show that this level of functionality is far from the norm. Once online notification is received, just 18.3% of respondents say their system can auto-triage the claim, with 58.3% having a mix of manual and automatic processes and 23.3% managing manually.
With AI technology, insurers are tailoring communication channels to individual customer preferences, enabling them to provide information about claims in various ways, such as by uploading images to an app. Carriers communicate proactively with customers by using analytics and algorithms to anticipate questions and send updates through the customer’s preferred communication channel before such information is even requested.
There is additionally an increased focus on claim prevention with insurers proactively contacting customers with data-driven suggestions on actions they can take to reduce risks. For example, insurers are pushing notifications about severe-weather warnings to encourage customers to stay put to avoid hail damage or turn up the heat to avoid pipes bursting during a winter storm. With focus turning to prevention, the insurance model is expected to shift from the traditional risk-transfer model to a mix of risk transfer and hedging, where policyholders manage the claim risk amid the tighter focus on prevention.
The claims process is the “moment of truth” for clients who expect handlers to demonstrate empathy, precision and care while delivering fair outcomes. Though digital claims are becoming more commonplace, the benefit of quality customer service should not be discounted. The J.D. Power study found customers who did not use digital claims tools experienced a similar level of customer satisfaction. There is a healthy appetite for AI-led digital tools and good old-fashioned guidance from a real person. It’s not binary and customers clearly want different options in how they communicate with insurers.
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