ith images of Britain's royal wedding fresh in their memory, insurers can be forgiven for thinking of claims as the "crown jewels" of the business. While claims payment is insurers' single largest expenditure, it also is their most significant point of vulnerability in terms of customer service. Indeed, according to Accenture research, insurance customers placed "speed of problem resolution" (that is, fast claims service) as their top criterion for choosing an insurance provider, ahead of price transparency and the availability of products that suit their individual needs.
We have seen over and over again that consumers drive innovation in insurance by demanding speed, access and collaboration. Consumers have become sophisticated users of information technology, and this sophistication has raised their expectations as to how insurers deal with claims processing and payment.
Claims also represent a high-potential opportunity for insurers to increase operating efficiency. Many (although not all) insurers have undertaken basic process improvements, such as making sure that difficult or high-exposure claims are routed immediately to the adjusters with the expertise necessary to handle them. While additional opportunities remain, insurers seeking high performance will need to embrace technology, viewing it not as a support function but as a key enabler of competitive advantage.
With improved customer service and greater operating efficiency both hinging on development and maintenance of a high-value-added claims function, insurers should be focusing management resources and capital budgets on four key areas of claims innovation:
1. Mobility. The extraordinarily rapid growth of mobile devices and applications provides insurers with a tremendous opportunity to improve service while lowering fixed costs. Customers with mobile devices have essentially invested in a new sales and service channel, one that they can use at times and places of their choosing. Insurers should accelerate their efforts to push information and service capabilities onto mobile devices.
Theoretically, customers should be able to report incidents, obtain updates on claims status, forward photographs and other documentation for investigations, and perform a host of other claims-related activities on mobile platforms. Insurers need to close the gap between what customers know is possible and what they are currently delivering.
2. Collaboration. High-performance claims processing is all about expertise -- getting the right information to the right people on a timely basis, and providing those people with the resources they need, including data and access to external experts. As is the case with mobile applications, many insurers have taken first steps, such as integrating claims adjuster calendars with those of outside service providers. The most significant improvements, however, are realized when everyone involved in the claims process has immediate access to all information necessary to service the claim.
3. Analytics. Effective analytics play multiple roles in improving claims processing efficiency and lowering costs. Business rules can help insurers make sound underwriting decisions -- often heading off difficult and/or costly claims before they occur -- by analyzing applicant information and comparing this data with the insurer's experience with similar applicants. Analytics can help extend the insurer's reach to tap into industry, law enforcement and other databases to help prevent so-called "application fraud."
And, when a claim is filed, analytics can perform high-speed sorting operations, forwarding routine claims for rapid payment while sending more problematic claims to appropriate investigative units (see page 6 for related article). For claims under investigation, analytics can help identify potential fraud by searching vast quantities of data, including links between claims data and known fraudsters, as well as links formed through communications on social media networks, customer call centers and elsewhere (see related Virtual Roundtable, page 16).
4. Core Systems Modernization. Insurers are again making the investments necessary to modernize and integrate core claims systems, which often struggle to deal with the barriers imposed by legacy systems. However, insurers need to build a high degree of flexibility into such systems -- both to deal with the impact of emerging technologies and to minimize the cost of future upgrades. A modular approach can help ensure that changes made to deal with developments in one area do not cause new problems elsewhere in the system.
Maintaining the Personal Touch
While these elements are vitally important to an effective claims strategy, the claims workforce ultimately determines the success or failure of the claims operation. The industry must address the fact that many of its top claims professionals are nearing retirement age.
Claims processing offers insurers numerous opportunities to establish and protect competitive advantage. To achieve consistently high performance in claims, however, insurers need to look at these "crown jewels" in a new light, thinking of them not so much as a cost but as a way to provide distinctive customer service in the one area that really matters to insurance customers: getting claims processed and paid. n
Michael A. Costonis is managing director of Accenture's global claims practice.