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Claims are the moment of truth for insurers, offering a chance to build loyalty and gather data.
The claims process also involves beneficiaries, and a smooth experience can help retain clients and attract new ones.
According to the 2017 EY Global Consumer Insurance Survey, 87% of policyholders say their claims experience influences their decision to stay with an insurer.
Poor claims experiences can lead to client churn, which is costly.
Managing claims is a significant cost area for insurers. Outdated paper-based processes inflate operational costs and slow down processing times.
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Claims management: Where loyalty and profitability meet
While sales begin the insurance journey, claims management is the most important post-acquisition touchpoint. Claims are crucial for building loyalty but are also one of the largest cost areas. With rising claims handling costs and outdated processes, inefficiencies amplify. Paper-based procedures drive up costs and delay operations.
Business and technological challenges
Claims management faces business and technological hurdles. Collecting documentation from stakeholders can take weeks, leading to long processing times.
Manual tasks cause data loss, while outdated systems suffer from transparency issues and lack real-time reporting for risk valuation.
Insurers also struggle with gaps in control processes and a lack of tools for claims analysis and predictive monitoring. Legacy systems present a major challenge, leading to longer settlement times and higher costs. Concerns about data security, privacy, and compliance complicate digitisation.
Digitisation: The only way forward
According to KPMG’s 2021 report, over the next five to 10 years, claims functions will digitise, automating processes. KPMG recommends advancing automation, enabling machine learning, and using data sets to streamline operations.
Capgemini notes digitisation will improve customer experience while retaining assets, especially with $68trn in assets passing from baby boomers to their heirs during the Great Wealth Transfer.
Full digitisation of the claims process
For today’s customers, the ideal claims process is fully digital, simple, and real-time. Claims should be transmitted instantly, with documents stored in the cloud. Self-learning algorithms validate claims, fill in missing data, and update clients automatically.
This system supports automatic validation, queuing, and automated communication. Compensation decisions are sent through a 360-degree client portal, with digital payments improving speed.
To support this, insurers need a flexible cloud-based IT infrastructure. However, even with digitisation, insurers must offer human contact. Customers expect 24/7 service with flexibility between digital and human interaction.
Benefits of digitising claims
In McKinsey’s 2019 report, partial digitisation can reduce claims processes by 30%. Health insurers could save 10–20% in medical costs through advanced analytics prioritising audits and identifying high-risk patients.
The benefits include:
- Cost optimisation through faster handling.
- Competitive advantage with smoother information flow.
- Automation of payments and verifications.
- Improved data integrity for audits.
- Faster decisions, boosting satisfaction.
- Fraud prevention through monitoring.
- Flexibility to adapt to regulations.
Ready-made solutions for less risk
Insurers should adopt ready-made solutions for multiple insurance lines like life, health, and pension. These systems should support various communication channels and integrate with external platforms.
A cloud-based service-oriented architecture (SOA) is essential. User-friendly interfaces enhance service. Partnering with an experienced IT provider reduces modernisation risks, as tested solutions minimise uncertainty.
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