Life insurance claims processes could be transformed if insurers invest more in technology, according to a report from the UK.
The report, which drew on evidence from 119 insurance companies across 23 countries, contends that the claims function needs to be reinvented through the use of technology.
“Insurers are dealing with increasingly demanding consumers who are much better informed and thus more powerful than in the past,” said UK consultant, Karin Lloyd. “By combining the power of technology in business and healthcare with the ‘connectedness’ of modern society – via the web and ever more sophisticated mobile phones – there is the opportunity to process claims more quickly and conveniently, and to raise levels of service to those found in other industries.”
According to the report, over the last decade insurers have made significant investment in front-office capabilities including underwriting automation, straight-through processing, tele-underwriting, and adviser-focused customer relationship management (CRM) systems.
However, investment in claims capabilities and technologies over the same period has remained modest. ‘Siloed mainframe-based legacy claims systems supplemented by Access and Excel databases (and many manual procedures) remain the norm,’ the report stated.
… insurers will seek to differentiate themselves over the next five years through their approach to claims capabilities
The report predicts that insurers will seek to differentiate themselves over the next five years through their approach to claims capabilities and systems.
The authors of the report suggest that this increased focus on technology in claims processing will be driven by a number of factors, including:
- New technologies (particularly those facilitated by the Internet and mobile networks) facilitating new ways to communicate with customers and claimants at a reduced cost
- Pressure from distribution channels that are becoming increasingly competitive, with traditional sources of differentiation harder to achieve and sustain
- Increasing regulatory demands driving the need for better management information, and the reward of lower volatility claims experience with reduced solvency capital requirements
- The gulf in customer experience between front-end and back-end execution, which the report argues is becoming increasingly obvious to customers and intermediaries
“There is so much more insurers could do in terms of speed of service, consistency in claim handling, and collection and analysis of data,” said Susie Cour-Palais of SelectX. “Our report should be the impetus for new, innovative strategies that give real competitive advantage – and deliver real benefits to customers.”
