Insurers are in the business of selling peace of mind, and not insurance policies! It is essential for insurers to compete with industries that contribute to the peace of mind of businesses and consumers, for instance, industries that sell IoT based services that will prevent a loss through proactive actions triggered by alerts from sensors. The business of loss prevention and loss indemnification address the same purpose - delivering peace of mind. In this paper, we will predominantly address loss indemnification however let us not forget the boundaries of loss management is expanding to cover prevention along with indemnification. The claims process is the moment of truth and defines the experience for policyholders and beneficiaries. Due to intensive paperwork, manual processes, and multiple internal and external stakeholders involved, claim processing has always been a pain point and hence, a key focus area for insurers. Over the years, reducing costs and providing best-in-class claim service has also become a motivating factor. The pandemic and changing customer expectations have necessitated radical transformation in the claims business process. Now, more than ever, the key business driver for claims is not just operational efficiency or reducing leakage, but also enhancing the end-to-end customer/claimant experience.
Claims Transformation Imperatives - A Shift from Paying Claims to Delivering Peace of Mind
The Gen Z and millennials not only expect their claims experience to be simple, quick, and easy, but also demand the best-in-class options in terms of accuracy and personalization. It is estimated that millennials will make up 75% of target customers for insurers by 2025, thus necessitating the need for insurers to focus on the experience. Insurers can no longer play a role of a negotiator while paying claims but need to take ownership of the end-to-end experience for a customer. Today’s customers need a reliable partner in an insurer who can not only deliver service, but also provide an experience with empathy and care. Changing customer demands have ensured a need for new advanced technologies, which are already delivering business value via different claims transformative strategies. A global claims transformation strategy is defined across two key themes: Efficiency and Effectiveness. Both themes have qualitative and quantitative outcomes for the Insurer. The expected outcome from claims transformation is elaborated below
Transforming the Claims Process - A Value Chain View
To adapt to the needs of ‘new’ customers, the industry has changed its perspective on the traditional claims process. While the claims business process has not changed drastically, what has been altered is the perspective with which we view the claims value chain. We no longer view claims as a set of activities spread across the value chain, we categorize them as process/ knowledge/ data intensive. This segmented perspective of activities enables us to decide on an appropriate set of initiatives to transform each set of activities in a value chain (as depicted below)
