In automotive claims, the concept of self-service is evolving as consumers, particularly those of the Generation Y era, want to be positioned front and center—and in the driver's seat—when it comes to having more control and better access to claims and insurance information. From allowing drivers to actively participate in first notice of loss (FNOL) with photos of vehicle damage, to letting them view the progress of their automotive repairs online, and offering Facebook integration for the insurance apps they use—insurers are unveiling a whole new world of technology innovation and self-service to vehicle owners today.

The driving force behind all of these advancements not only includes the ever-increasing need to improve the customer experience across the full lifecycle of the claim, but also the changing demographics of the marketplace and its impact on the way insurers do business.

From Steady Evolution to Revolution

The insurance industry enjoyed a dynamic, steadily evolving market environment through most of the 20th century. Ever-present risks, regional disasters and personal calamities would come in and out of people's lives; yet, with careful planning and attention, policies were there to rescue the consumer from financial loss. Furthermore, the basic roles of service providers and customers remained relatively stable.

The 20th century also saw the creation of government-sponsored insurance—social security, most notably. Additionally, private insurance continued to introduce innovation in the way of products and policies. Indeed, the industry has continued producing some of the most forward-looking and strategic ideas in the business world. A hallmark of the U.S. insurance industry over the last century has been its capacity for bringing financial stability to companies, families and whole classes of people that in other parts of the world—or in other times—may not have fared so well.

The insurance trends during this period showed incremental, steady evolution—not revolution. Now, we see insurance practices changing dramatically—and in ways that couldn't have been predicted. The drivers of change lie outside the industry itself. With the steady acceleration and adoption of consumer technology and the almost overnight pervasiveness of the Internet and mobile technology, the insurance industry (along with most other industries) has faced daunting challenges:

With so much technology and information in the hands of consumers, expectations for service have dramatically expanded.
Consumers, ready to flex their muscle in what has been described as the "Quiet Riot" of the consumer revolution, demonstrate willingness, even eagerness, to participate in the claims and resolution process.
As consumers continue their quest for more convenience, lower prices, and even faster service, insurance companies must address these concerns while also maintaining a viable business model.

Two primary factors have contributed to this seismic shift in the insurance industry:

The changing demographics of the market; that is, a generational shift from baby boomers (born 1946 to 1964) to Generation Y (born 1982 to 2002).
The transforming impact of consumer technology—from smart phones, ubiquitous social media, interactive websites and "always-on" networks.

Some business and service organizations—eager to identify, serve and retain their clients—may find the current business environment somewhat disorienting. Others, with the support of industry leaders, technology partners and training professionals, will find the new landscape exhilarating, lucrative and rewarding.

Let's examine the changing landscape of insurance services by focusing on new trends and practices in a particularly dynamic sector: automotive claims.

Auto Claims Processing

Self-service may not seem like a new concept, but, the self-service model was virtually unknown to consumers 100 years ago. Since that time, we've seen elevators, gas stations, buffet-style restaurants, ATMs, self-checkout lines, and countless more examples of the movement to the self-service model.

Interestingly, the first self-service grocery store was introduced in 1916. Entering through a turnstile, shoppers walked a few aisles and selected their purchases from several hundred items before proceeding to the checkout stand. At the time, this was revolutionary.

As the Internet age ushered in e-commerce, shoppers were given unbounded selection, payment and delivery options—for example, shipping preferences—that were not prevalent in the "brick and mortar" realm.

More recently, we've seen a continuing trend to self-service in the Internet era. The company Yelp (yelp.com), for example, represents a self-service, consumer-sourced, connected and mobile referral engine. Yelp offers site visitors (now pushing past the 100 million per month level) the ability to record reviews of consumer experiences and to browse reviews posted by others. No consumer-facing establishment—restaurants, retail stores, auto repair shops, insurance agencies, just to name a few—is beyond the reach of either favorable or unfavorable Yelp reviews.

Self-service is a trend that shows no sign of slowing down and the Internet has proven to be its natural accelerating agent. People like self-service as a concept, as a self-empowerment tool, and as a regular practice to fuel their decision making in almost everything they do. Self-service can also be seen as a great equalizer. Yelp reviews, for example, can allow even the "hole-in-the-wall" eatery across town the opportunity to be considered, even favored, over the more prestigious or established "chain" restaurant down the block. This, again, demonstrates the "Quiet Riot" marketing concept that challenges every business to make adjustments in how they engage their increasingly influential customers.

Now, consider how this self-service trend has expressed itself in the automotive claims sector. Although not particularly an early adopter of self-service, the auto claims sector is now demonstrating rapid progress in catering to consumer preferences and behaviors. Today's auto insurance consumer is increasingly comfortable staying actively involved in the claims process, wading through data, embracing consumer technology, and receiving constant status updates. Today's drivers, in other words, really like "being in the driver's seat" when it comes to their claims.

Insurers are finding that when consumers are involved in the process, less manual intervention, such as phone calls, are required, and customer satisfaction is higher. But it's not automatic—this win-win situation requires making the right technology tools available to consumers.

Claims Processing and Self-Service

First of all, the natural fit between the empowerment of self-service in a data-rich world and the rising prominence of Generation Y (predicted to eclipse the buying power of the boomer generation as 2020 approaches) will drive the rapid implementation of technology solutions in the automotive claims industry.

Let's take a closer look at some widely accepted attributes of Generation Y to see why this generational shift has such powerful implications, not just for auto insurance but also for all businesses:

Whereas boomers evidenced patience, idealism and a competitive spirit in their early adult years, Generation Y craves immediacy, connectivity, and tolerance in a socially diverse world.
Whereas boomers fought their way into adulthood with a healthy distrust of authority, Gen Y has retained in their early adult years an unprecedented financial dependence on their parents. Now add to this Gen Y's talent for extreme multi-tasking.
Whereas boomers took on risk—for example, credit—to achieve a higher standard of living, Gen Y demonstrates a sense of conservative entitlement, meaning they expect to pay less—even as they are not only more demanding about product and service purchases, but they are also more reliant on borrowed family wealth.

Furthermore, these defining characteristics of Generation Y seem to hold globally, not just in the U.S. A four-phase central European study, for example, studied millennial consumers for the purpose of better planning future service and product offerings for auto insurance. The conclusions, while noting a slightly slower adoption rate of mobile technologies, were entirely consistent with studies in the U.S. Even though Gen-Y consumers in central Europe were generally satisfied with the claims process, they saw room for improvement in several key areas: the process seemed to take too long (immediacy), the value they received did not entirely meet their standards (entitlement) and there was a lack of transparency during the process (connectivity).

Claims Processes Today

When choosing an insurer, consumers will favor a company that offers technology and tools to enhance the customer experience — online bill payment, mobile apps for self-service, social media options, web resources, etc. Accidents — typically happening once every seven years for consumers — become critical events not just in terms of life and safety concerns but also because the insured/insurer relationship is really put to the test—possibly strengthened or abandoned as a result of the claims experience.

Traditionally, when filing a claim, a driver starts with two or three phone calls to the insurer, the appraiser and the collision repair shop. The driver may even be requested to visit the repair shop to get an estimate or appraisal. Currently, we are seeing this process change dramatically with the relatively recent introduction of mobile apps, which allow consumers to initiate and manage their claim on their own time. Technology is already becoming available to guide people to take the exact photo that the insurer may require to document the vehicle damage. And drivers can be immediately dispatched to the collision repair shop offering the best availability for the repair, along with a convenient location and the highest customer satisfaction ratings.

In the aftermath of an accident, the consumer will more likely decide to stay with an insurer if the customer experience is enhanced and streamlined with integrated mobile claim services; easy and simplified participation; a handy repairer referral engine; and overall transparency. Insurers who boldly and intelligently move into this new tech-driven approach to claims processing will enjoy considerable rewards—higher retention, higher satisfaction, increased referrals, and an enhanced reputation for relevance in a changing market.

The mere presence of technology doesn't earn these rewards, however. Insurers must develop, test and employ technology that meets customer expectations.

Looking Far Ahead Into the Future of Claims

It won't be long before the tech savvy offerings of innovative insurers become the norm across the industry. As we move forward to the 2020 horizon, we will surely see more and more technology integrated into auto claims processing. Keep in mind that right behind gen Y is the emerging Generation Z—even more grounded in technology with consumer behaviors that reflect a lifetime of nothing less than super-broadband wireless connectivity, always-on networks, immediate gratification and touch devices. By 2020, the purchasing power of gen Y and gen Z will dominate the marketplace.

With innovation already delivering a user-driven experience, what could possibly emerge as new trends in auto claims processing? Consider that instead of the driver, the vehicle itself—connected, smart and properly linked to customer profiles—may initiate and manage the claims process, keeping all parties in the loop. Choice of repair shop, scheduling of key decision points and even posting of notifications could easily fall into the scope of vehicle-based capabilities.

Or consider a distributed intelligence across cars, smart phones and other devices, mediated by cloud services that would seamlessly act as the coordinating power behind every aspect of the claims process—initiation, management, updates, resolution and an ever-expanding experience archive. Even more startling developments—by today's standards—will likely come down the pike: think wearable technology that helps the driver better see twists and turns in the road, and makes further use of augmented reality-type innovations to guide the customer through their claim triage and repair options.

Central to all services, and their success, will be the changing media and technology behaviors of the consumer. For those insurers that actively monitor and adapt their product portfolio to address the changing marketplace, a solid future is assured. By establishing a planning horizon 10 to 20 years out, insurers will not only meet the expectations of the current overlapping set of generations, but also prepare for every "next generation" to come. Beginning on the next page, we review four technology drivers set to impact the auto claims realm.

Four Tech Drivers Impacting Auto Claims Handling

1. Intelligence

The FNOL process provides a fitting example of how claims practices can be transformed with a measure of built-in intelligence. Ideally, as FNOL just starts to take shape, associated technologies should gather high-level information to make sure a self-service approach makes sense for a particular claim. In some instances, such as in cases of extreme emergency or with complex variables, the effectiveness of self-service can be limited. But for many claims, self-service tools enrich and add value to the customer experience.

The intelligence surrounding self-service claims gives the customer peace of mind and builds trust: when an insurer can provide a customer with up-to-the-minute account data, instantaneous identification of their vehicles—beyond make and model to include special factory-installed packages and options—and the ability to communicate their claim information electronically, the user experience is optimized.

Armed with this information on a mobile device, drivers can conveniently be more involved and informed up front about the claim process and their predictive and recommended options for resolution, all while streamlining the insurer's end-to-end processes.

Claims technology providers are just catching on to this idea. Modern day innovation is helping with this by using predictive analytics, performed on millions of historical claims, to analyze correlational relationships across underwriting, policy, driver, automobile, accident and geographical data, to name a few, to predict and present the user with the best options for claim processing and resolution. The resulting matrix of structured intelligence enables insurers to serve their customers faster and more intelligently, from the point of FNOL until the claim is resolved.

2. Simplicity

When a customer has the nagging feeling that time is being wasted or that effort is being duplicated, self-service claims processes can also fail. Furthermore, the tools in play—mobile and web-based apps—must be flexible enough to serve both inexperienced and tech-savvy customers. That said, no matter where the driver's level of tech experience may lie, it is critical for insurers to keep processes simple and transparent.

One new trend along these lines is to allow vehicle drivers to take photos at the accident scene for use in the claims and estimating process. This expedites the claim and allows insurers and repair facilities to more quickly jump into action. Using mobile technologies, such as augmented reality, innovations exist that now guide users to take insurance adjuster-quality photos without having any prior experience.

This technology overlays specific vehicle outlines on top of the live camera feed on their smart phone or tablet to help the customer line up the "perfect" shot before taking the photo and sending it to the insurer or repair facility. By empowering drivers to take their own accurate and consistent photos of their vehicle damage, insurers are involving them as an effective participant in launching an efficient and cost-effective claims process. As a "member of the team," the driver has interests that align with those of the insurer and repair facility in achieving a timely resolution.

3. Engagement

A primary driver of the success of mobile devices—smartphones and tablets alike—has been their intuitive and engaging graphic interface, further enhanced by direct touch technologies. These devices have given consumers higher expectations for how technology can deliver power and speed, all in an attractive interface. Gamification—that is, the integration of gaming strategy and gaming processes to increase customer engagement and enhance training opportunities—will also impact self-service claims in the near future. It could even add some fun and levity to the process.

Further, when insurers, appraisers and repair shops showcase applications that are sophisticated visually— with 3D graphics and modern touch navigation—consumers have greater confidence that the vendors they've chosen to partner with for their claim are both capable and reliable. Indeed, the idea that perception is reality holds true in automotive claims. When that technology demonstrates that all parties in the claims ecosystem are working effectively together to produce more accurate and intelligent results, what ensues is a greater level of customer trust in the insurer's brand.

4. Information

Once the claims process is launched, consumers need to be continuously informed about the process. What is the process? Where am I now in the process? What is next? Drivers appreciate regular updates to support both the perception and the reality that "all is going well." Savvy insurers are already offering communication and notification apps that strike the proper balance between providing ample information while minimizing intrusiveness.

Again, putting tools in the hands of the consumer gives them the power to monitor and manage the entire process. Responding to the communal, always-connected tendency of gen Y customers, a number of insurers even provide easy "share" tools so that customers can conveniently post car repair updates to their Facebook profiles.

Further extending the sharing of information and taking the Yelp approach, insurers are also providing drivers the capability to provide feedback on their experience during the repair process. This helps the next customer crowd source a reputable and high-quality facility for their vehicle—and lifts the visibility of local, good-quality facilities with available appointments.

Special Reports /

Self-Service in a New Era of Auto Claims

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