Welcome to the world of no-touch claims handling. Imagine the scenario of being involved in an accident, snapping photos of the damage with your smart phone, submitting them to an insurance carrier portal, and then receiving electronic payment within minutes. This may very well be the future of insurance claims.

According to National Highway Traffic Safety Administration (NHTSA), there were 5.4 million car crashes in the United States in 2011. Fatalities totaled 32,885—the lowest in 62 years. Preliminary figures for the first three months of 2013 point to the ongoing trend in traffic-related deaths. Based on statistical projections it released last month, NHTSA anticipates a 4-percent decrease—or 7,200 deaths comparted to 7,530 reported last year. Although fatalities rose in 2012, they declined by about 26 percent from 2005 to 2011, NHTSA adds.

Safer Cars, Higher Claims Costs?

Presumably as cars get safer, the number of people killed or severely injured will continue to decline. The trade-off for safety, however, will be higher repair costs. This has the potential to result in a fundamental shift in the way a certain subset of claims are handled, giving rise to low-touch or possibly even no-touch processing.

Does this have negative implications for claims personnel? To the contrary; it would free up existing staff to accomplish more complex, meaningful tasks such as digging deeper into personal injury protection (PIP) claims or investigating potentially fraudulent activities.

So, just how would the no-touch environment work? The key to success lies in the triage process, whereby predictive analytics, such as that being developed by Mitchell International, would be able to accurately predict outcomes in claims within a specific degree of probability. Consider, for example, a PIP claim being presented by an insured who sought immediate medical care after the accident. What if an insurance carrier had the capability to know this would be the first and only bill? Rather than assign an adjuster to make contact with the insured, process the payment, and cue the diary for follow ups, the bill could be routed to an automated queue for an electronic payment to the medical provider. On the other hand, predictive scoring can help identify those claims with a high probability of exceeding policy limits regardless of claims-handling efforts. These claims may also warrant “hands-free” adjudication, but not without careful monitoring.

No- and Low-Touch Auto Claims

This has the potential to hold true for physical damage claims, as well. Whereas some accidents will always require certain key investigative steps, others may not. A significant number of car crashes involve clear liability with no bodily injury. The no-touch approach provides insurance carriers with the capability to create loss reporting apps that can be downloaded to smart phones. When the carrier issues a new policy, instructions are placed on electronic insurance ID cards to guide policyholders about what steps to take following the accident.

This “card” is represented by an icon on the smart phone. The insured would then select it after a fender bender and follow the instructions. He or she could snap pictures of both cars, obtain the information of the other party, and submit the claim. The carrier may then initiate the claims process, immediately arranging for transportation and a rental car. In a likely future state, these tools will blend the automation based on technology with simplified human interaction. For example, the extent of deformation or damage may best be mined from analysis of the image itself combined with a short verbal description recorded by the claimant on his or her smartphone.

The insurance carrier will have the ability to leverage a number of technological tools to rule out fraud or pre-existing damage; the photos of the damage can be scanned for metal deformation to recreate the accident and virtual estimatics could generate an instant estimate. Electronic payment would be sent to the insured bank account of record. As part of the reporting process, the claimant EBT routing instructions could also be gathered.

Of course, these types of claims are a subset of all claims, which will also benefit from improvements in technology. Consider the situation of disputed liability where both parties use their own carriers. While the insured may be the beneficiary of a low- or no-touch handling process, tools such as Mitchell's ClaimIQ could be used to determine liability. In addition, such tools can potentially interface with applications such as E-Subro Hub, to resolve disputes between carriers.

Moving beyond predictive analytics, consider the implications that further advancements in black box technology may have in determining driver behavior and vehicle motion leading up to, and during the accident. Having the ability to harness such technology during claims investigations involving situations of shared liability or injury cases could have significant implications on how claims are resolved.

By capturing information about speed and braking, recognizing metal deformation and principle direction of force and g-forces exerted on vehicle occupants, more accurate injury assessments can be made within a statistically valid degree of probability. Being able to biomechanically refute certain claims will provide positive outcomes for the premium paying public in general, who today is faced with rising costs even though the majority of motorists very rarely, if ever, make claims.

There are a few certainties in life: death, taxes and change. The latter is really the only constant with which we have any control. Those who embrace change tend to be the innovators. Of course, it is the innovators who become industry leaders. They rapidly gain marketshare from those who hold on to the status quo, which is very pervasive in the financial and insurance industry. But with each passing day, technology is advancing. Those who leverage technology to make their people more efficient and their process more robust are virtually guaranteed of gaining a significant competitive edge in the marketplace.

Christopher Tidball is a casualty claims consultant with Mitchell International and the author of multiple claims process improvement books.

Keith Peterson is the vice president of analytics at Mitchell International.

Special Reports /

The Future of Claims: No-Touch Handling

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