Managing today's claims while planning for tomorrow's technology

At one time, leading-edge insurance telematics, analytics and big data had to pushthemselves into the mainstream.

Now a slew of emerging technologies are close behind.

For claims organizations that value technology and thecompetitive edge it can offer them, the ultimate question is howbest to use today's technology — to lower expenses, improveefficiency and support customer service — all while preparing for arapidly developing but uncertain future.

The challenges ahead

Not surprisingly, the conclusions many organizations reach, andthe technology decisions they make, are different given each oftheir individual circumstances. Their attitudes toward technologyand their ability to use it effectively are based on any number offactors, including the real or perceived success of previous andperhaps even unrelated projects, what they currently own, and theiraccess to talent.

Believe it or not, I've seen carriers with legacy systems whoare using advanced predictive analytics for subrogation, fraud andassignment, and I've seen carriers with modern systems that are stillmoving paper around the office.

Those are exceptional examples. But broadly speaking, thecarriers I talk with typically have one of these three focuses:

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    - Modernization. They are seeking a modernclaims system that provides the speed and agility they need to meettheir business needs today, and that offers the flexibility theyneed as the business, technology, and customer expectationschange.
    - Adoption. They're using the claims system andadopting software and services to assist claims processes as theyknow them today. They also may be looking for tools that offer"next step" opportunities to accelerate resolutions.
    - Innovation. They're fullyexploiting the technology, techniques, and talent that areavailable today, always fine-tuning and looking at what's possiblewhile keeping an eye on emerging threats and opportunities.

I'll just take a moment to reiterate that these aregeneralizations, that they are non-sequential and not exclusive. Ifyou're responsible for technology decisions, though, you know thatthe first and perhaps most important step — even before decidingwhere you want to go — is accurately determining where you are.Only then can you make informed decisions about how to getthere.

Claims and modernization

When a carrier is looking to modernize a claimssystem, it's typically because their current system is notcompatible with "digitalization" and therefore limits the speed,agility and integrations they need to be successful. The idea is toinvest in a foundation to run the business today, that enables themto react to changes in the business and customer expectations, andprovides a framework to adopt new technologies and techniques asthey come along.

Digitalization is now foundational to streamlining andautomating routine activities, increasing transparency internallyand externally, reducing claims cycle times, and offeringsatisfying customer experiences. It facilitates communications, andexpands opportunities to leverage data for reporting, analytics,and more.

An important and immediate goal is to offer a "single view," inwhich authorized users can see all of the actions, notes, andhistory on a claim, customer, or related party. This level oftransparency opens the opportunity to process a claimsimultaneously across multiple teams – recovery, specialinvestigation unit, bodily injury and auto physical damage forexample – and is critical to accelerating claims resolution. Ofcourse, the flexibility to restrict certain elements, like SIUnotes, also is a requirement.

Because customers' expectations for speedy resolutionsare increasing, disjointed systems and processes must be correctedto meet their elevated expectations. For example, claims handlersshouldn't be hopping back and forth between systems to process theclaim. I talk to carriers even today who offer first notice of lossapps — but behind the scenes, someone else literally is rekeyingdata into a claim system. More sophisticated forms of customerself-service unsurprisingly will require more, and seamless,interactions between systems and services.

There are lots of opportunities today for automation, includingconfirming coverage, automatic reserving, checks for authority, andlimits and deductibles, and creating alerts. Claims segmentation —identifying the claim type and complexity so you can align it withthe right adjuster — and workload optimization also offeropportunities for real gains in productivity.

There are insurance carriers with legacy systems who areusing advanced predictive analytics, and there are carriers withmodern systems that are still moving paper around the office.(Photo: iStock)

Claims and adoption

The adoption focus assumes that the foundational technology issolid and capable, and is all about taking advantage of newsoftware and services, such as artificial intelligence, photoadjusting, data enrichment and pre fill, and the Internet of Things.

Artificial intelligence, such as IBM's Watson,Google's new voice-activated analytics, Amazon's AI services, andeven Apple's Siri, offer interesting examples of where consumersare headed, and what capabilities they soon will expect frominsurers.

AI can handle massive amounts of data in a short amount of time,recognize patterns, and doesn't have to replace human decisionmaking to be valuable. As AI applications become more mainstream,lower-cost analytics and machine-learning tools are already available toreduce the number of touches per claim, make better-informeddecisions, automatically process portions of a claim, or suggest a"next-best action" based on claim characteristics, or historicalpatterns.

Photo adjusting offers another opportunity for efficiency, andvendors are offering it as a service. Some vendors will even crowdsource the photo if the policy holder doesn't want to take it, andthey can connect with you as just another adjuster through yourestimating software. It's predominately for autos, but as dronesare used more widely, photo adjusting will be used for personal andcommercial building assessments.

Another marker for those with the adoption focus is theirinterest and ability to use data enrichment, that is, accessing externaldata to inform the claims process. If this data is usedstrategically and in the right combinations, it can lead to betterdecisions, more efficient processes, and superior customerexperience. Plus, these emerging modes of customer interaction givecarriers access to a ton of new and potentially valuable data.

One example is with third-party claimants. If you knowidentifying items, like phone number, or name and address, thereare services that will tell you who their carrier is and whatcoverages they have. For an auto claim, if you know a vehicle platenumber and state, they can tell you who the third party is. Onceyou have their carrier and coverages, gathered during FNOL, it canspeed up the recovery process and reduce the claim cycle timedramatically

Data pre fill is taking external information bringing it intothe claim process and actually populated the claim. With my exampleof the third party, it's retrieving the data and automaticallypopulating the claim with those relevant details.

Telematics initially was used primarily for underwriting, butnow also is a tool to inform the claim process. The ability toobjectively determine whether a vehicle was stopped, for example,or how fast it was going, or even if it parked in the garage whenthe accident occurred, indicating fraud, obviously could be veryvaluable in the claims resolution process.

Claims and innovation

There are several aspects of the innovation focus that will lookfamiliar: fully exploiting the technology that's available today —always fine tuning, considering what's possible, keeping an eye onthe horizon for what's to come, and figuring out how to leverage itfor claims. That said, innovation is not necessarily about owningnew and cutting edge technology. It's more about encouragingcreativity and experimentation and having the technologicalwherewithal to test and learn, and then implement solutionsquickly.

The best examples of innovation that I have seen emerged fromexploration in a low-risk environment. Essentially, you buildsolutions that challenge conventional thinking. Then, if a solutionproves out, you try to scale up. The truth is that not everyinnovation is sexy, and even little things can have an outsizedimpact on outcomes. For example:

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      - Considering different workflows, and A/B testing them to reducehandle times or the number of touch points
      - Eliminating processes, via photo adjusting, straight-throughprocessing, or other tech
      - Tweaking exception handling to automate more claims whilekicking exceptions out for review
      - Surfacing actions when there has been a lack of activity,rather than when they "need" to take place
      - Rethinking the "most-efficient sequence" for FNOL

"Speed to market" is more than just jargon. Even for the littlethings mentioned above, the ability to test, learn, tweak, andimplement them without creating custom code is critical. When itcomes to the bigger things, speed to market may also include thewillingness to take risks and pursue ideas before the market orregulators are ready. The payoff, in terms of new strategies,services, products, and markets, can be impressive.

Not long ago, drones were used for military operations, andfederal regulations prohibited their commercial use. Now manycarriers are using them for routine inspections. Liberty Mutualenables consumers to navigate the insurance process with voicecommands through an Amazon Echo. Artificial intelligence, once aSci-Fi bugbear, is deployed to help decision-making around personalinjury claims, saving 40,000 work hours at Zurich, reducing claimsprocessing time to as little as five seconds. Personal propertyinsurer Lemonade promises renters and homeowners insurance in aslittle as 90 seconds, and payment of claims in three seconds, allwith zero paperwork. GEICO has deployed Kate, a virtual assistant chatbot for routinecustomer interactions. Tesla vehicles are equipped for completelyautonomous driving and – in some markets – bundled insurance.

The list of insurance innovations could on for pages, but as youcan see: innovation is an iterative exercise, and it requires asupporting foundation consisting of technology, creativity,management support, and a willingness to take risks. It plays acrucial role in a carrier's ability to succeed in a highlycompetitive marketplace, and it's the only way forward for thosewho would do more than merely survive.

Will you lead change, or will change lead you?

Patti Griffin is chief product officer at Duck CreekTechnologies. She can be reached via email at [email protected].

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