Leaders in the insurance industry anticipate massive change, but many are fighting against legacy systems. (Photo: Shutterstock)
The age of the insurance monolith is over. That doesn't mean established titans are destined to die, or even that they will stop dominating, but it does mean they have to adapt, quickly and continuously, to stay alive. And no one knows this better than industry leaders themselves.
Nearly half of the insurance directors at a recent that "most existing insurers will not survive, at least in their current form."
Perhaps many have still been in denial. For years, the industry has been talking about the need for fundamental change, the need to reach clients where they are and create personalized products that utilize the vast array of digital tools – wearable technology and GPS, to name a couple – that allow companies to collect data and assess risk in revolutionary new ways.
But across the board, the much-discussed digital transformation hasn't happened, at least not at the pace of expectations. Wherever insurers look for advice these days, it's variations of the same message.
"Insurers must overcome the industry's traditional reluctance to change," says EY. "The entire insurance business model is being disrupted," notes PwC. "The window of opportunity is narrow," notes McKinsey. "Disruptive newcomers are looking to take market share from incumbent insurers," says Deloitte.
Change is here
Throughout the claims process, change is finally happening, from user interfaces to computer processing. Companies are utilizing in-home and automotive sensors, the internet of things, and even drones to assess risk and personalize their products. And they are deploying machine learning, artificial intelligence, and predictive analytics to crunch that data.
However, for many companies, the vision of a digital-first insurance provider is obscured by legacy technology that is simply incapable of the sort of agility needed in today's market. These enterprises are seemingly unable to switch to nimbler and more responsive architecture to support the influx of data. And all the data in the world is meaningless if it's not contributing to faster, more accurate claims responses.
Innovation in the claims intake process is a crucial, though largely overlooked, part of the insurance industry's digital revolution. It is perhaps the most important interaction insurance companies have with their customers and can be a great experience if things are working properly and the right information gets collected and routed to the right place.
An efficient and accurate claims process is only possible if companies are using an effective, up-to-date rules engine that is able to reconfigure and adapt along with the changing situation on the ground, new data collection tools, and shifting consumer preferences. Claims intake is also the point at which humans become involved in what is a mostly automated process. Support from a strong rules engine means intake workers can focus on the customer experience, which is where they bring the most value.
Claims data by the numbers
The demand for change in claims intake, as with all functions of insurance companies, is immense and only increasing: 87% of TPAs and carriers see a need for further innovation and tailored services in claims intake, according to a forthcoming NetClaim report. Yet there is an imbalance in how good TPAs and carriers feel about their vendors: 71% of TPAs are confident their current vendor can handle changing situations, but only 40% of carriers do.
And while TPAs are focused mostly on speed and efficiency, carriers care most about quality and configurability according to the upcoming NetClaim survey. This all points to the need for insurance companies to reach out to agile specialists for claims intake, firms that can coexist with legacy systems and implement changes to business rules as fast as customers, products and the relevant data demands.
For TPAs, this agility means they can win clients and be attentive to their shifting needs; for risk managers at direct employers it means addressing risks fast, before it does real harm; and for carriers, it means staying ahead of the competition and reducing costs. For all of these groups, it means immediately deploying the most advanced claim intake systems in the world rather than trying to build it yourself.
Where it works
At NetClaim, we have developed automated software-based integrity checks that maximize the chance that the first call will be the only call, avoiding the cost of missed or inaccurate information. We examine a robust set of metrics that allow us to identify where performance can be improved and innovations made. Ultimately, we increase our customers' operational efficiency, reduce loss ratios and related expenses, and compress turnaround time.
Outsourcing to specialists allows carriers and TPAs to bridge the gap between what is possible and what is achievable, given the existing systems and the expertise of their employees. As with all industries, insurance companies that try to do everything can't move fast enough in any given function to keep up with disruptors and scrappy, digital-native startups.
The way that insurance companies will withstand the coming digital wave is not simply by reinforcing their own foundations, but rather by building a network of digitally savvy partners that can keep them on the cutting edge of the industry. Partners that are not only prepared for the digital dam to break, but anticipating the possibilities.
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Haywood Marsh is General Manager of NetClaim, which offers customizable insurance claims reporting and distribution management solutions.
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