IAn insurance claim comes at a difficult time in a customer’s lifewhich often makes it a negative experience. At least, that’s what you might assume. That’s why I was surprised by the latest research report, Why artificial intelligence in insurance claims and underwriting,
Speed of settlement drives claims satisfaction in insurance
Overall, our survey found that 70% of policyholders said they were either satisfied or very satisfied with the way the insurance company or insurance agent handled their claim.
For claims, this is too high. And our survey isn’t the only data point that shows this. A 2021 JD Power survey focused on auto insurance showed benchmark customer satisfaction with claims, at 880 on a 1,000-point scale. A similar 2021 JD Power survey on title claims showed a slight decrease in satisfaction rates (from 883 to 871), but this broke a 5-year streak of steadily increasing satisfaction scores and was likely due to conditions not directly related to insurers (such as supply) Chain imbalances and lack of articles related to the epidemic). So, what causes these increased satisfaction rates?
Multichannel communication and transparency are two reasons. Most insurance companies allow customers to open a claim on a website or app. Technology provides the convenience of using images for scans rather than scheduling a person to come to the site. Some insurance companies offer a dashboard to track a claim throughout its life cycle.
These are all important updates that have helped make the claims experience smoother. However, there is one piece that, according to our survey, leads to satisfaction rates more than anything else: settlement speed. The longer it takes to settle a claim, the less satisfied the policyholder will be.
This insight is particularly important for insurers, as dissatisfaction with claims is a major factor in driving policyholders to switch to another company, with 74% of dissatisfied customers saying they have changed providers (26%) or are considering doing so (48%). ).
Insurers should focus on artificial intelligence to build on higher claims satisfaction rates
Knowing that speed of settlement is the primary driver, how do insurers continue to have high levels of satisfaction and, more importantly, build on that?
For many years, insurance companies have focused on omnichannel. We are now at a point where continued investment in omnichannel leads to diminishing returns. Of course, this does not mean that omnichannel should be ignored. New methods targeting the younger generations, such as chat applications (WhatsApp, etc.), will continue to be an important strategy for insurance companies to expand their customer base. And perfecting or updating any existing omnibus insurance delivery channel will be critical to staying relevant. What I’m saying is, the omnichannel is an easy fruit – we picked most of it already.
Instead, insurance companies should focus on artificial intelligence to automate the settlement process to be fast, easy, and accurate. Of course, this is easier said than done. Automating the settlement process requires robust data and analytics capabilities all connected in a single ecosystem.
Disconnect between intention and action
Executives already know the importance of using AI in claims. The graph below shows that for each area of the claims value chain, at least 75% of executives said AI and machine learning could bring “significant” or “great” value.
However, there is a disconnect between this intention and taking action. The same graph illustrates this gap, with only 44% of CEOs still saying they are advanced in using AI, automation, and machine learning in even the most advanced areas (claims adjustment). In this scenario, our definition of “advanced” is after the level “use in the initial stages”.
Insurance executives must look at priorities holistically
So, about 80% of executives recognize the value of artificial intelligence in claims, and about 40% consider themselves advanced in different areas. Not surprisingly, investments in claims will accelerate over the next three years, with 65% of those surveyed planning to invest more than $10 million.
However, insurers should not be discouraged, because the speed of settlement priorities aligns with other operational priorities, such as reducing administrative costs and bridging claims leakage — and the solutions are the same. This is why executives should avoid trying to solve each problem one at a time, and instead ask how AI, machine learning, and other automation can transform the business in a way that simultaneously meets multiple priorities. For example, increasing the speed of settlement through automation will naturally reduce administrative costs and avoid claims leakage, while increasing customer satisfaction and retention.
Insurance leaders also need to have the courage to confront these larger challenges and avoid putting too much time and energy into simpler priorities (such as omnichannel).
Insurers know what kind of value AI can deliver, but they’re delaying implementation. Fortunately, the recent dash into the cloud will help. The cloud is a critical foundation for leveraging real-time data and modeling that will fuel this type of automation.
Overall, there is still a lot of work to be done to get technology platforms to the point where they can automate settlement speed and make better use of AI across the business. But it’s clear that AI and automation is where investment should go for insurers to reap the most benefits: satisfied customers, empowered employees, and more agile businesses. Read our full report on AI-led transformation in insurance to learn more.
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