Claims deconstructed: Expert takes deep dive into surge events management

Claims deconstructed: Expert takes deep dive into surge events management | Insurance Business

Claims deconstructed: Expert takes deep dive into surge events management

No-one could have anticipated that Australia’s worst natural disaster season in recent years would be followed by a global health and economic crisis. From an insurance perspective, it meant a barrage of claims preceding a new world bound by restrictions and claim process complications.

To examine how the events of late have impacted the claims space, Insurance Business spoke with high-volume claims expert John Stewart Simpson (pictured), whose credentials include about a decade spent at Insurance Australia Group. He noted that insurers, big and small, are currently contending with limited numbers of insurance assessors, motor repairers, loss adjustors and others.

“With each event comes unique challenges, but the general issue comes down to how to deal with the sudden surge in volume that comes with events,” said Simpson – who cited the bushfires of late 2019 and early 2020; major hail events in Sydney, Melbourne, and Canberra; and significant storms in Rockhampton, Sydney, and Melbourne’s outer eastern suburbs.

“Despite the best efforts of personal lines insurers to utilise resources from within their existing operation, the demand tends to outweigh the resources that can be utilised. As a result, customers striving to lodge their claims by traditional tele-lodgement means face long call waiting times, often have difficulty getting through, and even confront system-related failures due to the overload of calls.”

The Simpson Strategic Solutions Consulting Services director added that the sheer volume and customer demand had also seen system meltdowns in alternative options such as web lodgement. Then came the coronavirus outbreak, which further complicated matters claims-wise.

The IAG alumnus stated: “If the combined impact of a surge in volume both in terms of scale, complexity, emotional impact, and media attention didn’t compound insurers’ efforts enough from a claims perspective, the onset of the COVID-19 pandemic brought more challenges.

“Some insurers had undertaken to ‘offshore’ both claims lodgement and other processes. Many of these operational functions were now impacted, and, as a result, insurers were forced to bring these functions back onshore and do so urgently as they strived to deal with the demand.”

Add to that the coronavirus-related restrictions which have made movement harder for claim fulfilment suppliers – key resources that Simpson highlighted aren’t in abundant supply, to begin with.

He stressed that the number of insurance builders and associated trades, for instance, is not infinite. Combine that limitation with the surge in demand, and you’re left with a strained claim process on all fronts – from lodgement to validation, assessment, and processing, all the way to finalisation which may require repair. And the difficulty to mobilise leads to delays.

“The events we have faced have compounded the usual challenges,” the industry veteran told Insurance Business.

Simpson, who knows no insurance provider wants a growing backlog of ageing claims, believes insurers should now be taking the time to consider their entire claims models, ‘end to end’, and how they could be redesigned to address the surge in volume and the demand for tailored response following major volume events.

“The ‘to be’ world should consider how technology can provide alternative solutions and options for customers outside of telephone lodgement and on the online passive options that exist at present,” he asserted. “Such alternatives will assist with the initial demand.

“However, in my opinion, insurers should also focus in this review of the importance, at the initiation of any claim, of collecting as much key detail and critical information to set the claim up for success as possible. Alternative claim lodgement capability and detailed information will not only assist with the initial surge but also enable more effective management of the claim throughout the cycle.”

According to Simpson, this “source of truth” significantly reduces rework and allows not only potential virtual and remote assessment but also greater insights for suppliers like repairers and builders in tailoring their responses.