Pandemic ushers in a brand new world for claims

Companies that adapt can extract value for themselves and their customers

Pandemic ushers in a brand new world for claims


By Alicja Grzadkowska

There’s no question that the pandemic has pushed the insurance industry fully into the digital age. Alongside changes to many of their processes, there’s also a heightened need for insurers to protect their clients and provide them efficient claims services by implementing digitalization effectively. However, industry experts caution that a path to digitalization that works for all parties involved should prize making progress over being perfect on day one.

During a recent webinar, leaders from the claims space sounded off on how they’ve gone down the digital path over the course of 2020, and the lessons they’ve learned.

“Our purpose is to make lives better by solving the financial challenges of our changing world, and clearly 2020 has been an example where the world has changed dramatically,” said Evan Scarponi, chief claims officer at Prudential, speaking during the Reuters-hosted panel, “Progress over Perfection: Build the Best Digital Claims Journey.”

The topic of ‘progress over perfection’ resonated with the claims leader for a few reasons, the first being that COVID-19 has forced Prudential to think differently, and be more flexible in the face of rapidly shifting customer needs and macro trends. Today, the insurer has to deliver improvements to claims in a more agile fashion and in a way that allows the company to test and gather feedback from users, tweaking its processes as it goes along.

“To me, that’s a very different way of thinking for our industry, and it’s a welcome change that I think will lead to continued improvements for our customers over time,” continued Scarponi. “As industry professionals, we should consider how we can balance risk management and innovation in a way where the two can coexist – and I believe they can.”

If the insurance industry wants to create digital experiences that match the expectations that consumers have now, thanks to progress being made in other industries, then insurers have to abandon some of their old assumptions that don’t hold true in today’s world. For instance, consumers generally are seeking simplicity and ease, and insurance claims and transactions are no exception to that. In fact, claims potentially have to evoke these qualities even more because of their highly personal nature, noted Scarponi.

According to another panelist, a digitalization journey that evokes these customer expectations has to occur at two key points in the insurance transaction – the point of purchase and the moment of a claim.

“The claims experience is a very emotional one for a lot of people, and it’s one that people remember when they interact with insurance carriers,” said Michael Nadel, AVP of innovation at CNA Insurance. “Creating a great claims experience is a way to create a real competitive advantage, from an insurance carrier perspective.”

He added that there are two ways in which claimants see the changes in their claims experiences – one is on the front-end and the other is on the back-end. The former changes are transparent to the customer and are ones that they can interact with and feel, such as a change made to an insurer’s customer-facing website or application. Back-end changes involve streamlining processes behind the scenes or developing an insurer’s internal culture, which, in turn, could shorten the claims experience, the time to payment, or a customer’s overall experience with the insurer.

“The companies that can really orient themselves around this way of thinking [can] extract a lot of value for both the carrier and the claimant,” explained Nadel, though he added that phasing out legacy systems and implementing emerging technology, like AI, telematics, and blockchain, to bring about such changes can be a lot for insurers to handle. The main question for companies, continued the CNA leader, “is how do you marry these two things together to create value for the customer, and then in turn drive value for the insurance carrier?”

To start, insurers can pinpoint which processes are most transparent to their customers, and focus on updating those first, instead of trying to do everything at once. The process around a claim for an auto policy might be more transparent and simpler than a D&O claim, for instance, which could take years to settle and might have more privacy on the corporate side, making it a less ideal target for updating.

“When you can make these important financial decisions around your legacy technology, you can in turn put that ROI that you make back into replacing this technology over time,” said Nadel.

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