The property and casualty (P&C) insurance industry is lagging far behind other financial services and utilities when it comes to digital experiences, according to J.D. Power. Despite widespread adoption of digital tools in other industries, home and auto insurance customers are still reliant on personal channels to get the services they require, especially when it comes to claims.
The J.D. Power 2021 US Claims Digital Experience Study, which is based on 3,043 evaluations by auto or home insurance customers who filed a claim in 2021, revealed that only 40% of claimants interacted with an estimator via digital channels in 2021, and only 47% made a claim via a website. Adoption of digital claims technology remains stubbornly low, and digital claims management tools are hitting their key performance indicators for the estimation process just 35% of the time, and for digital reporting just 40% of the time.
The need to digitalize has not passed the insurance industry by completely. In recent years, insurers have invested heavily in back-end technology, such as straight-through processing, in order to enable faster and more personalized digital claims management tools. But there’s still lots of room for improvement, according to Martin Ellingsworth, executive managing director, P&C Insurance Intelligence at J.D. Power, who said: “The best is yet to come.”
Insurers are making progress, but they’ve fallen behind the pace of leaders in the banking and wealth industries who are providing 24/7 digital customer experiences, with easy-to-use tools like calculators and estimators that drive engagement and increase end-user satisfaction. According to Ellingsworth, the insurance claims process has not really evolved beyond the launch of digital photo estimation three years ago – and even that, he said, is “in its infancy”.
The J.D. Power 2021 US Claims Digital Experience Study revealed that phone still dominates the estimator phase, with 49% of claimants choosing to interact with their estimator in-person over the phone. This could come down to a desire for human empathy at a time of great stress – no-one wants to experience an insurance claim – but Ellingsworth said there’s room for both people and technology in the claims process.
“I’m more of an AND versus an OR when it comes technology, people, and process. I think technology, people, and process should be a triangle of helpfulness. It’s robots when you want them, people when you need them,” he told Insurance Business. “If you’re a technically savvy individual and you find an insurance carrier that has a digital solution for moderate severity claims, I think there’s intrinsic empathy in the carrier’s respect of the claimant’s personal time by letting them do a digital first notice of loss (FNOL), submit their claim [online or via an app], and then go through the claim and indemnification process digitally.
“I get enthusiastic about the use of AI and robots, but here’s the thing: no amount of digital delight is going to fix a rusty, boring, disjointed process. The old way of handling a claim [via mail, or phone call, or fax from an auto body shop or estimator] was processed out of time and out of sequence. These new digital claims experiences enable insurers to be more proactive, more connected with consumers, and provide more timely responses – and it gives consumers the opportunity to be informed and have their claims managed in person, by a robot, or a mixture of both.”
Customer expectations are being set by technology giants like Amazon, Apple, and Google – all of whom are promoting real-time digital delivery. But P&C insurers have “a big chasm to cross” between their legacy systems and delivering the digital solutions that are expected by customers today, according to Ellingsworth.
He commented: “If you look at any insurance company, they’ll have a policy system, a claim system, a billing system, and that can be broken down into an auto insurance policy system, a renters’ insurance policy system, and a home insurance policy system. All these caveats have multiple systems that are product centric or policy centric, which are at odds with being customer centric. That’s the biggest pain point in all of this. Insurers have got this amalgam of legacy technical debt that’s meeting a smartphone from 2021 – and if they haven’t upgraded everything to meet modern customer expectations, it might look like they’ve upgraded nothing.
“I don’t see carriers really being proficient at being full stack digital solution providers. Speed to market, speed to scale, and investment in excellence, is probably going to need some insurtech partnerships. I’m not saying a large insurer can’t invest in this technology themselves […] but there’s a certain economy of scale where these solutions need to be invested in and then rolled out. Having pockets of innovation will still be important to some carriers, but in many cases, these new digital innovations are really meshed in fine grain and they’re connected to everything.”
