Technology advances are driving transformation. Within the insurance industry, claims management is one of the areas that most clearly testifies to this change. Traditionally a complex and time-consuming activity, claims management can now be optimized through the integration of new technologies: digital tools, cloud-based platforms, and artificial intelligence (AI) applications.
How and with what consequences is digital transformation revolutionizing claims management in the insurance industry? What tools are actually producing greater operational efficiency? What is the relationship between digitization and customer satisfaction throughout the insurance journey? Why can the most macroscopic effects of the use of new technologies be traced to the claims management process?
Before answering these questions and delving into how digital tools can help insurers manage claims, let’s clarify the difference between arguably the two most critical phases of the insurance life cycle: claims management and policy renewal.
Claims management and policy renewal: two strategic moments in the insurance journey
Claims management and renewal processes in the insurance industry differ significantly. Claims management represents the insurer’s response to the occurrence of specific events and consists of assessment and settlement operations. Therefore, it’s reactive in nature. Renewal processes, on the other hand, are proactive, occurring when the policy expires, where the insured reflects on the validity of the risk determination policies in their policy, and then decides whether to continue coverage.
Claims management: submission, evaluation, settlement
The claims management process is triggered when a policyholder suffers a loss or damage covered by his or her insurance policy as a result of the occurrence of unforeseeable events, such as accidents, property damage, or other types of insurable incidents. It involves three steps: case submission, damage assessment, and settlement or compensation for the loss suffered. In terms of necessary documentation, claims management is triggered from the moment that all relevant information related to the accident or specific loss is collected, and includes any supporting evidence that can be considered relevant (for example, covering the cause of the event and the existence and extent of the loss). The guiding principle in claims handling is the fair and timely settlement of what has been established to the insured, according to the terms and conditions of the policy. The decision-making process involves assessing the merits of the claim and determining appropriate compensation.
Although both claims management and renewal processes contribute to the overall operation of an insurance company, they take on profoundly different functions: in the former, a timely response must be provided in the event of an accident; in the latter, the ultimate goal is to maintain coverage over time.
New technologies have had a profound impact on the insurance industry by redefining both renewal and claims practices. In general, while “smart” algorithms improve the accuracy of forecasting, digital interfaces provide interactive, customer-centric experiences. While policy renewal processes are benefiting from predictive analytics, Internet of Things (IoT) devices, and blockchain (which help simplify risk assessment and decision making), claims management has accelerated with automation, AI, and data analytics. Overall, technological innovations reduce operational costs, improve customer satisfaction, and create more agile and efficient insurance ecosystems.
But what are these tools? And how can they support claims management processes?
The technologies changing claims management process
In 2021, the global market for claims processing software was estimated at $36.3 billion. Its value is projected to increase steadily, up to 2030, with a growth rate of 8.4%.
Thus, it’s a rapidly expanding market where digital tools are being used to fulfill many functions: from insurance claims management and evaluation to data collection, from authorization and payment tracking to the creation, management, distribution, and monitoring of communications. The growth is due to the transition from manual processing systems to AI-based automation, which minimizes operational inefficiencies and legacy problems, reduces maintenance and training costs, and improves the customer experience.
Never underestimate the customer experience
The integration of cutting-edge technologies, such as artificial intelligence, data analysis, IoT, digital platforms, mobile apps, advanced image and video analysis tools, and digital communication tools is redefining how claims are handled in the insurance industry. All of these innovations not only make the process more efficient, accurate, cost-effective, and flexible, they also offer insurers a new, entirely customer-centric perspective from which to assess, process, and settle claims without ever underestimating the importance of the customer experience.
- Automation and AI. Automation and artificial intelligence play a key role in accelerating the claims management process. Intelligent algorithms can quickly analyze large amounts of data to evaluate claims, reducing the minimal processing time required. AI-based systems can also detect patterns and anomalies, helping to identify potentially fraudulent actions. Chatbots and virtual assistants interact with policyholders, and in some cases, are also used to gather initial information about a claim. They can guide users through the claims submission process, ensuring that all relevant details are provided. This not only speeds up the claims initiation process, but also improves the customer experience through prompt and immediate support.
- Data Analysis. The most advanced analytics tools enable the processing and analysis of large data sets to identify trends, assess risk factors, and optimize processes related to claims resolution. Predictive analytics can be used to predict the frequency and severity of events, providing useful information for allocating resources and speeding up strategic decision making.
- IoT devices. Increasingly integrated into insurance policies, especially in the automotive and property sectors, Internet of Things functionality collects real-time data, enabling insurers to accurately assess risk and facilitate faster claims processing. For example, in the case of automobile policies, telematics can provide detailed information about driving behavior, helping insurers determine liability more accurately (and thus minimizing the danger of fraud).
- Advanced image and video analysis apps. Insurers can leverage AI algorithms to analyze images and videos submitted as part of the documentation on a claim. Advances in image and video analysis technologies help formulate faster and more accurate damage assessments, facilitating faster claims settlement.
- Mobile apps and digital platforms. Mobile apps and digital platforms are simplifying the claims reporting process for policyholders. They enable self-service modes of communication that give the user greater autonomy. Policyholders can submit claims, upload documents, and monitor the status of their claims through intuitive interfaces. This not only expedites claims, but also increases customer satisfaction because it provides an important empowerment and accountability experience.
Insurers that embrace technological advances are not only streamlining their operations, they are also better positioned to adapt to the evolution of the dynamic and competitive insurance industry. The future of claims management lies in the seamless integration of these technologies, benefiting both insurers and policyholders. Finally, the role that digital communications plays should be highlighted in the renewal that is sweeping the insurance world.
The benefits of digital communication on claims management
Digital communication technologies are streamlining and enhancing claims management processes. In particular, they are contributing to the design of a better customer experience, the creation of interactive digital interfaces, the construction of more comprehensive and timely customer service systems, the development of synchronized multichannel management modes, and a substantial reduction in operating costs.
- Improved customer experience. Claims management based on new communication technologies enables insurers to leverage real-time data and analytics. Policyholders benefit from tailored solutions and faster claims processing based on information from their data history.
- Creating interactive digital experiences. Through mobile apps and intuitive digital platforms, customers can submit claims and monitor the claims management process. In other words, they fully participate in interactive digital experiences created by the insurer to make claims management more agile.
- More comprehensive customer care offering. Digital communication in claims management contributes to the development and differentiation of customer care services. Solutions based on automation and AI enable the collection of detailed information that provides insurers with broad and detailed knowledge of the situation and enables them to offer accurate assessments and efficient solutions.
- Multi-channel and synchronized customer management. By integrating different communication channels, insurers can provide concrete answers for both internal, corporate requirements and when requests come from agencies scattered throughout the territory. This unified approach improves communication and collaboration because it ensures that all stakeholders have access to the same content in real time and in a consistent manner.
- Reduction of operational costs. Digital communication tools contribute significantly to reducing operational costs in claims management. They streamline workflows and eliminate time-consuming manual activities. This operational efficiency not only speeds up claims processing, but also reduces overall costs associated with staffing, optimizes available resources, and minimizes the risk of errors, leading to a more cost-effective claims management system.
Because of the relevance they are assuming within the insurance industry, and in light of the benefits we have just described, three specific digital communication solutions now deserve our attention: customer communication management, mini sites, and personalized videos.
CCM, mini sites, personalized videos: how digital communication supports claims management
Digital communication channels combined with customer communications management (CCM) strategies play a key role in improving overall claims management. Insurers can leverage personalized videos and responsive mini-sites to effectively communicate with policyholders. These interactive tools provide a dynamic and engaging platform through which to provide information about the claims process, clarify policy details, and offer personalized updates.
Sending a video, which recalls the terms of the contract and, at the same time, reassures the viewer by calling them by name and demonstrating complete knowledge of their needs, is the best way to strengthen the bond with the company. There are different ways to deliver it, and this depends on the type of channel that the customer prefers (the insurer is aware of these preferences because of the digital footprints the user has left each time he or she has interacted with the company’s touch points). The video can be distributed via email, through a link on an instant messaging app, such as Whatsapp or Telegram, or through a post on the social network that the insured to contact the insurance company. Distribution thus takes place in omnichannel. A multi-channel digital communication system allows insurance teams, from the agent in charge of tracking the file to the help desk operator, to have a complete and up-to-date view of the various touch points through which the customer connects with the company. This means that the moment an insured has a need, in the case of a claim, he or she does not have to explain every time via email, phone, or social media.
In the case of claims management processes, a reliable Customer Communication Management (CCM) system provides a smooth and frictionless document experience. A CCM with advanced capabilities, such as Doxee’s, enables tailored communications of different formats across a variety of channels and platforms, ensuring timely delivery of up-to-date documents to policyholders. Through CCM, insurers can create and distribute personalized and engaging communications, such as informational videos and responsive mini-sites, improving understanding of complex information.
By prioritizing digital communication, insurers not only streamline the flow of information, but also improve the customer experience, fostering transparency and enhancing trust throughout the insurance journey.