The $4.5 trillion insurance industry will undergo an extraordinary evolution in the coming years. As customers increasingly demand a streamlined experience, and technology delivers greater and greater potential for optimizing risk assessment and service delivery, insurers must be prepared to leverage what’s on the horizon.
Let’s look at some of the major trends driving the future of insurance claims management.
Customer expectations are changing
One of the most important disruptions to the insurance industry is the emerging seismic shift in customer expectations and behaviors. Going forward, customers will want more than just competitive rates.They want immediate access. Insurers must respond to their customers’ desire for streamlined service delivery that will speed up the claims process. This includes the ability to easily get the help they need through any channel they wish, including desktops, laptops, and mobile devices.
According to a recent report from McKinsey, customers will increasingly expect several important things. First, they want simplicity — one-click shopping, for example. Second, they want 24-hour access to insurers, policies, and services. Next, they want clear and relevant information about a product’s features — specifically pricing. And finally, they want innovative and tailored services designed for the digital age.
Data analytics is changing the game
Groundbreaking advances in computing technology and the meteoric rise of new digital data sources have paved the way for massive changes in how insurers understand and determine risk. Because the trendline favors better access to third-party data sources, insurers will be able to use predictive models to optimize management operations and develop new products that deliver greater value to customers.
McKinsey provides an excellent example of the result of millions of dollars of venture capital investment in analytics vendors that specialize in insurance appliances. One vendor has developed a health risk model that combines actuarial data with medical science, demographic trends, and government data. This tool models longevity risk by analyzing data from traditional mortality tables, data on medical advances, and emerging lifestyle trends such as less smoking and healthier diets.
Additionally, machine learning and advancements in data visualization techniques will help insurers assess and predict claims risk with greater accuracy and certainty. Using software like Tableau, insurers can do more than predict claims risk. They can also analyze the success of innovative products and identify patterns of fraud.
Regardless of whether an insurer progresses with small-scale projects or dives right in on a large scale, the insurance company has no choice but to take action. When it comes to leveraging new technology, insurers cannot afford to wait.
Insurtech will continue to be a disruptor
“As technology, coupled with data and analytics, has powered the claims evolution from traditional to fast track, and most recently to virtual handling, we wanted to look ahead to better understand the future of claims handling,” says Bill Brower, vice president of claims at LexisNexis Risk Solutions.
“Due to adoption barriers, we recognize this is not something that is going to happen overnight, however, we feel that current technology, coupled with data and analytics, positions the industry to adopt touchless handling as the future of non-complex auto claims.”
That’s right. Touchless claims. Many people, especially tech-savvy millennials, are increasingly favoring self-service options through their mobile devices to take care of both everyday and important tasks. As a result, mobile claim reporting and self-service claims will continue to grow.
Claims volume will decrease
Most experts agree that the volume of general insurance claims will likely decrease in most insurance lines. Several factors will influence this reduction. Monitoring sensors for fire and flood claims will reduce claims volume for homes and commercial properties. Increased vehicle and road safety will reduce both claim volume and severity for both commercial and personal motor insurance lines. And, the introduction of safer semi and fully-autonomous cars over the next decade will have a significant impact on road safety, thereby reducing claim volume in motor insurance lines.
Claims volatility will increase
Although claims volume will decrease, claims volatility will increase. This is particularly true for natural hazards claims.
Indeed, one of the biggest changes in the insurance industry will be climate related. It is projected that climate change will cause an increase in the severity and frequency of extreme weather events. Since 2010, there have been 22 storms that have caused more than a billion dollars in insured losses. Hurricane Harvey, which heavily impacted areas in Texas, caused an estimated 20 billion dollars in insured losses.
The insurer of the future will need to ensure their ability to scale up for natural hazard events at the same time as delivering business-as-usual claim services. Today, there aren’t enough adjusters in place to meet demand.
The on-demand workforce will augment the claims adjuster pool
A product of the insurtech boom, vendors are finding new ways to streamline the delivery of services and accelerate the claims cycle. WeGoLook is one of those insurtech companies. It is disrupting the insurance claims management process with technology that provides flexible, on-demand staffing for insurers.
When needed, particularly in times of crisis, WeGoLook can activate a large workforce of on-demand workers, called Lookers, who can quickly and safely assess the condition of properties wherever the loss occurred. Lookers capture photos and videos on location using either their mobile device or drones, and office-based adjusters can use this data to easily determine the extent of the damage.
Additionally, the on-demand model gives insurers the ability to quickly scale up their workforce when needed and scale it back down when the need diminishes. Due to projected claims volatility, the value of on-demand workers will continue to grow.
Fortunately, members of the insurance industry are becoming increasingly aware of these trends and are doing something about them. For instance, Crawford & Company has developed what it calls “the future of claims management”: a fully integrated management solution that combines digital innovation with new services like WeGoLook.
Technology generally advances faster than organizations do. In these rapidly evolving times, the winners will be those organizations that take decisive action. Innovation is key as the insurance industry undergoes a digital transformation.
As you can see, most of the changes involve technology. It’s time to understand that technology and what it can do for your customers and your organization. Change is on the horizon. And it’s starting now. Get ready.