By SUSAN CASE who is a claims product marketing manager at Guidewire Software, a provider of policy administration, underwriting, claims, and billing management solutions.
When we look to the future of claims management to determine how insurers can best prepare, we should first consider the top business drivers and how they will redefine success for insurers.
We should also consider the role an insurer's claims system should play in helping them not just simply negotiate, but also capitalize on the rapid changes facing their organization and industry overall.
Key trends that will shape the future of the insurance industry include claims-specific trends, such as regulatory change, but others may be less tangible yet perhaps more strategic such as evolving customer expectations. A few such trends that come to mind include:
-- The concept of "insurance as a commodity." Insurers are recognizing the increased role of claims management in establishing, reinforcing and enhancing their brand.
-- Evolving customer expectations. The bar continues to rise on insurers to deliver timely yet tailored claims service.
-- The power of "Big Data." Tapping into the value of the ever increasing volume of claims data for improved claims outcomes and streamlined or redefined processes.
-- Seamlessly leveraging current and emerging capabilities to advance claims team effectiveness.
Freeing the claims team from tedious administrative tasks to enable them to focus on higher value responsibilities can truly differentiate a company's claims service. When coupled with a claims system that supports seamless integration with a range of expert point solutions, data sources and service relationships, the effectiveness of the claims team in providing service excellence and their ability to better manage losses can be taken to an even higher level.
A thread among these trends is the acceleration of change. Enabling organizational response to the accelerating pace of change, negotiating and capitalizing on the new opportunities change brings, delivering differentiating services and improving results, should compel insurers to ensure that their claims system provides the foundation to support frequent change, or to seek one that does.
A claims system foundation that is architected and designed to successfully provide flexibility and responsiveness will be increasingly critical to any insurer's success.
Flexibility and responsiveness are two very liberally used terms. To illustrate what these terms truly mean for insurers let's take a closer look at our trends:
These two trends are tightly coupled. The lack of sufficient service differentiation relative to a customer's expectations is a direct contributor to commoditization.
Further, as customer expectations continue to rise, more service efforts fall into the "expected" category. Nevertheless, claims management is an opportune area for an insurer to establish and build its brand reputation, differentiating itself on service excellence.
Without a clear service differentiator, the "insurance as a commodity" trend will go unchallenged with the lowest priced coverage winning the business more times than not.
An exceptional level of claims service exceeds what "should be" with what "could be." With a flexible and responsive foundation, an insurer can look to differentiate its service offering for both personal and commercial business in so many ways and deliver the "hoped for" service response.
One approach is to provide "self-service" options, often through a portal.
However, the diversity that can be accommodated through self-service approaches provides a strong basis for differentiation. Self-service can be differentiated on a number of aspects, such as user experience, support for a broader range of self-service actions, and the opportunity to link to or schedule various vendor services.
It can also be differentiated via integration with all sorts of channels, Web, mobile apps. Once again, flexibility is paramount if a mobile solution is to be part of an insurer's self-service strategy.
Given the frequency of change in the mobile device arena, the longer term view would be to seek a solution that leverages a device-agnostic framework.
The key here is to select a claims system with very flexible integration support that is not targeted at specific devices; but rather can serve up data to support today's devices and channels, as well as those in the future.
Ways to differentiate claims service could also include:
-- Creating a holistic customer view that encompasses all of a customer's interactions across all of an insurer's core systems to provide a better, more informed service experience.
-- Redefining customer service response by aligning vendor options with customer and claim-specific needs. Insurers need claim system flexibility to automatically identify service vendors based on such categories as vendor type, geographic proximity, preferred status, and even performance scoring, as well as the ability to easily integrate vendor scheduling arrangements to provide valuable customer service differentiation.
-- Effectively managing special handling instructions for large corporate clients. Having the system flexibility to tailor special handling triggers that differ between accounts and within an account by line of business or other criteria, at any point in a claim lifecycle will significantly improve customer service while dramatically reducing the manual burden on adjusters.
A popular term today, "Big Data" refers to datasets that are so large and detailed that they exceed the capability of traditional databases. As the datasets get richer, the ability to find the relevant data becomes more difficult, but also more valuable.
This points to the value of reporting and analytics in deriving meaning from the aggregation of internal and external data, to modern systems that can effectively capture Big Data, and to their design flexibility which enables that data to be accessed and analyzed.
New generation claims systems already enable more comprehensive and accurate data capture than ever before to provide the crucial foundation for analytics and claim performance monitoring. With the ability to put the data to work through detailed analysis, the opportunities for insurers to improve operational results and continually enhance the claims process are virtually limitless.
With increased data integrity and the availability of more granular data capture now feasible, there is more interest in exploiting advanced analytic capabilities that are also evolving to better identify potential fraud scenarios as well as other leakage and anomalies.
But these offerings vary widely in terms of both capabilities and costs, and they continue to evolve. To ensure long-term viability, insurers should seek a claim system with the flexibility to integrate with their choice of analytics systems and support their vision on how best to use analytics outcomes and scores in their claims process.
There is also a trend to tap into the value of claim data to improve performance, ensure adherence to best practices and support timely intervention in real-time, making claims data actionable while the claim is still in process.
Enabling this capability requires real-time claims performance monitoring architected into the claim system. It is through such measures that an insurer's data can enable adjusters, supervisors and others to take appropriate action to best affect the claim outcome.
To maximize effectiveness, this performance support data needs to be easily accessible and useful to the adjuster to provide an "at-a-glance" picture of the most important aspects of a claim's overall condition as well as a more detailed display of a claim's status relative to the insurer's benchmarks. The claims system needs to have the flexibility to empower the insurer to establish and maintain metrics to reflect process and line of business changes.
Another trend is to tap into mobile access to enable the effectiveness of field adjusters. As noted, given the pace of change in the mobile device space, it is important to seek a claims solution that is device agnostic.
Leveraging third-party solutions and data sources designed to help solve specific business challenges such as estimating and fulfillment services, glass replacement, legal billing systems, and geomapping functionality will also yield success defining benefits.
Many of these applications exist today, however most legacy claims systems rely on outdated technology, making integration of these new applications difficult if not impossible. As a result, manual workarounds are put in place to try to compensate. So while there might be an outward appearance of modernization, behind the scenes inefficiencies reign.
To make the claims team more effective, a claims system must be designed with the integration strengths to orchestrate and enable seamless access to these capabilities and point solutions from within the claims application.
The new claims system insurers implement today or in the near future will be supporting their claims operation for the next 10 to 20 years. While it's not possible to predict all that the claims system will need to do and support in the future, it is clear that claims management is facing accelerated and constant change.
So, the flexibility to support change in a quick and efficient manner should be part of every insurers' selection criteria when evaluating new claims systems.
October 15, 2011
Copyright 2011© LRP Publications