P&C Insurance Claims Transformation in 2017 – Retrospective and Prospective

Insurance carriers have made an unprecedented investment to improve the integrity of their claims systems and processes. This transformation started in the US over 15 years ago with the original goal of improving financial accuracy, financial control, upgrading legacy technology and decreasing systems support costs. Many leading insurers have established claims transformation programs and have delivered upon these foundational goals. In recent years, broader InsurTech and advanced technologies have evolved, which have allowed insurance companies to drive improved operational efficiency and effectiveness, more robust, automated data gathering and analytics and more seamless customer experience with an omni-channel approach through their claims transformation programs. Claims transformation programs will continue with this broader focus, building upon advanced systems and adopting new technologies.

Most P&C carriers are somewhere along the claims transformation journey. Some of the larger personal and commercial lines carriers were early adopters of modern claims systems. They focused on better workflow and improved data gathering for actuarial purposes. Many of them have further enhanced integration to digital/mobile, financial/payment systems and third-party vendors (e.g., medical bill review vendors or auto repair shops).

The second wave of P&C claims transformations saw more complete design at lower cost thanks to technology and vendor ecosystem maturation. The carriers in this wave had a second mover advantage and learned much from the early adopters. The third and the current wave of claims transformations is being completed for even less financial outlay and can be tailored to the digital, mobile, analytic and financial integration needs of the wide number of stakeholders.

Our personal lines clients have told us that their highest priorities are to continue lowering costs and improving the overall customer experience. These goals also are important in commercial lines, but the segment also wants to build a more solid, data driven operational partnership between claims and risk management to reduce loss through proactive risk mitigation and risk management. Advanced technologies such as drones, the internet of things (IoT), robotics process automation (RPA), and image analytics are helping deliver these goals.

There are four key themes that have dominated our recent conversations with the P&C sector about investments in claims transformation:

Personal and commercial lines carriers have increased their investments in claims transformation and recognize they need further automate and integrate their claims processes by adding the following capabilities to their claims operations:

Carriers are subject to the complex and fluid expectations of staff, consumers, agents and partners in loss restoration. The claims event is a difficult event and not as straightforward as online retailing. With the burden of a catastrophic event and the disruption it brings, claims organizations must have exceptional technology and people to deliver a true omni-channel experience. Carriers are also rethinking their digital experience and turning away from separate digital and “over the phone” experiences to an omni-channel, user-centric experience that maximizes their combined investment. Well-designed omni-channel claims experiences allow claimants to self-tailor the claims process and the claims touchpoints to best serve them. This type of experience also allows for the claimants to pick activities where they are comfortable serving themselves and others where they need help. To enable omni-channel experiences our clients are starting to make investments in the following capabilities:

Claims data is used to formulate company strategy, underwriting guidelines, pricing, customer experience and financial reporting for carriers. It’s central to running an insurance company. The ability to accurately correlate variables, detect and dissect loss, expense and customer trends, and allocate costs accurately by line of business separates leaders from laggards. Carriers can dynamically respond to emerging loss trends in the market if they have richer and more useful claims data. Companies that are enhancing their claims data environments are investing in the following capabilities:

InsurTech is opening up opportunities to start new businesses and form new carrier operations. Technologies such as cloud computing, the internet of things (IOT), drones, big data, artificial intelligence (AI), and robotics can help better determine and manage insurable risks, as well as transform how an insurance company adjusts claim. Two important questions for claims personnel include:

• Carriers have increased their expectations of chief operating officers and chief claims officers to deliver improved loss, expense and customer satisfaction. It’s no longer enough to focus on just one dimension of the claims triangle (loss, expense, customer satisfaction) in a claims transformation program.
• Seamless omni-channel capabilities are critical to enabling “self-customization” of the claimant and agent experience.
• Robust and comprehensive claims data is critical to insurance carriers’ survival. Leaders in the industry will rely on analysis of claims data to deliver results that help drive financial effectiveness and improve customer outcomes.
• The application of advanced technologies in claims is a critical step to further innovation. Using claim data to specifically attack risk with these technologies is critical to establishing practical applications and cost benefit analyses.

Imran Illyas and Richard Pankhurst, PwC FS Insurance Advisory Services principals, co-authored this article with Matt Wolff, Scott Froseth, Ryan Hilyard, and Ryan Rodriguez, also in PwC’s FS Insurance Advisory Services.