A Wake-Up Call on Claims

"The industry is lagging far behind financial services and utilities providers when it comes to the digital customer experience," J.D. Power finds.

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Digitizing the claims process has been one of the shining examples of innovation in insurance -- or so it seemed. But J.D. Power threw some cold water on that notion in a report released last week.

"The industry is lagging far behind financial services and utilities providers when it comes to the digital customer experience," according to the J.D. Power 2021 U.S. Claims Digital Experience Study. "Adoption remains stubbornly low. During the course of this year, just 40% of claimants interacted with an estimator via digital channels and only 47% made a claim via a website."

Martin Ellingsworth, executive managing director of P&C insurance intelligence at the market research firm (and a longtime contributor to ITL), said that "the insurance claims process has not really evolved beyond the launch of digital photo estimation three years ago.”

He said the heavy investments that insurers are making in straight-through processing will enable more adoption of digital claims management, "but, right now, there is still a great deal of room for improvement."

For me, the key finding of the U.S. Claims Digital Experience Study, now in its second year, was that telephone calls still dominate in the estimator phase and lower customer satisfaction.

"Just 40% of claimants interact with their claim estimator via digital channels, while 49% interact with their claim estimator via phone," the report said. "The average overall customer satisfaction score among those claimants who use the phone is 861 (on a 1,000-point scale), lower than in any other interaction channel. Use of video chat with an estimator is associated with the highest level of overall satisfaction (882), yet it is experienced by just 26% of claimants."

The report also found that "digital claims management tools are hitting their key performance indicators for the estimation process just 35% of the time" and that, not surprisingly, Boomers use digital claims tools less than Gen Y and Gen Z do and are, thus, less satisfied with the claims process.

You can certainly take a glass-half-full approach to the J.D. Power report and argue that having 40% of claimants interacting digitally with an estimator marks a sharp improvement over, say, five years ago, and I'm inclined to sympathize with insurers trying to make the transition.

But I share the J.D. Power report because it's worth reminding ourselves from time to time just how far we still have to go. We can't be congratulating ourselves just yet, especially when other industries keep driving digital adoption and setting an example that insurance customers demand that we follow.

Cheers,

Paul


Paul Carroll

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Paul Carroll

Paul Carroll is the editor-in-chief of Insurance Thought Leadership. He is also co-author ofA Brief History of a Perfect Future: Inventing the Future We Can Proudly Leave Our Kids by 2050 and Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of a best-seller on IBM, published in 1993. Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.

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