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The Connected World: How It Changes Claims

Automation is transforming claims processing in myriad ways. Damage appraisals that are completed in only a few hours are becoming the norm―shaving days off cycle time and making the claims process easier than ever before. Insurance customers are getting comfortable with snapping a few photos of their damaged vehicle and sending them to their insurer via a simple mobile claim app. Drones are often dispatched to inspect storm damage on a home, allowing property adjusters to complete virtual damage inspections. Data delivered electronically early in the claims process is revolutionizing the claims workflow, simplifying claim reporting and providing a wealth of actionable data to expedite claim settlements.

What do customers think about the advent of claims automation? How can insurers leverage today’s technology and real time data to wow their customers? These are just a sample of the questions we wanted to answer with our Future of Claims panel of experts at the LexisNexis Customer Advisory Meeting on Sept. 11, 2018, in Scottsdale, AZ. This session, which I moderated, included experts Dave Pieffer (P&C practice lead with J. D. Power & Associates), Jimmy Spears (AVP auto experience with USAA) and Lily Wray (VP emerging technology operationalization with Liberty Mutual).

See also: 3 Techs to Personalize Claims Processing  

Data from the 2018 J. D. Power Claims Customer Service Survey, presented by Dave Pieffer, informed our discussion around the following four themes (with the customer perspective for the themes shown in quotes):

  • Show Empathy―“Listen to Me”
  • Streamline Customer Communications―“Simplify for Me”
  • Improve Service Speed―“Prioritize Me”
  • Optimize and Balance Self-Service Options―“Empower Me”

Show Empathy

The survey found that showing empathy (“Listen to Me”) ―expressed as “ensuring the customer feels more at ease”―scores low, with an industry average of 66%. Pieffer shared that the only empathy category scoring lower was “taking the loss report in 15 minutes or less”―with an average of 59%. The panel explained the importance of listening to customers as a first priority and improving FNOL scripts to be more natural and conversational versus impersonal (such as simply providing a list of questions). Jimmy Spears emphasized the importance of adopting a user-friendly self-service claims reporting process. He introduced the term “digital hug”―an immediate digital response to a customer’s electronic claim report or message. Spears shared that often customers who report electronically will immediately also call to ask, “Did you get my report?” Providing a digital hug gives customers the assurance that they have been heard and action is underway. The panel audience participated in the session by answering real time electronic polling questions from their phones, and in this case responded that simplifying the FNOL process with fewer questions was the most important way to increase customer empathy.

Streamline Customer Communications

On the topic of streamlining customer communications (“Simplify for Me”), Spears explained that “pro-active communication is the key to success.” Pieffer shared statistics showing that customers are most satisfied when the insurer updates them with claim status information. The survey results supported this information through scores indicating deteriorating satisfaction when customers find themselves having to call their insurer or repair facility. The panel agreed that getting the claim to the right person quickly and avoiding multiple handoffs was critical to improving customer communications. This was confirmed by survey data that showed consumer ratings drop by 133 points when customers are asked to repeat information during the claims process. The audience’s real-time polling indicated that typically at least three claims employees touch even the simplest claims.

Improve Service Speed

Customers expect their insurance company to make them a priority (“Prioritize Me”) when they have a claim. While we often think this means fast claims service, Pieffer explained that the survey results indicated that setting an accurate customer expectation at loss report was equally important to processing speed. In fact, meeting customer expectations on time-to-settle increases customer satisfaction scores even more than simply providing a fast claim experience. Spears explained how his company has completely redesigned the total loss claims experience by simplifying not only claims processing but also the car purchasing process via USAA Bank services and the USAA car buying service, which allows customers to be in their next car within a few days versus a few weeks (the industry average). Audience polling revealed that the optimal time to pay a simple claim should be within three days. Pieffer noted that the survey indicated today’s industry average is about six days.

Optimize and Balance Self-Service Options

Our final discussion topic (“Empower Me”) focused on the use of self-service technology. Pieffer shared data showing that Gen X and Gen Y customers (younger than age 50) were most comfortable with submitting damage photos via a mobile app and receiving electronic claims updates. While this was not a surprise, it was interesting to learn that satisfaction with digital FNOL was low for all age groups. The panel spoke about the need to simplify the FNOL process to minimize the clicks it takes to complete a digital FNOL. This was validated by audience polling, which overwhelmingly supported simplifying FNOL apps and minimizing clicks. I shared the value of bringing real-time data into FNOL and self-service applications to electronically verify first-party information to minimize additional inquiry. Furthermore, I noted that real-time FNOL data also allows third-party information to be collected immediately and accurately to simplify the FNOL process and make self-service reporting much easier for customers, which should greatly increase customer adoption.

See also: The Missing Piece for Customer Experience  

The panel discussion and audience poll answers confirm that delighting customers at time of claim is all about listening to, simplifying for, prioritizing and empowering them. As the P&C insurance industry continues to advance in claims automation, these four customer expectations should be front and center to ensure greater customer satisfaction and retention.

5 Challenges When Innovating With AI

Artificial intelligence is booming in insurance. In a recent report, Celent identified AI use cases around the globe and across the insurance value chain.

Uses include customer engagement (USAA’s Nina); product optimization (Celina Insurance Group, Protektr); marketing and sales (Usecover, Insurify, Optimal Global Health, Ping An); underwriting (ZestFinance, SynerScope, Intellect SEEC, Swiss Re); claims (Tractable, Ant Financial, Gaffey Healthcare); fraud detection (Ant Financial, USAA); risk management (Achemea); and business operations (Ping An Direct, Union Life).

Insurers are wise to innovate with AI technologies. Early adopters will face challenges but will also have the potential to reap greater rewards by improving efficiency and customer engagement.

Here are five challenges for carriers to consider when innovating with AI:

1. What technology to use when. When embarking on a digital transformation, there may be a number of solutions available for a given problem, one of which could be AI. But while AI may resolve an issue, it is important to examine all the potential solutions and decide which one is the best fit. Perhaps robotic process automation (RPA), application programming interface (API) or another automated solution is best suited. Can an existing technology be leveraged?

Deciding what solution to apply when requires you to look at the whole organization and all the issues upfront. This allows CIOs and CEOs to examine each problem, decide on the right technology solution and make sure it complements the overall strategy and budget.

See also: Strategist’s Guide to Artificial Intelligence  

2. Big data + AI = big strategy. A second challenge surrounds the management of big data obtained from customers, core systems, brokers/agents and insurance exchanges. Add to that the varied types of data that AI is managing, analyzing, communicating and learning from and things get a little more complicated. Here’s a list of the different data types AI may be working with:

  • Structured, semi-structured and unstructured data
  • Text
  • Voice
  • Video
  • Images
  • Sensors (IoT)
  • Augmented/virtual reality

Data is also classified as real-time, historical or third-party — yet another dimension to consider. Make sure your strategy takes the necessary data variables into account: where data will come from, where it will flow to and how it will be handled at various points in the customer journey.

3. Managing customers across swim lanes. This leads us to challenge No. 3: the ability of AI to engage with customer data at key touchpoints during the customer lifecycle. For example, if Lucy has group benefits as well as voluntary products, car and house insurance, how will her data be managed and optimized across swim lanes?

What will be the touch points for AI? When will other insurtech solutions be present? When is human intervention required? And how will this data be used to inform future risk decisions?

4. Harnessing AI’s multidisciplinary capabilities. AI encompasses machine learning, deep learning, natural-language processing, robotics and cognitive computing, to name a few. You can read my blog post here to learn more. Deciding what technical abilities will be required to solve your problem could present challenges as the lines between disciplines blur.

Additionally, the next wave of AI could come from entirely different industries, such as aerospace, environmental science or health — but  it will still have applications for insurance. The best way to overcome this is to examine your AI needs across solutions and select vendors with the right capabilities to execute them.

See also: The Insurer of the Future – Part 3  

5. Communicating past tech speak. As AI becomes mainstream, the challenge of helping non-technical business professionals understand these complex applications is real. AI systems can require a level of technical expertise beyond the everyday scope of business.

True digital transformation, regardless of technical complexity, affects everyone in the organization. Ensuring the vision is shared will matter as day to-day operations, tasks and activities change. Find someone who can break down the benefits of these new solutions into bite-sized pieces that everyone understands to ensure buy-in and ultimate success.

The question of whether AI will indeed disrupt the industry or simply enable its full digitization is still not known. It will not be the solution to every problem. However, if implemented strategically, it may hold the capacity to create an entirely new way of insuring — and delighting — customers in a rapidly changing landscape.

Robots and AI—It’s Just the Beginning

You’ve probably had regular help from a virtual assistant by phone or online, assisting you with basic tasks such as directing your call or giving you your bank balance. Helpful, right? The companies that employ the virtual assistants think so, too, and are applying these AI/robotic processes to more and more of their everyday business operations.

Often called out for being slow to change, the insurance industry is beginning to catch up quickly. It’s making sweeping changes across organizations and core systems because of the disruptive emergence of insurtech. Carriers like Celina and USAA are using AI in their daily operations and reaping the benefits.

As a result, insurers are now either delivering — or are in the process of delivering — a great digital experience to consumers. Once complete, this transformation will entail an entirely new way of doing business and servicing customers.

See also: Strategist’s Guide to Artificial Intelligence

There are four main technologies to keep in mind:


Robotics is the branch of technology that deals with the design, construction, operation and application of robots, virtual or physical. They are autonomous or semi-autonomous machines or systems that can act independently.

Artificial Intelligence

AI is the theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making and translation. AI is software that learns and improves. Some robots can use AI to improve their capability by learning, but that is optional.

Cognitive Computing

Cognitive computing technologies are a subset of AI. Cognitive computing “refers to computing that is focused on reasoning and understanding at a higher level, often in a manner that is analogous to human cognition,” writes Lynne Parker, director of the division of information and intelligent systems for the National Science Foundation, in Computerworld. “This is a subset of AI that deals with cognitive behaviors we associate with ‘thinking’ as opposed to perception and motor control.”

Robotic Process Automation

Insurtech consultant Celent defines robotic process automation (RPA) as a set of technologies that can automate processes that currently require human involvement. Robots replicate human behavior to conduct the tasks as a human would; robots also optimize the tasks. RPA can yield benefits when applied to the right roles. It does well supporting repetitive tasks in various environments where there is little change, often back-office support roles and tasks.

Accenture found that cost savings after deploying RPA can reach as high as 80% and time saved on tasks as high as 90%. Automating repetitive processes means tasks are completed quickly with fewer errors, opening up new opportunities for employees to focus on more customer-centric tasks.

But RPA is not the answer to everything. It does not think, reason or predict. It completes simple, repetitive tasks quickly, but it does not learn or self-improve. Developing an enterprise-wide strategy to determine where RPA provides the most value and to anticipate the organizational change that may result is the prudent approach.

The Future Is Here

IBM’s Watson and Amazon’s Alexa are early examples. Insurers already have joined the revolution. Celina Insurance Group uses an analytics-based agency prospecting tool to appoint agents in high-potential underserved areas. USAA’s “Nina” is an AI virtual assistant that chats with customers on the USAA website. It’s designed to respond to 120 questions, from reporting stolen payment cards to changing a PIN.

See also: The Big Lesson From Amazon-Whole Foods  

There will inevitably be lessons to learn from successes and failures of this first wave of robotics and AI. However, early adopters of these technologies also risk success. Investing in innovation is what will allow insurers to stay ahead of disruption and, in some cases, create it.

As robots evolve, their capabilities and applications will no doubt be vast. Just as we could not have predicted how the internet — and now the Internet of Things — would evolve, robotics and artificial intelligence will likely follow the same course.

The Need for Agile, Collaborative Leaders

Change has arrived in the insurance industry—and it has decided to stay a while and get comfortable. In this recap of a general session from The Institutes CPCU Society 2016 Annual Meeting, industry executives spoke about the ramifications of today’s landscape of change and the need for insurance and risk management professionals to stay on top of the latest technologies and technological issues, such as cyber risk, and to embrace ACE: agility, collaboration and education.

The insurance and risk management industry is constantly evolving and, like many of the industries it insures, is currently at an introspective point, as change is all around.

Much of this change is driven by the increasing use of technology, which is having a profound effect on businesses, individuals and society as a whole. Cyber risk, for example, is a major concern for insurers. With nearly half of insurance professionals planning to retire in the next 10 years, developing a new generation of leadership is essential.

To be an insurance and risk management leader in today’s environment requires continuing education. That was the consensus of a panel of industry chief executive officers who discussed at The Institutes CPCU Society 2016 Annual Meeting in Hawaii emerging trends in insurance and risk management and how to be a leader in the modern work environment.

I had the pleasure of moderating the panel, “CEO Conversations, Becoming a Leader,” which included Jeffrey Bowman, FCCA, senior adviser in Deloitte Insurance Consulting Practice and chairman of The Institutes’ Board of Trustees; Albert “Skip” Counselman, CPCU, chairman and chief executive officer of Riggs, Counselman, Michaels & Downes; Alan Krapf, CPCU, president of the Property and Casualty Insurance Group at USAA; and Christine Sears, CPA, CPCU, president and chief executive officer of Penn National Insurance.

See also: Best Insurance? A Leadership Pipeline  

All of the panelists have experience managing change in the industry and implementing new technologies, regulations and working practices. As great leaders themselves, they have helped others grow into leadership roles within their own organizations. They also serve as board members of The Institutes, which has given me the pleasure of knowing them for many years.

The panelists agreed that for the industry and its professionals, honing critical thinking skills and maintaining knowledge of emerging issues—such as growing technology and data analytics—and then being able to use and apply that knowledge are critical to future success. Regardless of professionals’ comfort level with technology, lifelong learning about it, as well as about economics, societal changes and other new developments, is vital to the advancement of both their careers and the industry.

Understanding New Technology

In regard to new technology, the panelists noted that, though it can help facilitate communications, analysis and efficiency, it also poses a large risk. For example, Bowman said that understanding, preventing and insuring cyber risk is a major concern that professionals are still trying to determine how to insure.

Because it is evolving quickly, is very complicated and has many elements, “nobody really has this right at the moment,” he said, adding that companies also have to be aware of third-party risks: “It brings in a whole realm of issues around compliance, regulation and governance that everybody has to be aware of.”

Counselman noted that cyber crime does not discriminate, but affects everyone: individuals, large businesses and small businesses. “You can buy insurance, you can transfer the risk, but transferring the risk isn’t the entire answer,” he said. “What’s really the answer is being vigilant and educated, learning and trying to stay one step ahead. And that’s the message we have to get across, because just as we thought about fire insurance and general liability insurance for years and years as being the mainstay of what we were doing and telling our clients about, this cyber risk can shut down a client and put a client out of business very quickly if the appropriate safeguards aren’t enforced.”

Chief among corporate cyber risks is reputational risk. Krapf said: “It’s not just about protecting the data and the financials. It’s also about the brand. How do I protect the reputation of my company, too?”

Sears added that reputational damage from cyber crimes can cause billions of dollars in damage. “What is really key is that you have a plan in place for when that happens,” she said. “And so, all of us should have a crisis management plan in place so we know that when it happens—because it really is more a matter of when—we know exactly what the processes are that we’re going to follow.” Accordingly, she said, companies should have a plan in place to quickly handle a public relations crisis.

ACE in the Hole: Remaining Agile, Collaborative and Educated

The panelists all agreed that, to address the rapid changes in technology and other spheres, continuing education and agility are essential.

“Really, what is happening today is a fourth industrial revolution: technology in the insurance industry,” Bowman said. “To deal with the changes that are coming in and the changes that have to happen within organizations, you have to have qualified staff.”

Panelists also discussed how collaboration across departments is key to dealing with the fast pace of technological change.

“To be successful in observing and understanding change, deciding what to do about change and implementing change, you need to collaborate today,” Counselman said. “You can’t just make your own plans within your one division or within your one department. You need to collaborate. You need to have input from people who might be involved on a daily basis in property-casualty coverages and risk management advice, in IT advice and financial planning. You need all of that, and you need to be effective at giving everyone the opportunity to understand the issue that you’re trying to approach and determine your strategy—and you need that input across divisions.”

Diversity can enhance collaboration, the panelists asserted. With a diverse workforce comes diverse perspectives, which can aid in everything from product development, customer relationships and risk management.

“Diversity lets you come up with richer and better decisions and allows you to come up with an answer that’s not just the answer that’s always been out there,” Krapf said.

Allowing Professionals to Shine

Part of facilitating collaboration across departments is the move to more decentralized organizations. Decentralized organizations are often flatter and less bureaucratic, thereby helping empower employees to be more involved in decision-making processes.

Krapf added that institutional success further depends on a clear explanation of the mission. “You have to make sure you’re clear with all of your employees about what you are trying to accomplish and then let them make decisions.”

To be well-equipped to make proper decisions in today’s rapidly changing landscape, insurance professionals must continue to learn. Gaining information and ensuring a solid understanding of that information are competitive advantages in the workplace. This idea was reinforced by Sears, who said, “Lifelong learning is absolutely what got me to the position that I’m in today.”

With nearly half of insurance professionals expected to retire from the industry in the next decade, the industry needs insightful and capable new professionals. The good news for the industry, and specifically CPCUs, is that they have proven their commitment to lifelong learning and staying on top of industry issues.

Changes in insurance, business and society present both opportunities and challenges for ensuring professional growth and leadership development and for grooming a generation of professionals with different working styles. From the panel’s perspective, insurance professionals are clearly going to have to work harder than ever to keep up with new developments and best practices and to develop creative solutions. This will enable them to thrive within the industry’s dynamic work environment and help the industry evolve.

See also: Better Way to Think About Leadership  

Looking out from my moderator’s chair at the hundreds of new and veteran CPCUs in the audience, meeting with many more at the CPCU Society Annual Meeting and interacting daily with members of the industry, I am optimistic about the future and excited about the opportunities in front of all of us.

The insurance industry plays a vital role in making people’s lives easier. Insurance offers the promise that, if you pay your premiums, you will be protected from certain forms of catastrophic risk, thereby allowing you to engage in risk management. Through mutual trust, insurance also provides the peace of mind needed for families to buy a house or car, entrepreneurs to start a business and large companies to expand overseas. In this way, insurance helps oil the wheels of the economy.

As holders of the industry’s premier designation, CPCUs are the insurance industry’s natural leaders and role models for continuing education. To this point, Counselman told attendees, “The most important thing you can do is commit yourself to lifelong learning. Getting your CPCU designation is only the beginning.”

CPCUs should take great pride in their industry, hard work and accomplishments to date. There will be many opportunities ahead. I encourage CPCUs to raise their hands and seek these out. Find a mentor. And always keep learning.

A Look at 3 Leading Next-Gen Insurers

As the June 30 deadline approaches for the 2016 SMA Innovation in Action Award submissions, let’s take a look back at our insurer winners from 2015: Haven Life Insurance Agency, John Hancock and USAA. Their innovative projects and initiatives have demonstrated how they are rethinking and reinventing the business of insurance and furthering their progress toward becoming a Next-Gen insurer. Insurers that are considering submitting an application to the 2016 Innovation in Action Awards program can see from these examples what a winning business and technology project/initiative might look like.

See also: How to Enable the Next-Gen Insurer

The Next-Gen insurer model is based on five foundational areas of transformation: customer, products and services, technology and data, business model and innovative culture. (For more information on the Next-Gen Insurer model and its foundational areas, click here.) Insurers are taking creative approaches in all of these areas, and the 2015 winners are no exception. Winners are listed in alphabetical order.

Next Gen

  • Haven Life Insurance Agency made a real leap forward for the entire insurance industry in the area of products and services by offering medically underwritten life insurance that can be purchased online. Haven simplified an arduous paper-based application process of four to six weeks to better meet the expectations of today’s customer. The company did this by leveraging technology and data – specifically, external data fed through sophisticated algorithms – to greatly reduce the amount of information that the customer has to provide to receive a quote. A partnership with MassMutual gives Haven Life access to the resources of a large organization while retaining the innovative culture that sparked the transformative approach to selling, underwriting and administering life insurance.
  • The John Hancock Vitality Program reimagined the relationship between an insurer and its policyholders, creating a unique customer experience in the traditionally low-touch world of life insurance. The program rewards policyholders for healthy behavior such as exercising and getting annual physicals. These activities can be tracked through wearables technology and data via a free Fitbit or logged online through a computer or a mobile app. John Hancock uses this data in an online rewards program that offers premium savings, among other rewards, changing the business model for this life insurance product. In addition to rewards, policyholders can receive individualized encouragement toward further healthy behavior, a value-added service that represents a real advance in life insurance products and services.
  • USAA pioneered the use of drones in the insurance industry, showing what this technology and data can do for insurers, especially in P&C claims. After mudslides hit Oso, WA, USAA’s deployment of drones for damage assessment established a new and vital service for policyholders in post-disaster situations, pushing the envelope in the foundational area of products and services.

See also: 6 Key Ways to Drive Innovation

The real progress that these three insurers are making toward becoming Next-Gen insurers is evident in the effects these groundbreaking initiatives have on the five Next-Gen Insurer foundational areas. They are also fantastic examples of how thoughtful approaches to innovation can make insurers stand out from the crowd in the industry.

2016 Awards Logo

This is the fifth year of our SMA Innovation in Action Awards program, which honors insurers and solution providers that are putting innovation into action with creative projects, initiatives, technologies or solutions that further insurers’ progress toward the goal of becoming Next-Gen Insurers. We encourage you to apply for the SMA Innovation in Action Insurer Award or the Solution Provider Award to share your successful innovations!

Submissions are due by June 30, 2016. A full program description, FAQs and links to the applications for both awards can all be found on the SMA website.