Digital claims transformation brings a raft of benefits for insurers and customers alike. Stuart Riddell and Shaiwal Mathur explore how to put digital claims transformation plans into action.

Claims transformation can help future-proof your business and establish a more customer-centric approach. The additional data it brings can garner insights that drive innovation, inform product design and meet emerging customer expectations. You can also reduce claims cost and optimise indemnity payments through improved risk management, better fraud detection and reduced claims leakage. We’ve talked about the benefits of claims optimisation previously, but how do you get the ball rolling and put it into practice?

Starting points for transformation

Firstly, you need to know what 'good' looks like in digital claims transformation. That includes a clear definition of the target end state, claims success factors and key performance indicators. These need to be fully aligned to your wider organisational strategy and your ESG goals. Next, you need to acknowledge that getting to that target state will require a fundamental rethink around how your claims processes work. Starting with your desired customer outcomes, work your way backwards to figure out what your underlying processes and team need to look like.

Legacy infrastructure may be one of your most immediate challenges, and it’s important to set a clear strategy for your legacy stack. That includes plans to build or buy new technology solutions, transform existing ones, or retire complex and out-of-date systems. You’ll also need to think about how your core systems will interact with each other or with third-party systems or suppliers. Streamlining your architecture will help manage your data more effectively and establish good quality control processes. Ultimately, you need to consider how these systems will affect the customer journey, and any potential impacts for the consumer.

The next question is: how do you measure success and monitor progress? You’ll need to establish effective benchmarks to measure success, against your peers and against customer expectations. Measuring benefits of the work to date will help establish a future investment plan, with a strong business case, so you can continue to adopt new technologies such as machine learning and blockchain.

Getting the right balance

Most insurers have made in-roads in their digital claims journey, but there’s still a long way to go. Insurers tend to follow a mix of phone and online notifications. Decision-making processes are mostly done by humans, with a small number being automated – and this can lead to inconsistent outcomes for customers. When it comes to processing, firms often use a combination of system or back-office automation, including robotic process automation (RPA). At this point there can be a disconnect between insurer and supplier technologies leading to occasional discrepancies or disruptions. Some legacy systems also prevent firms from big leaps in progress because they simply aren’t fit for purpose anymore.

Ideally, you want to get to a point where the vast majority of your claims are online, to improve consistency and reliability. The small remainder – more complex policies and claims details, for example – would be dealt with by a human by phone, although automation can still support this process with suggested claims outcomes or reserving.

Once the decision has been made, all processing would be automated through a mixture of machine learning, RPA and third parties within your supply chain. This includes claim validation, enhanced fraud detection and identifying trusted customers.

How to get started today

To get started, you can establish your target end state and assess where you now sit against that. A gap analysis will identify key activities for your transformation roadmap and help you create a project plan to initiate change in line with your budget.

It’s also important to take a holistic approach, and look beyond technology to understand the impact on people and processes. Doing so will help align the changes to your strategy and values. Implementing long-term, sustainable change takes time, so you need to make sure you’ve considered the impact on your customer, your team and user adoption.

For further insight and guidance on claims automation, contact Stuart Riddell.