Claims technology – quicker claim settlements and other trends for 2018
15 Mar 2018
Russell Crewe, Claims Director for Direct Group (DG), shares how claims technology has accelerated claim settlements for property, and what’s on the horizon for the claims industry in 2018.
60% of insurance industry operating costs are claims-related, according to some estimates. That’s far too high. In response, insurers and their claim’s partners are turning to new claims technology to help reduce costs. This applies to every part of the claims journey, from First Notification of Loss (FNOL) to final settlement and nothing is off-limits to digitisation and automation, as long as service quality is not compromised.
Take Direct Group’s validation services, based in Preston, which deals with nearly 300,000 contents, warranty and gadget claims a year, on behalf of a number of major and smaller insurers. This service is one part of the total claims proposition offered by DG which is being transformed by claims technology. While the databases we use to source replacement products, from TVs to golf equipment, were created manually over the last 25 years, new claims technology has now made the process hugely more effective.
When we now progress a contents claim, the details are captured electronically and proof of loss is requested automatically, if required. Anti-fraud measures, ensures that the policy is cross-referenced against other key data sources to make sure it’s genuine, and to identify the correct and precise make and model of the item. Our platform is able to provide the best match on the basis of features and specification, however we can also establish what’s important to the customer such as brand or technical specifications. We incorporate this into the validation where appropriate, and have a range of settlement options designed to control claim costs and provide a range of customer choices including repair, product replacement, e-voucher or cash.
The validation settlement journey for, say a gadget or a TV now takes less than 30 minutes whereas five years ago, the same process would have taken three days.
In another new initiative, we’re offering customers the option of ‘swap out.’ This service provides a refurbished product rather than new for old, especially for mobile phones and tablets, where the customer gets a refurbished product (including a warranty) to reduce the settlement time. It’s better for the environment and reduces the cost of claim for the insurer, as a refurbished phone is typically 70 to 80% of the cost of brand new handset. The customer benefits from receiving a replacement device within 24 hours, which could be crucial for those who are reliant on their device such as the self employed. Extending customer choice in this way is already becoming the norm.
Looking ahead, other trends to watch out for in 2018 include ‘on-demand’ insurance. There are a number of tech start-ups and gadget or consumer electronic retailers where customers are automatically insured when they buy a product, either by being offered damage or warranty insurance at point of sale which is then uploads the policy and item details to the cloud, or by choosing to take an individual policy which can be managed fully, including any claims made, through an app.
Expect to continue to hear a lot about connected or integrated homes, especially where risk mitigation is mentioned. A number of collaborations are in place, offering leak-bots to detect and manage escape of water. They sound an alarm and a team is sent out to stop the leak occurring. These services not only reduce claims spend – through prevention but have the added benefit of enhancing customer satisfaction. It’s far better for all parties to stop the leak than clear it up afterwards.
I’d also like to see some progress on insurance for vulnerable groups, especially for those on low incomes. DG has partnered with other third parties, to supply low cost insurance where the premium is paid monthly, for example, as part of their rent. Most of these are indemnity policies, where depreciation on broken or stolen contents is applied (i.e. new for old isn’t included as standard however offered as an extra) , and basic cover of up to £15k is provided for contents.
Far too many people are not insured at all, and as a result suffer the most when their items are lost or stolen. Hopefully in the future, technology will help to reduce claims such as fire or escape of water, to make it both easier and accessible for vulnerable groups to protect their items, so that the technology revolution in claims benefits the many, not just the few.
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