Connecting the Claims Ecosystem: Truly Digitized Insurance and Straight-Through Processing

Cloud-based platform technology will enable the auto insurance industry to make a critical and fundamental pivot away from purely reactive claims response.

(Image credit: Shutterstock.) 

Editor’s Note: Alan Demers, President of InsurTech Consulting, co-authored this article with Stephen Applebaum.

More than any other area of insurance operations, claims is best positioned to benefit from a digitized, unified, and continuous ecosystem in order to meet the needs and exceed the expectations of today’s consumer, support management’s key strategic objectives, and bring compelling new value to policyholders.

It is generally understood that with a connected ecosystem, data and information flow easily and quickly between myriad stakeholders, speeding decisions, and improving outcomes. This holds true for insurance, where digitally connecting all providers necessary to quickly resolve a claim can radically improve consumer experiences, customer loyalty, and retention. And though often perceived as a technology laggard, the insurance industry proved during the pandemic that virtual processes are not only possible but welcome and more efficient. This shift to a more digital-first process was made possible by a combination of connected technologies; many of which will also fuel the industry’s vision of straight-through processing.

Creating a Connected Underpinning

Connected ecosystems are enabled by cloud technology. Cloud is not new, its roots tie back to 2006, but the insurance industry is now moving to the cloud in growing numbers. In fact, the recent Arizent/Digital Insurance 2022 Prediction Survey revealed that nearly 70 percent of responding insurers will be investing new or incremental resources in cloud in the next 18 months. Insurers are beginning to recognize the benefits as some of the insurance industry’s information and technology providers have been supporting them using cloud technology for years and the value it has brought to insurers has added additional validation and encouragement to those yet to migrate to cloud technology. From an operational and technical perspective, these benefits include the ability to adapt to different work environments, facilitate experimentation, accelerate innovation and drive more efficiency into their business. From an end-customer perspective it means better, faster service experiences and outcomes across touch points with the insurer.

Marc Fredman, Chief Strategy Officer, CCC.

Many insurers are already utilizing the cloud in claims and other external transactions. For example, when an insurer uses a third-party information provider solution to manage external aspects of claims, such as requesting an estimate of repair cost and making a damage inspection assignment, chances are that the connections between carrier, customer, adjuster, and the repairer are taking place in the cloud. To validate this, I spoke with Marc Fredman, chief strategy officer at CCC Intelligent Solutions (Chicago). He confirmed that the cloud is hard at work for its insurance clients, adding that the CCC Cloud has facilitated more than 150 million cloud-based interactions on behalf of its customers.

The Great Cloud Migration

If you’re new to the concept, the cloud can be considered a collection of remote data centers. It avoids the need to store data on internal computer hard drives; access to information and applications takes place over internet which are available anytime, from anywhere. Clouds can be private or public and single or multi-tenant.

At its simplest, a private cloud is a service that is completely controlled by a single organization and not shared with others while a public cloud is a subscription service that is also offered to customers who want similar services.

In a single-tenant cloud, only one customer is hosted on a server and granted access to it. Multi-tenant clouds can be compared to the structure of an apartment building. Each resident has access to their own apartment within the agreement of the entire building and only authorized individuals can enter the specific units. However, the entire building shares resources and common areas. A multi-tenant cloud is what’s needed to power dynamic ecosystems at scale.

A cloud platform enables insurers to reimagine insurance as continuous customer engagement. It helps mitigate and manage risk and leverage data-driven capabilities and analytics at scale to accelerate business impact and drive retention through better customer experiences. Simplifying application programming interfaces (APIs) to third party providers, cloud connectivity enables a virtually unlimited number of opportunities to seamlessly connect  external and internal resources in support of policyholders. And providing capabilities like process configuration and automation enable insurers to bring together innovative, compelling solutions for their customers. For example, a property/casualty insurer writing personal and/or commercial auto and property in regions of the country susceptible to extreme weather events can leverage a cloud platform, digital CRM systems  and artificial intelligence algorithms to integrate with high fidelity weather data providers and “push” advance weather alerts and warnings to policyholders, giving them time to move their property and themselves out of harm’s way.

McKinsey, in its recent quarterly 2022 report “Cloudy with a Chance of Billions” identifies insurance as a top beneficiary of cloud adoption, predicting an industry increase of between 43-70 percent in impact as a share of 2030 EBITDA and goes on to state “you might think that cloud merely optimizes IT, but 75 percent of cloud’s predicted value comes from boosting innovation.”

Claims in the Cloud: The Ideal Use Case

Claims operations, which have been traditionally treated as outputs of a “reactive back office,” are striving to become a powerful differentiator. Through innovative, unrelenting customer service, and multifaceted talent, Claims is capable of driving strong results while reducing costs and enabling  growth free of incremental expenses.

According to Deloitte, the insurance claims process is core to industry disruption. At the center of this insurance reset, the new growth engine is customer retention and loyalty, both of which are largely driven by customer interactions with their insurers, specifically the claims experience.

The key enablers for the likely future of claims are a combination of process transformation, adoption of new technologies, a connected partner ecosystem, and a talent model that values technical claims handling and data science skills. Adoption of new technologies should reduce pressures of an aging workforce as no-touch insurance claims processing increases. At the same time, claims professionals will need greater technical fluency to take advantage of the increased volume and velocity of available information.

Carriers are focused on moving as quickly as possible towards digital, straight-through processing of claims. However, everyone acknowledges that this is not possible without a cloud infrastructure. Once in place, it provides the ability to efficiently extend digital processing beyond Auto Physical Damage, where much of the innovation is happening today, to related claims functions such as Casualty, Property repair/restoration, Payments and Subrogation and among a multitude of supporting partners.

CCC is at the center of enabling the highly complex end-to-end claims processes for our multi-trillion-dollar industry. CCC’s Fredman shared that the company’s cloud technology connects more than 30,000 businesses across insurers, repairers, automakers, medical providers, lenders, parts suppliers and more. In a recent conversation, he noted a few examples of higher frequency use cases for cloud-enabled transactions, including;

  • Computer vision of smartphone images to quickly identify total losses and provide repair estimates for decision making by policyholders, adjusters and collision repairers
  • Triaging claims with third parties including towing, car rental, and total loss salvage services
  • Straight-through processing of Auto Physical Damage claims, leveraging AI to enable minimal to no manual intervention to generate line-level estimates in seconds
  • Automated applications in casualty claims; determination of fault and comparative negligence in the adjudication of medical bills

Core system providers are also beginning to use cloud to offer client access to vendor marketplaces. In this use case, the sponsoring company has developed a core system for a specific segment of the industry on which sits a collection of third-party apps and content providers for use by the customers of that core system. The Guidewire Marketplace, Duck Creek Partner Ecosystem, and the Majesco EcoExchange are prime examples of insurance marketplaces.

We get asked all of the time about the difference between a marketplace and ecosystem platform like the one Fredman describes. And, while somewhat similar, a marketplace offers a gateway for customers to access third-party apps to augment their services. A network platform can do this along with its defining dimension of connecting ecosystem partners to enable the seamless exchange of information, assignments, reviews and approvals to deliver more efficient claims resolution.

For insurance, ecosystem platforms free up staff time in claims organizations and help insurers differentiate themselves by focusing additional resources on the overall claims experience and increasingly on claim prevention vs. claim resolution. Preventing claims will change the relationship between insurers and customers—from a loss focus to a partnership with shared interest in loss prevention. Connected telematics programs combined with third-party data can alert customers to risks before losses occur.

Ecosystems and Network Effects

James Moore is credited with articulating the concept of business ecosystems, defining them as an economic community of interacting organizations and individuals – the organisms of the business world. In our context, ecosystems are connected groups of companies all of whom are all engaged in related but different aspects of a specific supply chain serving one or more common customer. The term “ecosystem” is extensively used today in place of the word industry though the terms aren’t interchangeable as an ecosystem implies connectedness and industry, while related, isn’t by definition connected through technology.

Successful insurance ecosystems will offer wins not just for end-users, but for all participants. Their value grows as more people and institutions join, which is known as the Network Effect, the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. Network effects are typically positive, resulting in a given user deriving more value from a product as more users join the same network.

Challenges of Cloud Computing

In spite of all of the many compelling reasons and rewards for carriers to move to the cloud, challenges do exist, both real and perceived.

Migrating away from legacy systems can be difficult while prioritizing limited resources and the conflicting demands of system transformation of policy administration, claims and billing functions. Concerns over sensitive data security need to be addressed and satisfied. And cloud reliability including 24/7 information availability are critical.  However, many forward-looking carriers have overcome these challenges.

The Future of Insurance Cloud in Claims and Beyond

The future opportunities for claims transformation using cloud technology are truly exciting. They include the ability to extend and expand more intelligent straight-through-processing across auto physical damage and beyond, including the automation of casualty claims, property repair/restoration, payment, and subrogation.  The uses of connected vehicle technologies including telematics are still only narrow and rudimentary but future potential with cloud technology includes real-time First Notice of Loss, behavioral modification for safer driving and the integration of third-party weather data, surface conditions and road hazard warnings and rerouting.

Ultimately, when fully adopted, cloud-based platform technology will enable the auto insurance industry to make a critical and fundamental pivot away from purely reactive claims response and processing to more proactive claims minimization and avoidance, thereby delivering true, higher value protection to its customers and better operating economics to all of its stakeholders.

Alan Demers, President, InsurTech Consulting.

Alan Demers is President of InsurTech Consulting (Westerville, Ohio), which provides strategic development, subject matter expertise and advisory services.  A former executive with over 30 years of property/casualty insurance claim experience, Demers collaborates in the forefront of InsurTech, partnering with insurance leaders, start-ups, service providers and investors to modernize insurance. As Vice President, Claims Innovation at Nationwide, Demers conceptualized a vision and roadmap to build Claims of the Future, focused on automating and digitizing claims experiences, progressing from inception through prototype testing. He served as a founding member of the Corporate Innovation Council and played a key leadership role in establishing goals, best practices and building an innovative culture at Nationwide. Demers and has worked for two Fortune-100 insurance companies in a number of corporate, national and regional leadership roles among personal, commercial, non-standard and specialty lines claims. Prior to leading claims innovation, he served as head of claims for Nationwide’s Commercial Agribusiness and Non-Standard Claims. Other noteworthy roles include, Field Vice President, Regional Claims Officer, National Catastrophe Director. Alan began his career with Aetna as a claim adjuster, manager and advanced to a Corporate Claim Consultant role, prior to joining Nationwide.



InsurTech Isn’t Just Hype (pace Evan Greenberg)


Stephen E. Applebaum // Stephen Applebaum, Managing Partner, Insurance Solutions Group, is a subject matter expert and thought leader providing consulting, advisory, research and strategic M&A services to participants across the entire North American property/casualty insurance ecosystem. He will be chairing the Auto Insurance USA industry conference on April 16-17, 2020 in Chicago presented by Insurance Nexus/Reuters Events which focuses on the impact of emerging technologies and changing consumer behavior on the broad connected automotive, insurance, claims, information, services and repair ecosystem. Applebaum is also a Senior Advisor to Waller Helms Advisors (WHA) an investment banking boutique firm focused on the crossroads of the insurance, healthcare and investment services sectors and a frequent chairman, guest speaker and panelist at insurance industry conferences and contributor to major insurance industry publications and has a passion for coaching, mentoring, business process innovation and constructive transformation, applying disruptive technology, and managing organizational change in the North American property/casualty insurance industry and trading partner communities. He can be reached at

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