(Satellite photo of Hurricane Michael, at peak intensity, making landfall on the Florida Panhandle. Source: NASA.)
The moment of truth has arrived: Hurricane Michael made landfall as a CAT 4, just shy of CAT 5 on Oct. 10, 2018. Not since Hurricane Andrew in 1992, has a storm barreled ashore with such ferocity. Like any catastrophe, insurers will be challenged. At issue is their ability to restore the lives of those whom rely on them to protect their dreams.
In a low-growth environment, insurers know that customer retention is a key to profitability. Savvy insurers realize that a core tenet of customer retention is performing during these “moments of truth.” This time of year we don’t have to look too far for those opportunities, especially for those who found themselves in Michael’s path.
The lasting impacts of Michael will only be revealed over the coming weeks. Insurers are still reeling from all that we saw in the destruction left by Hurricane Florence in the Carolinas this September. Those of us in the industry also know that, while the personal suffering is very real, this year’s Michael or Florence are last year’s Harvey, Irma or Maria. Last year’s storm season in the U.S. led to record-breaking losses of over $200 billion. Even when the news cycle moves on, insurers know the job of helping hundreds of thousands of customers with their own “moments of truth” is just getting started.
Digital Support in the Wake of Catastrophes
The result is an intense focus across the insurance industry on digital transformation. Too often, digital is thought of in terms of customer interaction channels, like a new app or online portal. Instead, when considered across the front, middle and back offices, digital can play a key role in supporting customers in the wake of catastrophes.
To illustrate this point, consider First Notice of Loss (FNOL) processes, which are always important but especially so when disaster strikes. In an increasingly digital world, the FNOL process might be the only interaction point between policyholders and their insurer. Expectations of a rapid, positive and seamless claims experience are high. FNOL reimagined for the digital era can include:
- First contact into the front office via digital channels such as claim reporting features inside mobile apps, which are increasingly common.
- A transformed claims workflow than includes investigation, evaluation and settlement with process cost analytics to improve decision making, with additional advanced capabilities to identify potential fraud.
- A transformed back office that automatically fast tracks claims that meet specific criteria using robotic process automation, workflow tools, machine learning and cognition, and then routes exceptions to claims experts.
When orchestrated together with claims teams, these interventions improve capacity, cycle time, settlements and fraud detection—which can make a difference both for individual customers, as well as for insurers responding to the volumes of claims that follow a disaster. We’ve seen digital interventions, such as automated workflows, intelligence information extraction, judgment-based processing and cognition-embedded decision making improve FNOL process efficiency 30-35 percent, fraud detection by 20-25 percent, spot settlement by 5-10 percent and 2-5 percent better utilization of claims adjusters and special investigation units.
FNOL is just one of many examples of the promise of digital for claims. Insurers are experimenting with other technologies, such as using drones to survey property, intelligent estimatics, and the ability of analytics to analyze images. Following a disaster, many insureds are faced with power outages and looting, leaving them stranded with no access to the outside world. Before the digital age, adjusters were often armed with lists of addresses, to proactively seek out insureds. Today, virtually everyone has a smart device that is potentially their only contact with the outside world. Leveraging outbound calling to proactively contact insureds not only creates an element of trust but speeds up the process of restoration. Beyond this, capabilities exist to view entire neighborhoods with an eagle’s eye to identify the hardest hit areas providing knowledge for the optimal mobilization of claims personnel.
Strategic Vision with Clearly Defined Goals
To succeed in driving digital transformation, insurers should have a long term strategic vision with clearly defined goals. Digital intelligence is an approach that uses data from previous disasters and customer behavior to create the right orchestration of digital interventions and human efforts to drive solutions that improve customer experience and increase speed to respond, while reducing cost to serve.
Leading the digital transformation charge is paramount to success for insurers. Those that successfully transform place in the top quartile of their industries, growing revenue, reducing expenses and improving profitability. These are all important, obviously, but at the same time, when done well, digital can also help insurers to better support the all-important “moments of truth.” of protecting dreams and restoring lives.