(Image source: SMA.)
Property and casualty claims is already one of the most dynamic, exciting, and important areas of the insurance business. Whether we are considering personal or commercial lines, or the auto, property, or casualty/medical areas, there is a lot going on. In the next decade, claims will transform more than any other area of the insurance business.
The extraordinary events of 2020 have placed new demands on claims that have played an important role in accelerating the digital transformation in this area. Four major themes have emerged along the journey toward the future of P&C claims: 1.) Automating operations, 2.) AI for insight, 3.) Augmenting human experts, and 4.) Associating with new ecosystems.
Efficiencies in claims have been an imperative for decades—managing LAE to reasonable levels will remain important in any era. But now, technologies like robotic process automation to automate tasks and natural language processing for document intake enable us to get to new levels of automation. Expanding digital connections into new networks also automates workflows.
AI for Insight
The claims environment receives a lot of data from a lot of sources, making it a prime candidate for leveraging various AI technologies to gain more insight. Recent research from SMA reveals the areas in which claims executives believe AI technologies will provide the most value. Three areas demonstrate AI’s potential in claims.
- Reporting the claim (FNOL or FROI): Half of personal lines and 39 percent of commercial lines respondents said that AI will transform reporting. Examples would be the use of chatbots or AI-guided interviews for data collection.
- Triage/assignment: There appears to be great potential, especially for commercial lines, where claims can be more complex. Intelligent triage facilitates the shift to more no-touch claims and getting the right resources involved as soon as possible.
- Damage assessment: About half of the respondents see much potential here. Even though it is early in the maturity of the tech, there are already solutions and pilots in the marketplace that use computer vision and machine learning to detect damage, identify replacement parts, and develop an estimate.
Every other area of the claims process will benefit from AI technologies. There are important use cases for reserving, litigation, recovery, and CAT response. But fraud detection is still the number one area of potential for AI, with many implementations already in use.
Augmenting Human Experts
There will always be a spectrum of claims handling that ranges from no-touch to high-touch. The automation of operations and using AI for new insights has led many to leap to the conclusion that adjusters won’t be as valued or needed in the future. But two trends are changing the dynamics of the workforce and the claims environment.
The first is workforce change driven by natural demographics. With retirements and fewer young people coming into the claims environment, the result is a natural decline in the number of claim adjusters and professionals. The second is the effect of the automation and AI, which will result in a higher percentage of no-touch or low-touch claims. Together, these two factors will serve to elevate the role of the adjuster to focus on more complex claims. With AI tools to augment decisioning, there will emerge a different type of experienced, specialized claims adjuster that uses the technology of the future and new support roles for people that are data/AI experts.
Associating With New Ecosystems
Property/casualty claims departments have always had complicated ecosystems—they must work with many parties for damage estimation, restoration, settlement, litigation, and recovery. But now there are new players entering. Many offer new technology-based solutions: digital payments, connected devices for rapid response to accidents/incidents, coordination of repair and restoration efforts, and tapping into specialized expertise.
At its core, claims will have the same mission and value in the future as it does today. But in many ways, the claims organization will be significantly transformed. But there is one thing that won’t change—and that is the responsibility claims has in meeting customers at their greatest time of need. Even with all the automation and artificial intelligence, the personal connection will not lose its importance. Empathy will still be essential. And efficiently and effectively managing the process for the benefit of the carrier’s bottom line will remain vital. Technologies are now available to transform the roles of professionals and the products and services related to claims. The combination of operations automation, insights from AI, human expertise augmentation, and advanced ecosystems will result in winning scenarios for insurers, claims professionals, and claimants.