How Automation Can Transform The Car Insurance Industry

When an insured driver experiences an auto accident or theft, how well the claims process is handled can make or break the policyholder’s relationship with the carrier. Some automotive carriers continue to favor traditional claims processes thanks largely to the human touch advantage. However, they may risk sullying the customer experience with prolonged wait times and greater potential for human error.

This is why auto carriers are embracing automation and connected cars in greater numbers. Automating claims handling processes may create huge efficiencies and could reduce costs for carriers’ books of business. More importantly, customers like the benefits that automation and connected car data bring.

Customers also want a thoughtful, measured approach to how their data is used and automation is executed. Comfort levels with data sharing and automation vary by generations, with millennials being the most receptive. Others still want some degree of human support, particularly if they’ve never filed a claim before and are uncertain about the process. They seek a balancing act between greater automation and human engagement.

Connecting the data

These shifting consumer expectations have triggered an exciting transition from traditional claims processing to fast track and virtual claims handling and even touchless claims processing. The industry is entering the new era of “connected claims” in which carriers are reinventing the claims process through a connected data ecosystem.

Telematics has contributed to this transition. While carriers have focused their telematics efforts on pricing and risk mitigation for usage-based insurance customers, telematics data is now entering the claims domain. It is enabling claims to become far more automated, allowing carriers to deliver valued customer support and claims investigation.

Telematics now gives carriers an advantage at the first notice of loss (FNOL), helping to provide a better customer experience post-accident. Through near real-time collision notification, the carrier can proactively manage the claim, calling the driver to check his or her status, and put relevant services in place, like towing and car rentals.

The data collected from the incident — such as speed, braking, and force of impact — can help verify a claim and determine if it should be paid as quickly as possible. It can help: accelerate the whole claims process, reduce cycle times and improve the customer experience.

However, telematics data by itself doesn’t provide all the data needed for automation to be successful. Carriers need a complete data ecosystem that combines telematics with police records, weather conditions, and other external data to provide a fuller picture of the incident. This data ecosystem facilitates automation at all levels, from delivering reports to adjusters to feeding AI-based decision-making.

Carriers taking a measured approach to automation

Carriers have been steadily moving toward more automated claims processes, with the primary goal of removing touches where they can to reduce costs, but they haven’t completely abandoned traditional claims handling methods. They are taking a more thoughtful and exploratory approach toward augmenting traditional methods with automation.

As mentioned, most carriers are beginning their automation evolution at the FNOL (First Notice Of Loss) stage of the claims cycle. They are focusing on rules-based logic and software-driven photo estimation for non-complex claims. They are implementing self-service online or mobile reporting, integrating data, such as telematics data and analytics seamlessly into their workflows at FNOL (First Notice Of Loss). It simply makes sense, as there is clear value in having more complete and accurate information available earlier in the claims process. This kind of automation also addresses customer dissatisfaction with the vast number of questions asked at FNOL, along with carriers’ failure to fully integrate data upfront in the claims process to simplify customer self-service.

This shift is starting to accelerate. The claims industry spends most of its current data and analytics budget in the areas of investigation and evaluation, but only a few in the FNOL (First Notice Of Loss) and triage/assignment processes. However, over the next years, the focus will shift towards initial claims processing.

As carriers continue to gain greater efficiency and cost reductions, they then set their sights on virtual claims handling approaches. Most carriers are at least considering using virtual claims to improve their competitive edges, such as utilizing technology-based inspections to enable remote assessments and processing.

However, they approach it with some trepidation. While the vision of touchless claims leveraging virtual claims processing looks promising — especially for simple, non-injury claims — the claims research revealed that carriers and customers alike have been hesitant to leap fully because they are reluctant to exclude completely human involvement.

Some carriers are concerned that automation might introduce more error and fraud risk into the non-complex claims process. They aren’t fully confident that the systems are mature enough to counterbalance these types of situations.

Some consumers fear that making a mistake on the self-service form or technological glitches could negatively affect their claim. Consumers also say they seek empathy from carriers and agents; in other words, a human who cares about their outcomes. While a sizeable portion of consumers is fairly comfortable with the idea of automated claims processing, only a few are very comfortable with the idea. Again, the comfort level varies by generations, with millennials having higher comfort levels.

If executed carefully, leveraging the data ecosystem to automate the claims process can help overcome these concerns. For example, customers hate long claims processing times. Data prefill technologies can help minimize the number of information customers and claimants are required to provide. Still, with empathy being a top consumer concern, carriers need to find ways to integrate the human touch into automated processing.

A touchless future

As more tech-savvy millennials enter the insurance marketplace, they will continue to push carriers towards providing more self-service options. Touchless claim processing is similar to virtual handling, except no claims adjuster or insurance carrier employee is involved in the claims process at all. Carriers utilize emerging technologies to process reports, capture damage or invoices, run a system audit and communicate with the customer electronically. If the claim meets the approved criteria, it is automatically paid without human intervention. The insured initiates the process by using customer-friendly self-service tools to report and process a non-complex auto claim.

Telematics will also be a major driver of this transition, particularly in claims investigations. Telematics offers carriers the potential for premium reductions, a stronger competitive advantage, and increased accuracy in assessing risk, among other benefits. Telematics automatically provides information that can further simplify and accelerate claims processing.

At the same time, technology advances are enabling carriers to use data and analytics in ways that were unthinkable just a few years ago. It was found that some carriers believe that data and analytics will be used to automate some minor liability investigations. However, robust data sources and data analytics, combined with telematics, have the potential to reduce insurance carrier employee touches on a claim from many to one — or even zero.

At this point, carriers and consumers are roughly on the same page in terms of automating the claims process and the era of connected claims is here and enabling that process to happen smoothly. The key will be which carriers differentiate themselves by striking the right balance between integrating and leveraging the available data for automation and still having appropriate human interaction. They can work together as automation can help carriers deliver the human touch by freeing representatives to be available when a customer needs personal attention.

Data and analytics, in turn, can be more deeply incorporated into the claims process to help improve accuracy and efficiency — factors that impact how customers feel about their claims experience. The bottom line: both sides are open to a hybrid approach to connected claims that leverages data and automation where it can be most effective, and it’s up to carriers to lead the journey to the future of connected claims.

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