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Essential elements needed to digitize and transform insurance claims



Successful digital transformations in claims begin with developing a new value proposition that sets a high-level aspiration and pursuing an end-to-end digitization of the claims customer journey. The development of a truly innovative customer journey can be achieved by integrating with three other areas—AI and digital technologies, the digital integration of the claims ecosystem, and a new digital operating model (Exhibit 2). Together, these five elements give management the strategy and tools to both transform claims into a digital function and improve performance on all of the three foundational KPIs.

New digital value proposition for claims

For the digital age, the claims value proposition—that is, the value an insurer can provide to its customers through the claims process—needs to go beyond traditional after-the-fact claims management. The value proposition sets the aspirational goal of offering excellent omnichannel customer experience supported by intuitive digital processes. Insurers should aim to adopt a faster, analytics-driven approach to claims handling and fully automate the claims handling processes for clear and simple cases.

In addition to working actively with customers to prevent claims, insurers should provide services that add value for and delight customers and draw on customer feedback to continually improve service offerings, usability, and performance.

Instilling this upgraded value proposition within the organization is an often-underestimated element of a digital transformation. Top and middle management in claims should become champions for the new value proposition; otherwise, they risk finding themselves halfway through the digital transformation without the necessary company-wide buy-in to stay the course.

End-to-end digitization of the claims customer journey

At the core of the claim function’s digital transformation is a redesign of the claims customer journey. There is no silver bullet interaction that ensures customer satisfaction, but a successful redesign typically involves considering processes from the customer perspective and optimizing back-office processes accordingly to provide simple and fast claims services.

Insurers should start with an “everything is possible” mind-set to unleash truly transformative ideas. Satisfaction surveys in claims consistently show that customers desire a fast and intuitive process as well as transparency on where they are in the process and what happens next. Accordingly, the digital redesign of a claims journey needs to go much deeper than superficial process improvements.

To determine how digital technologies can unlock value and improve the claims customer journey from start to finish, managers should examine each step of the journey with the following areas in mind and start to develop an aspirational future state for claims that is unconstrained by potential short-term, technological barriers:

Product simplification

Customers want simple and fast digital interactions, but complex coverage details that include many specific exceptions can create barriers. Large numbers of legacy products with different coverage details also make it difficult to implement and maintain the technology systems necessary to improve efficiency. A carrier should find ways to simplify products and reduce product generations to ease the development of fully digital customer journeys.

Customer and intermediary self-service

Insurers have the opportunity to shift simple, routine transactions from claims handlers to intermediaries, such as agents and brokers, or customers themselves. As with any self-service tool, insurers must precisely define the necessary information, for example, where the customer can find his or her policy number. They must also build in support in case customers need it, such as online-chat with a claims handler or easy-to-find FAQs. Further, seamless handoffs across channels are critical: customers who start their journey online but want to talk to a claims handler or agent halfway through should be able to do so without having to repeat steps or information. This functionality requires that all system interfaces follow an identical structure and logic.

Intelligent case management

After the First Notice of Loss (FNOL) and throughout the process, handlers typically evaluate claims cases manually to decide on appropriate next steps, such as scheduling an adjuster appointment or providing information about direct repair programs with local repair shops. Supporting the entire journey with automated, intelligent case management is critical to establishing truly end-to-end digital customer journeys. With the help of AI, a digital evaluation automatically identifies the best next step in a specific customer journey, reduces manual touchpoints, and significantly speeds up the claims process. For example, in a simple claim, this technology can allow a customer to schedule an appointment with a repair shop as part of the FNOL. Enriching these journeys with insights from behavioral economics can help customers to follow the most satisfying and efficient paths in their claims journeys.

Frontline and back-office process digitization

Claims handlers and adjusters manually carry out often-complex tasks, leading to significantly divergent results. Digital tools and systems can simplify and standardize manual processes. For example, tablet-based calculation tools for home damages can help claims adjusters estimate the value of losses faster and more accurately and consistently—even if this means that indemnity payments may increase for certain cases. Standardized reports and calculation methods will leave customers with a comprehensive overview of how their claim was calculated. This results in higher customer satisfaction and a leaner process with reduced follow-ups and recalculations or litigation.

Back-office automation

Insurers can achieve the greatest efficiency gains by fully automating back-office processes. Customers benefit significantly from faster claims processing—for instance, through automated verification of car repair estimates and invoices as well as automatic reimbursements as soon as the repair invoice has been verified. In addition, digital tools can support and assist the decisions of claims handlers, leading to better outcomes.


Providing customers with the necessary information in digital channels offers customers the sense of control they desire. The quality of communication can raise customer awareness and usage of digital self-service tools throughout their journey.

By examining each of these areas, claims functions can start to rethink the claims customer journey and back-office processes. This approach should be synthesized into an aspirational future state outlining the digital assets needed to achieve the ideal state. Claims leaders should prioritize these digital assets based on the value they can generate. For example, digitizing invoice reviews and automating payment processing often significantly reduces processing time.

Enabling truly innovative customer journeys

Offering truly innovative customer journeys requires a combination of AI and upgrades to technology platforms as well as the digital integration of partners in the claims industry ecosystem. A greater understanding of these elements and the digital operating model needed to bring them to life can help claims managers make the proper investments.

AI and digital technologies

Digital customer journeys require not only the AI-enabled automation of decisions traditionally made by claims handlers but also an IT architecture that supports real-time digital interactions with customers. While AI should ideally support the entire customer journey, it can generate significant value by automating claims management. The following three modules lay the basis for real-time engagement:

Prediction of claims characteristics

AI can help infer as-yet-unknown characteristics of a claim, such as the likelihood of fraud, total loss, or litigation, to speed up its downstream handling. And leading players in automotive can estimate a vehicle’s damage value in real time at FNOL based on customer pictures or a damage description, using the latest advances in AI and picture recognition.

Claims segmentation

AI algorithms can help segment claims cases by complexity using factual and predicted claims characteristics. Based on this segmentation, claims can be assigned to specific downstream handling processes—either one of the fully digital self-service journeys (such as selecting a direct repair shop in self-service) or a claims handler for more complex cases (for example, with high litigation risk).

Supported claims handling

Going beyond the first two modules, AI can support in finding the optimal claims handling process for a specific claim.

Integrating real-time customer interactions and insights from AI modules into customer journeys poses vastly different requirements for the IT architecture. While in the past, online interactions with the customer were only one way (for example, saving the details of an online FNOL into the claims database), interactive digital customer journeys require real-time, bidirectional interactions. A new IT architecture concept—generally referred to as two-speed architecture—is required to complement the stability of the core claims database with responsive features on the front end. A middle layer connects the traditional, slow claims database with customer-facing interfaces and runs AI modules. This functionality connects the information a user submits with insights from AI in real time to populate online forms and offer direct feedback to the customer.

Digital integration of the claims ecosystem

For competitive differentiation and ownership of the customer in a claims case, insurance carriers need to proactively manage more (ideally all) processes related to a customer’s claim—also those involving third parties. By providing a fully integrated digital experience, claims functions can become the true and sole owners of customer contact in a claims case.

To combine such offers into efficient, digital, self-service journeys, insurance carriers need to digitally integrate with relevant players in the larger claims ecosystem (Exhibit 5).

In addition, a digital integration can vastly improve efficiency in communication between the ecosystem parties and speed the claims processing for the customer. As this type of digital integration is currently rare, a carrier can become the ecosystem integrator, harnessing the best of the ecosystem for its customers.

Given the complexity of this integration, carriers should prioritize pursuing digital interfaces with the players that are involved in a high number of claims cases. In auto insurance, for example, these players would be roadside assistance services, claims assessors, and repair-shop networks, as well as invoice control service providers. Insurers don’t need to start from zero.

In many markets, insurtechs have started to lead the digital integration, for example, by digitally connecting car repair shops and enabling digital cost-estimate and invoice transmission. Insurers should explore partnerships with existing offerings to further digitize and integrate the claims ecosystem. 

New operating model for the digital age

A successful digital transformation radically reinvents the claims customer journey with the help of AI, digital technologies, and the claims ecosystem. To support these efforts, the claims department needs to pursue deep, cross-functional collaboration with other functions such as marketing and IT. Bringing the transformation to life requires new roles, including data scientists, customer journey “owners,” and user experience designers, as well as a digital way of working, which must be instilled in the organization.

As this new approach can represent a substantial change, success depends on deeply integrating a digital way of working into the entire organization. Successful organizations tap joint cross-functional management teams to lead the effort, develop experts in all digital methods, and provide intensive coaching for all relevant employees.



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Differentiating in a Radically Changing Marketplace– Customer-Centricity in Insurance, Digital Innovations



Sweeping technological advances have created major growth opportunities in the Global insurance space, both for industry leaders and for innovative third-party providers. Insurers are reinventing their consumer engagement experience models, digitizing their distribution and operations, and embracing big data and analytics as they seek to lead the industry wherever they find themselves.

Against this background, many insurers all over the world are leveraging new Technologies to gain the upper hand from their data and transform their new and old business models to align with the new digital age.

Today’s consumers have more complex needs and are more knowledgeable about their choices and needs and therefore require personalized offerings as well as customized communications. They expect insurers to deliver services that meet the high benchmarks set by global digital giants with offerings that gives shorter response times; personalized service, top of the range quality services, seamless interaction among others. To survive in this new digital natives’ market-space, insurers must become truly customer-centric, embrace innovation to remain relevant, satisfy and retain their customer in today’s radically changing marketplace.

Why has is it Become Necessary to Innovate:

Moving towards customer-centric Insurance through digital innovations, there are some critical questions that as insurers we must ask ourselves:

  1. How effective would digital and mobile channels help insurers achieve growth and profitability in the market by retaining existing customers and most importantly gaining new customers.
  2. What are the best steps to take to close the communication gap and strengthen relationships with customers – this emanates from the fact that the modern consumers want frequent, meaningful and personalized communications.
  3. And thirdly, how can insurers build on first-generation agency portals with new capabilities through digital innovations to support distribution channels – this is because, insurance sales executives, agents and brokers always want better data and tools to better serve their customers and most important compete for new businesses.

The scale, reach and pace of tech-driven disruption in the insurance industry continue with such unprecedented speed pushing insurers to a new phase – adaptation of underlying business models.

Digital innovation through new technologies is the key driver of change in the insurance sector hence leading to customer-centric gains.

Innovation and new technologies have the potential to affect the fortunes of insurance companies. Examples the world over shows that the rewards are significant for companies that create strategies that successfully use digital channels.

These channels allow insurers to engage directly with customers, a critical requirement in the new digital age when customers expect continuous interactions with their service providers. Again, through these innovative channels, insurers can gain insight into unmet needs that provides ideas for new offerings. Third, insurers can gather information that helps them improve how they underwrite and market their products. 

In answering the above question on why has it become necessary to innovate, I dare say that innovation has become an imperative for insurers because without a strong digital strategy to differentiate oneself in the digital natives’ market-space,  insurance companies could lose the slice of the margins they earn from distribution and eventually impact their bottom line negatively.

How insurers responds to these economical and society-wide technological innovations, and provide insurance processes and policies that integrate such changes to bring about differentiation in the industry is a discourse worth considering.

Permit me to share with you a good example of one such disruptive innovation that has led one company to differentiate from the competition in the insurance space.

The Case of BIMA

BIMA is a leading insurance tech player that uses mobile technology to disrupt the global insurance industry. Even though it is a Swedish Microfinance Company, BIMA provides insurance services in developing and emerging markets in Africa in particular.

In Ghana, BIMA mostly provides mobile-delivered insurance and health services to the underserved market mostly within the informal sector thus pushing the agenda of micro insurance and insurance penetration forward. BIMA is less than ten years in Ghana but through its disruptive digital strategy, it currently serves and adds about 575,000 customers to its base monthly bringing about 75% first timers to insurance on board.

The BIMA business model allows their customers to register for an insurance policy via their mobile handset and pay for cover through deduction of prepaid airtime credit, or through their postpaid bills.  BIMA has developed an industry leading pay-as-you-go (‘PAYG’) insurance product that is the first of its kind in most markets.

The concept of real-time visibility has become a reality. This is the observation of processes or events in the precise time of occurrence. Real-time visibility helps in improving customer experience by proactively solving needs and concerns, cuts down on operating costs and improves business agility. Internet technologies and the use of digital hand held devices are making it possible for insurers across many markets bring about differentiation. Smart contracts have become enabled by the use of blockchain technology which has dramatically decreased paper-based transactions and turnaround times.

Cloud technology strategy is another digital innovation which provides an agile, scalable and flexible technology to improve the overall modeling capabilities for insurers.  These cloud technologies are been used in delivering value to business customers as well as building and managing bespoke IT systems to give cost competitive advantage and differentiation to many insurers. As pointed out by an article in The Record in the winter 2017 issue, “by leveraging high-performance computing (HPC) in the cloud, insurers are achieving levels of risk modeling that were not possible before”.

Despite the intense competition within the insurance industry, new non insurance-industry entrants into the insurance space is also raising the levels of competition and consequently increasing choice and consumer expectations.

To remain relevant in this radically changing marketplace, tomorrow’s insurance leaders and winners must prepare for the adoption of these new digital innovations. Great strides have been made in this direction and insurers leading the pack on the innovative front are taking action and making investments now that will help them become more customer-centric, improve their pricing to stay ahead of the competition and create operational efficiencies.  With these ever-changing digital environment, the question is, “where are the right areas to focus to achieve the expected goals”?

  • Research done by Celent found out that 37% of insurance customers prefer using smart technology rather than having someone physically to talk to. This gives customers immediate answers to their questions, their inquiries whenever they want. This empowers consumers and facilitates quick decision making. For example, Progressive Insurance’s Flo Chatbot that combines Artificial Intelligence (AI) and quoting technology to answer questions and start the auto insurance quoting process on Facebook Messenger  has created a niche that reaches the younger generation that are hooked to new technologies. This innovative approach has separated Progressive Insurance from its competitors in its market.
  • As indicated by Accenture, a global management consulting and professional services firm that provides strategy, consulting, digital, technology and operations services “The biggest innovations in insurance over the next three years will not be in the technology tools themselves, but how insurers design them with customers, agents, employees and other human partners in mind”.

In conclusion, a research conducted by Goldman’s Sachs Investment Research Department in 2016, found out that there is a strong recognition that the millennial cohort, which is one of the largest age group worldwide and are entering their highest consumption period and have a preference for digital solutions available for transactions.

As insurers, differentiating in a radically changing marketplace and becoming customer-centric in our insurance delivery through digital innovation is a must!

For our customer-centric based systems, we need to be strategic and take advantage of the various modern technologies such as AI, Blockchain and the cloud to help us deliver to customers’ expectation, profitability and remain highly competitive.

Whilst deploying these technological and innovative digital systems to ensure that our companies are the most efficient and customer-centric in our industry, we equally have a responsibility to develop clear strategies for fostering and managing these digital innovations.

These strategies must aim at enhancing the capabilities of our workforce and the efficiency of our operations.

Again our strategies must address the issue of integration where insurers extend the benefits of our technology enabled value chain to other industries to create dependable ecosystems with other service providers.

And finally, our insurtech strategies should grow and position our companies to share and possibly sell developed, tested and deployed innovative technology solutions to other industries.

The insurance industry has recognized this new phenomenon and through introspection, the industry is reviewing how to approach product and service distribution, claim management among other processes. The millennials are clearly dissatisfied with the conventional insurance solutions hence it has become imperative for our industry to adapt to solutions that digitally innovative so we can remain differentiated and relevant in the face of radical changes in our marketplace.

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