Rising claims cost and evolving customer preferences for personalized policies and omnichannel interactions are putting auto insurers under intense pressure. Recent studies have concluded that accident-related auto repair costs have risen significantly, undercutting profitability and worsening loss ratios. Further, the proliferation of RPA, telematics, and IoT is pushing insurers running manual, error-prone processes to digitize their operations and leverage data from various sources for enabling faster, more accurate claims processing.
For instance, when an accident occurs, telematics data from the vehicle can be sent directly to the insurance company and be used as the first notice of loss (FNOL), helping to significantly reduce the possibilities of fraud in conjunction with staged accidents. The company can then get in touch with the driver and send help. This allows the insurer to send its preferred vendor’s towing service to the scene to avoid high tow and storage charges, ultimately reducing claims cost.
To illustrate the impact of improved claims operations, let’s examine the experience of a hypothetical personal lines insurer facing a high loss ratio due to suboptimal claims processes, which also affects its overall competitiveness. The organization struggled with a long turnaround time for claims settlements due to manual workflows, resulting in customer dissatisfaction and a dwindling bottom line. In an effort to boost revenue growth and profitability, the insurer wanted to streamline its claims processes, minimize claims cost across locations, and implement a high-ROI, omnichannel strategy for registering claims.
Due to obsolescence and disjointed legacy systems, modernization of existing technology supporting the claims lifecycle was another requirement. The insurer also realized a need to maintain a list of trusted, high-quality, and compliant auto repair service providers as important factors in controlling and reducing claims costs.
The Path to Claims Transformation
With expert services and technology from Xceedance, the situation and challenges of this auto insurer are addressed through a combination of business process engineering, digital enablement, and user experience enhancement. The following approach can be a helpful blueprint for auto insurers looking to streamline and strengthen their target operating models for claims services:
- Data Visibility – Foundational data accessibility issues are analyzed and resolved, beginning with the application of comprehensive automated workflows and the deployment of effective interfaces to facilitate the flow of information between multiple platforms and policy systems.
- Automation – Robotic process automation (RPA) is increasingly leveraged to identify and execute valid use cases for automation, freeing up expert workforce bandwidth for core claims-related activities.
- Customer Experience – A customized channel strategy is established, with multiple digital customer touch points including web, mobile, and self-service/interactive voice response (IVR).
- Vendor Management – With in-depth analysis of historical spend data, claims cost reduction is improved by preparing a list of preferred, cost-effective vendors.
- Operational Excellence – Sustaining efficient claims operations is key to ensuring profitable growth. The insurers is supported to enhance accountability and drive better adherence to service-level agreements (SLAs) by clearly defining task-based skillsets across front-office, back-office, and payments functions. Moreover, a reliable claims quality function is set up to help the insurer adopt a data-driven culture, monitor process-related key performance indicators (KPIs), and achieve continuous process improvement.
Through significant improvements across the claims value chain, the introduction of digital claims assessment processes, and robust vendor compliance, this personal lines auto insurer reduces its loss ratio and gains a competitive edge. Extending the engagement model in the industry, and depending on their size, structure, and target markets, insurers can potentially realize 7 to 10 percent claims cost savings by curating a list of preferred vendors.
Furthermore, process improvements such as automated notifications, in most cases, reduce the number of claim-related queries by close to 20 percent, consequently accelerating turnaround time, improving the overall customer experience, and helping to increase policy renewals.
As the use case demonstrates, delivering a superior policyholder experience and establishing competitive differentiation requires auto insurers to invest in process reengineering, digitization, and automation. In many cases, insurers also have the option to seek the support of insurance-expert service partners to drive innovation in claims management.
Learn more about how Xceedance Claims Services can accelerate the claims process transformation of insurance organizations.
Prashant Tekchandani leads the claims and credit control teams at Xceedance, bringing 17+ years of experience in re/insurance markets.
Prateek Vijayvergia heads the technology team at Xceedance. He is an insurance IT professional with more than a decade of cross-functional experience.