Five technology trends shaking up insurance claims management

By: Slav Todorov

October 17, 2018

Slav Todorov

Insurance Claims ManagementIoT, mobile and AI are all revolutionising the way insurers interact with their customers, including their claims management process. The smartest players, though, are letting customer demand shape the way this happens.

Five amazing ways technology is revolutionizing insurance claims management:

1. Image Recognition

For many years, the ubiquity of miniature cameras in everyday life has presented a huge opportunity for customers to self-report insurance claims. However, the massive expense and complexity of delivering real time, commercial image recognition to support this has held back progress.

Now, Tractable, AI specialists in accident and disaster recovery have unveiled the results of their latest research. Using a database of more than 130 million images of wrecked cars, they have trained their systems to recognize the type of damage a vehicle has sustained and predict the likely cost of repair which it can then communicate back to an insurer.  All this has been made possible by Amazon’s data storage capabilities; a custom-built API that downloads, decompresses, and buffers images; and an extraordinary feat of AI development.

This functionality captures the true potential of technology to change the relationship with insurers for the better.  Now, the customer is able to take control of a previously lengthy and opaque assessment process. With just a click of a camera they can secure a fast, accurate decision about an insurance payout, saving time, money and uncertainty for everyone involved. 

This game-changing insurance tech has been made possible by recent leaps in cloud-based computing, data storage, processing power and machine learning.  Ultimately, though, the change is driven the need make claims easier and less stressful.

2. Drone technology

In the last few years hardware has become cheaper and technology has become smaller. Drones with compact high-resolution cameras are now robust and inexpensive. As a result, insurers, particularly in the US, are deploying them to revolutionize claims handling and to give their customers a better experience when they most need support.  

Large, dangerous or inaccessible areas, such as storm-damaged agricultural land, ruined buildings and contaminated zones can be inspected more easily and with no risk to life.  Huge efficiencies have emerged for the industry, with one company able to scout three times as many damaged farm acres by drone as an adjuster can manage on foot in the same time.  

Customers are feeling the benefit of faster and more accurate claims processing – together with a greater understanding of the extent and nature of the damage they have experienced to help them plan their return to normality.

Meanwhile, insurers are seeing a significant reduction in fraudulent claims, which has proven to be an intractable problem for the industry.

For such a cheap addition to an insurer’s armoury, the impact has been profound. And with 13% of all commercial drones now working in the insurance sector, they are currently estimated to help save the entire industry nearly $7 billion per year.

3. Chatbots

Artificial intelligence is finally delivering on the hype surrounding it.  And it is promising to reduce many of the pain points for customers and cost burdens for their insurers at the same time.  In fact, Gartner predicts that by 2020, 85% of customer interactions will be managed by chatbots.

Claims management has been a special area of focus, with insurers hoping to automate the initial reporting process using this technology, making a personalized, user-friendly service available 24/7.

Zurich’s claims chatbot, for example, simulates a human operator’s ability to quickly and naturally figure out what a customer wants and what assistance they can offer them.  It can capture details of a customer and their claim, at speed, collecting important data, correcting mistakes and funnelling a claimant into the next stage of the process.

Like a human, a chatbot is constantly learning from successful and unsuccessful interactions to improve the quality of future interactions.

The 2018 pilot shows the potential benefits for the entire industry, improving accessibility while streamlining the process to reduce costs.

You can even try it out here.

4. Parametric Insurance

From its earlier use by reinsurers in the insurance-linked security market, parametric insurance now represents a new direct insurance business model. It is made possible by insurers’ adoption of ‘always-on’ digital systems, together with developments in forecasting and weather-monitoring technology.

Fundamentally, though, the solution has been driven by customer demand and changing attitudes to risk as climate change leads to ever-worsening weather events.

With the emergence of parametric insurance, customers living in ‘at-risk’ areas can insure themselves for fixed amounts against very specific weather or seismic activity.  Premiums can be calculated against real-world data and sophisticated meteorological modelling. Payments can be triggered automatically when local monitoring stations report particular events, for example, a certain amount of rainfall, wind speed or earthquakes of specific magnitude.  

As extreme natural events become more common in certain areas, this kind of insurance removes the need for lengthy and expensive investigation while offering protection plans highly tailored to customer needs.

5. AI Fraud Detection

The likes of FRISS are now using AI powered technology to evaluate the risks related to a claim so that a more accurate estimation can be reached. This type of technology can also detect insurance fraud before the claims are paid, which reduces loss ratio and limits false positives. Combined, these features enhance customer experience and enable fast track claims.  

Lessons of innovation

Each of these areas, made possible by recent strides in technology, offers huge value to insurers as they search for ways to save costs and streamline their business.  However, they are firmly inspired by customer demand for a better experience, greater access to services and more personalized solutions.

As traditional insurers integrate these kind of innovations into their existing offerings, and customers begin to experience the benefits, customers’ expectations will rise, creating a further impulse for innovation. This dynamic between the use of technology and the consumer expectations it gives rise will continue to play out long into the future.

 

Slav Todorov

Written by Slav Todorov

An actuary at heart, Slav has an extensive background in the insurance business. With a career spanning almost ten years, he was involved in the pre-sales and POC with over 30 insurance carriers across the globe. Slav comes armed with an in-depth knowledge of how information technology can best support insurance.

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