Insurance Automation: Enabling Efficiency & Empathy

Highlights

Automation is transforming insurance and changing the future of the industry. And so are digital payments. LexisNexis foresees that by 2025 more than 80% of claim payments will be made digitally, improving payment speed to meet customer expectations.

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A Nationwide Agency Forward Survey found that 75% of policyholders are interested in websites or apps that let them track claim progress, and 67% are interested in websites or apps that let them upload photos and videos.

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To deliver the claims experience that policyholders want, insurers will need a strategy that combines human and machine. Automation is paving the road for more efficient processes. This can result in savings of both time and money, but it can also do more than that. It can also enable a more empathetic response.

Policyholders Want It All

Keeping policyholders satisfied is getting harder. According to the 2022 U.S. Property Claims Satisfaction Study from J.D. Power¹, claims satisfaction has dropped to a five-year low.

Insurance is a high stakes matter, and the claims process can be especially contentious. Value Penguin² looked at insurance complaint data from the National Association of Insurance Commissioners and found that more than two in three of all complaints are about claims.

Claimants expect a lot from insurers. Many insurers focus on speed as a key metric, and for good reason. According to Accenture³, 95% of policyholders say that speed of settlement is important. However, even though speed is important, it’s far from the only aspect that matters. Accenture also found that 94% cite the explanation and transparency of the claims process as important, while 90% say it’s important to be able to contact the provider at any time to get real-time claim status updates, and 85% cite the empathy and care of staff as important.

So, policyholders want insurers to settle the claim quickly, but they also want claims handlers to take the time to explain the process and express empathy. It might sound like a contradiction, but with AI, it’s possible. By automating simple and routine tasks, AI can free up resources, allowing claims handlers to focus on the human element.

Advances in Insurance Automation

Insurance automation has been advancing rapidly. According to McKinsey & Company⁴, it’s estimated that there will be around one trillion connected devices by 2025. The resulting explosion of data, combined with other advances, including data ecosystems and improved cognitive technologies, will lead to more sophisticated uses of AI. By 2030, many claims processes may be triggered automatically, and claims might be resolved in minutes instead of days and weeks.

Insurers have already been investing in the innovations that will make this possible. According to a survey from PwC⁵, 65% of insurers say that AI investments are already resulting in better customer experiences, while 31% expect to start seeing improvements in the next two years. And according to the 2021 Future of Claims study from LexisNexis Risk Solutions⁶, 79% of Millennials and 64% of GenXers said they were already comfortable with automated claims processes.

Finding the Right Balance

If automation is a journey, insurers are speeding along the path. But there may be a few bumps along the road, as the recent drop in claims satisfaction reported by J.D. Power shows.

One critical issue will involve finding the right balance between human and machine. Many policyholders are interested in digital tools that can make the claims process faster and more efficient. A Nationwide Agency Forward Survey⁷ found that 75% of policyholders are interested in websites or apps that let them track claim progress, and 67% are interested in websites or apps that let them upload photos and videos. There’s also been a 183% increase in two-way texting between claimants and claim handlers. At the same time, policyholders still want to be able to talk to a human representative over the phone when there’s an issue, with 58% of consumers citing this as important.

Sentiment analysis is a perfect example of where AI is driving this flexibility. Using Natural Language Processing (NLP) along with algorithms, sentiment analysis allows insurers to determine if customer emotions are positive, negative or neutral. It can help insurers detect patterns within written or spoken encounters that can inform appropriate responses and improve the customer experience. It can even prompt organizations to seamlessly convert a customer’s digital journey to one with human interaction, giving customers the best of both worlds.

The Future of Insurance

In McKinsey & Company’s predictions for 2030, the human element has not disappeared from claims. People will still be needed to manage complex, unusual or contested claims. But for many claims processes, human interaction isn’t needed. If there’s a simple claim – for example, a fender bender that results in minor property damage – automation can facilitate quick and efficient resolution.

Based on their 2021 Future of Claims study results along with carrier conversations, LexisNexis predicts that by 2025 more than 80% of auto insurance claims will be processed virtually, with up to 50% of non-injury claims being fully automated (touchless)⁶.

For a simpler claim, many policyholders would prefer a fast, AI-enabled settlement over a slower, human-led one. At the same time, however, when there’s a problem, policyholders want to be able to reach a real person.

It's not a question of whether automation or human is better because it’s not a one-size-fits-all issue. In some cases, pure automation may yield the best results. In other cases, the human element is required. In some situations, a blend of human and machine, where AI supports human decision-making, is ideal. It’s more about providing each at the right touchpoints, as well as continually evaluating automation’s impact on the experience. Is it providing optimization or is it just increasing frustration levels for both staff and customer?

Automation provides insurers operational efficiencies that reduce costs, increase speed and drive value. It also allows claim handlers the ability to provide the empathetic response they simply cannot give policyholders when tied up with manual processes and administrative tasks. Moreover, automation provides them with the technological tools to better solve policyholder problems, ultimately driving value and a delightful customer experience.

The Future is Digital Insurance Payments

Automation is transforming insurance and changing the future of the industry. And so are digital payments. LexisNexis foresees that by 2025 more than 80% of claim payments will be made digitally, vastly improving payment speed to meet customer expectations.⁶ By automating manual payment processes and removing paper checks, insurers reduce expense and drive both efficiency and customer value. And with next generation technologies, the future is bright. Are you ready to bring your insurance payments into the future? Contact us.

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