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Aug 2022

Digitalising motor claims - trends and insights

Source: Asia Insurance Review | Aug 2022

James OngMotor claims follow the traditional customer experience: Taking out a policy, renewing and making a claim. It’s that last step that tests the insurance industry on whether insurers can keep their promises or not, says Sedgwick’s Mr James Ong.
 
 
The need for digital motor claims continues to grow as consumers want to report their claim at any time on a channel that is convenient to them. They want full transparency into the claims process, the ability to submit documents digitally, be informed of progress in real-time and ultimately receive a timely and fair settlement.
 
The JD Power 2021 US Claims 
Digital Experience Study found that the insurance claims process has not really evolved beyond the launch of digital photo estimation. While back-end technology has certainly progressed to create a more personalised experience, there is still room for improvement. Companies cannot take a one-size-fits-all approach to their customers, but instead need to meet the customer wherever they are in the claims process.
 
Current state of play
Motor claims is undoubtedly one of the first areas where the insurance industry truly adapted to the digital claims revolution. Digital initiatives such as electronic estimation systems using industry and manufacturers databases and part prices, have been widely used in the UK since the 1990s. These systems connected panel shops and insurers to enable a more efficient and digital way for estimating the damage as well as submitting digital photos of the loss.
 
Fast forward to today, where digital claims estimation tools connecting panel shops, insurers and motor loss assessors have become commonplace in many parts of Asia. Estimates generated by panel shops are now sent electronically, some via established industry portals and others through the estimating systems. This process also applies to insurers who are sending approvals. Digital photographs of the loss or accident-damaged vehicle are also sent by panel shops using the same system. These processes are meant to reduce the lifecycle of motor claims and make the approval process more efficient.
 
If independent loss adjusters are appointed, their reports are also prepared using the claims estimation system and submitted electronically with digitalised documentation. Digital systems are also used when loss adjusters are not involved and in-house assessors submit their recommendations to the motor claims department.
 
Most insurers operating in Asia today offer some form of digital notification through their websites or mobile apps. Through these apps, claimants can be alerted to updates instantly, so they have a better and more immediate view into the process. Some insurers also have a 24/7 road assistance service which enables their customers to contact the service centre at any time to receive help, assistance or towing of the damaged vehicle.
 
The JD Power’s study also found that the way an insurer handles first notice of loss (FNOL) accounts for 25% of insurance customer satisfaction in auto claims. The same survey noted that there is a noticeable increase in customers who have used digital tools during claims processes. It’s evident that inclusion of digital tools can enhance the overall FNOL customer experience, highlighting the importance of incorporating digital-first processes to both present day and future motor claims operations.
 
COVID-19 and effects on customer expectations
The pandemic has changed the way we communicate and interact with one another and this has carried over into the motor claims industry. Many insurance companies have adjusted their offerings to allow for contactless claims handling which includes services like virtual car insurance claims.
 
Interestingly, the pandemic has also given the insurance industry some time to adapt as JD Power reported a 22% decrease in the volume of motor claims. With lower claims volumes, insurers could quickly adapt to the pandemic by offering digital platforms to purchase and renew motor insurance claims as well as provide digital motor claims handling capabilities.
 
A recent report from McKinsey also found that many of the pandemic-induced changes to consumer interactions in the insurance industry, particularly that related to claims, could result in three major shifts in claims handling practices:
  1. Increased use of digital and AI. McKinsey believes simple claims could see more automated processes with human customer service to fill in AI ‘blind spots’. Complex claims will still have claims handlers playing a central role while AI-driven support tools will help them improve decision making and streamline manual tasks.
  2. More multichannel communication with customers. Insurers will need to meet each individual customer’s specific communication preferences, such as mobile apps that let customers upload images of damage. Analytics and algorithms will anticipate a customer’s question and send updates before the information is actually requested.
  3. A bigger focus on preventing claims. Insurers will take a data-driven approach to make suggestions to their customers on actions they can take to avoid a claim. For example, severe weather warnings could trigger push notifications to encourage customers to move their cars to a garage to avoid hail damage.
 
What about the human touch?
While a large and complex claim will require the expertise and guidance of a qualified loss adjuster, what about a simple claim such as one for an auto accident? Will someone who is available to advise on the application of policy excess, how to find a good panel shop or even on the process of recovering against a negligent third party be relevant in today’s quest to file a claim, or will digitalisation prevail?
 
On the other side of the fence, not all consumers want to use digital tools and many still want to speak with an actual person regarding their claim. Companies should not and cannot get rid of the human touch and personalised interactions that occur when interacting with claims professionals. In fact, both the JD Power and Consumer Intelligence reports referenced earlier show that customers who do not use digital tools also experience high level of customer satisfaction. Top-rated insurers can still gain the trust of customers in a tradition way – by providing good service and a high level of professional claims.
 
There is a need for insurers to embrace digital claims fully, but without losing that old fashioned, more traditional way of handling claims. This involves access to a real person who has the empathy and experience to provide that necessary human touch throughout the claims process. The combination of these two would provide a win-win solution.
 
The future of digital motor claims 
Present day practices for insurers in Asia depend heavily on the digital claims management process aided by technology that enhances their own internal claims processes and expedites the overall process. Putting the customer at the core of the business will fully drive the digital transformation for motor claims.
 
This includes enhancing the FNOL experience and ensuring ease of notification through a multi-channel platform that suits the customer. Consumers want to have websites or apps which allow them to track the progress of their claims from start to finish through regular multi-way communications and a smart tool that provide an interface to upload pictures, videos and claim documents at their fingertips. The use of AI and big data analytics will inevitably increase and drive personalised and expedited claims decisions and outcomes.
 
In the future, claims will be the growth engine for customer retention when the total value chain is transformed. While motor claims are traditionally considered part of the back office, these operations will be digitally transformed to become a powerful differentiator that is innovative in nature, uncompromising on customer service, multifaceted in capabilities and drives strong results.
 
Digital transformation is an enabler and not an end in itself. The digital claims process has started an irreversible trend in motor claims and the faster we adapt to this, the better the outcomes will be.
 
The human touch in claims will not disappear, it will co-exist with the digital technologies of today and tomorrow. Motor claims of the future will be exciting, speedy, efficient, transparent, innovative, digitally driven, yet interlaced with the human element which will bring the claims experience to life. A 
 
Mr James Ong is CEO Asia with Sedgwick.
 
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