Building Consumer Trust and Cutting Risk in a Paperless World

Digital tools have the potential to help vehicle insurance firms boost consumer engagement while simultaneously optimizing the claims process.

The result could be a big saving in both cost and time, as well as increased transparency between insurer and customer. During the claims in particular, digital tools like mobile applications and cloud-based communications help consumers understand how the claim is being processed and what work is being done on the vehicle, giving customers the feeling that they’re being looked after.

“Historically, insurers have tended to vest their treasure on the upstream side of the value chain, sales and marketing, and claims has always been the poor relation,” Ed Rochfort managing director of Carrot Insurance, told TU-Automotive. “Customers have suffered a fairly mediocre service at best as a result of that.”

Not only does an accelerated, more user-friendly, claims process directly benefit the customer, from the insurer’s perspective, the benefits of quick, accurate objective data are very significant and they’re measurable as well.

Rochfort pointed to a case study the company did where it measured every time data was used in the claims process, finding a nearly 8% improvement rate in the combined operating ratio by using digital tools. “Technological changes within the claims space provide a massive opportunity to streamline costs and to make insurers much more cost efficient,” he said. “It’s transformative in a way that it makes costs cheaper for everyone.”

Rochfort noted the insurer has digitalizing its customer service facility through live chat and chatbot solutions to improve the way it can interact with customers, rapidly routing claims to the right insurance contact. “In terms of claims, that is going to be really important, because it will allow the customer to interact directly with the specialist they need throughout the claims process,” he said. “Cutting out a lot of email queries or repeated calls can be very powerful for consumers and help insurers become more customer-centric.”

In addition, digital tools like telematics can help insurers in matters where liability is disputed, for example determining whether injuries could have resulted owing to the vehicle’s speed. “The savings of that digital footprint, having that data available 30 seconds after an accident has happened, can help improve decision making and reduce costs. Whether that being to defend a spurious claim in a low-impact incident, or on the other hand where you’re using it to validate what you’ve told has happened,” Rochfort explained.

Overall, digital technology, when used correctly, should help insurers cement a stronger relationship with customers from the moment they sign up, as well as providing a single set of data that insurers can use to where the inefficiencies are. “One of the biggest challenges insurers and the insured face is the claims process, in particular how slow it can be and how it lacks transparency,” said Nick Maynard, lead analyst at Juniper Research. “By introducing digital processes, insurers can act faster, reduce costs and improve the customer experience.”

For example, by using an app-based process for claims reporting, insurers can receive first notice of loss (FNOL) much faster, allowing them to act quicker. “This is highly important for the insurer, as there is a direct link between delay in reporting and rising costs of claims,” Maynard said. “This can automated further where telematics is used, as an impact can trigger an automated FNOL.” Also, by employing AI in the claims process, damage assessment can be much faster and can speed up the repair process.

Maynard noted that digital solutions enable insurers to boost engagement with customers that could assist customer retention, a “notoriously difficult” challenge for insurers. “Where insurers use telematics devices, digital solutions can boost engagement by delivering proactive feedback and using location-based insights,” he said. “Having a presence on the smartphone also enables insurers to add extra value, such as with rewards schemes.”

Maynard said it is important to make solutions seamless and user friendly, given that it is in insurers’ interests to boost adoption. The key in this area is engagement and tenure. If engagement is high, then insurers will anticipate higher tenure and lower renewal costs, breaking the “change every year” model. “The more innovative solutions at present are the automated FNOL solutions that some telematics providers are offering,” Maynard noted. “These are really helpful in reacting to claims quicker and reducing costs overall.”

He explained that in the future, the transition to autonomous vehicles will require massive changes to the way the insurance industry operates, with shared liability. Overall, by digitizing and breaking down silos between data sources, insurers can enable the use of tools such as big data analytics and AI.

“Big data will be used at a more general level, to identify mega trends in claims, which will allow insurers to change general policies,” Maynard said. “AI will be used in more specific use cases, such as surveying vehicle damage based on pictures or analyzing telematics data. Strategies combining the two will enable insurers to reduce costs and meet customer needs more effectively.”