Future of Management Steven Girvan, Melissa Yan
The future of claims Future of claims research In early 2016, EY undertook research to understand how industry executives, thought leaders and analysts view the future of claims operations Interviews conducted in North America, Europe, Asia and Australia, with: Executives at large general insurers A range of industry analysts Leaders from select FinTech and Insurtech companies
A Very Different Future For Decreasing claims volumes Severe weather expectation Modernised technology Sensor revolution Talent Drive for cost reduction Connected organisation
Decreasing claims volumes It is expected that claims frequency will continue to fall, significantly in some lines, but severity may increase in others. Australia experience to date Reduction in claim frequency in Home and Motor portfolio is less obvious Could be any real reduction in claim frequency is offset by other factors such as increased urbanisation or events Advancement in technology are generally slow to pick up in Australia
Increased frequency and localisation of weather related events. Severe weather Better technology can also provide advanced warning of these events. Social media can also be used to track the extent of the event.
Sensor revolution Wearable or personal technology ( fitbit ). Sensors on objects, including personal and commercial vehicles and shipping containers Location-based sensors homes, factories and warehouses, including smart thermostats and security technologies Geographic information systems (GIS) that provide geophysical, topographical, climatological and hydrological data Benefits Revolutionising claims handling and service experiences Product design Pricing connection Maximizing profitability Accountability and value add Control of data Challenges
Cost reduction (1/3) Headcount as % of Total Underwriting Operations 6% Engineering Inspection 6% Intermediary and Partnership Sales and Service 14% Other Functions 12% Direct sales and service 25% 37% Other Functions 38% Costs as % of Total Marketing 7% Facilities 7% IT (BAU) 18% 14% Direct Sales & Services 16% Cost ratio cost gap Common savings tactics Gap to close Sustainable level Today Target Past cost reduction measures are not sufficient Implement faster and deeper for competitive advantage Unrelenting factors drive up costs BPM applications Cost reduction programs Rounds of reductions Outsource and captive centers Re-engineering Robotics Cloud Analytics and data monetization Artificial Blockchain Increased regulation Product commoditization Increased competition New non-traditional entrants
We have no chance of competing against machines on frequent, high-volume tasks. Anthony Goldbloom Founder and CEO of Kaggle Cost reduction (2/3) 2 RPA orchestrates existing legacy applications for transaction ing, data manipulation, response triggering and Tools Web Applications 35% of insurers report more than 15% in cost savings the past 2 years 82% percent of insurance leaders plan on using machine learning and embedded AI solutions 75% are investing in machine learning. Accenture Technology Vision for Insurance survey 2016 APP 1 bases ERP 3 E R P RPA uses software to execute es in a repetitive, audited and controlled manner Utilities 3270 RPA acts alone with very limited human participation
Manage claims strategy Manage claims operations Cost reduction (3/3) Manage individual claims Manage claims operational Evaluate impact of strategy Manage claims technology Manage third parties (including TPAs) Manage First Notice of Loss Manage third party recoveries & captures Manage s Eliminate material human effort Evaluate external driver impact Manage claims change portfolio Manage regulatory compliance Adjust claim Manage reinsurance recoveries Manage reopened claims Get more value from knowledge workers Reduce costly errors; improve quality Evaluate capability requirements Manage claims talent Manage Manage fraud investigation Manage bordereaux Close claims Shorten critical path; Accelerate activities Manage claims plan Manage operating policies and procedures Manage customer experience incl. complaints Manage aggregates Situationally valuable
expectations What Insurers are not delivering What customers demand Insurers are not delivering owners online and mobile expectations, which have been shaped by their experiences as consumers in areas like shopping, banking, and even buying personal insurance online. Digital Strategy Success s at most levels demand a digital claims model. They want to define if, when, and how they interact with insurance professionals on the same level as their personal policies, health insurance, and wealth. Increased selfservice realisation Improved claims financials Enhanced customer experience Improved claims operations
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CONNECTED ORGANISATION Personal insurers may reduce their employee base by up to 50% Smaller reductions for commercial insurers What capabilities will be needed in this leaner organizational structure? Robust digital channels to handle most low-complexity claims Automated, rules-based es to replace human handling and intervention in less complex tasks Increased corporate risk Fewer lower-skilled claims handlers, with a greater focus on more complex adjusting skills Sourcing of capability through a more extensive supply chain network enabled by real-time data flows Increased outsourcing and offshoring due to continued cost pressures and the ability of more providers to handle a broader range of claims activities
Connected organisation The claims workers of the future will require new skills Talent and planning Skills and professional status Virtual teams Manage Change Workers in the claims operation of the future will have a different set of skills. Higher skilled and more experienced, thanks to the elimination and automation of many simple tasks and increased adoption of selfservice. More sophisticated learning environments and talent will help retrain or upskill workers to handle more complex claims. Analytical skills will be in higher demand as data breadth, volumes and availability expand dramatically, placing a premium on competitive insights. Dedicated specialists will be hired, trained or engaged to deal with emerging risks, especially cybercrime, data breaches and fraud. Special response units and global Cat teams will be in place to provide supply elasticity to manage surges and spikes in claims volumes due to increasingly frequent weather events or natural disasters. Remote working will expand as a means to reduce real estate costs. and pathways
FUTURE OF CLAIMS WILL CONTINUE TO BE A CUSTOMER LED PROGRAM 1 2 3 Design future state customer journey maps Map the underlying end-to-end customer es Assess operational requirements and design operational model
JOURNEY MAP FOR PERSONAL LINES FNOL Assessment Repair Payment Finalisation
Insurer JOURNEY MAP FOR PERSONAL LINES FNOL Assessment Repair Payment Finalisation Claim is lodged Insured informed of assessment outcome Repair consultation Claim is triaged Cash settlements Invoiced s Repair consultation Internal assessment Assessor consults with builder/suppliers Repair conducted assessment Invoicing
Negative Neutral Positive Insurer IDENTIFY CUSTOMER AND INSURER PAIN POINTS FNOL Assessment Repair Payment Finalisation Claim is lodged Insured informed of assessment outcome ~ Repair consultation Claim is triaged Internal assessment Assessor consults with builder/suppliers assessment Cash settlements Repair conducted Repair consultation Invoicing Invoiced s ` 1 2 3 4 5 6 1 2 3 4 5 6
Process Technology Negative ADDRESS PAIN POINTS FNOL Assessment Repair Payment Finalisation 1 2 3 4 5 6 1 2 3 4 5 6 Omni channel platform Robotics, automated triage self-service Repair estimation tools Property repair data aggregation Digital tools and online : Web and mobi sites and *App, *web-chat, Click2Call and Callme-back Robotics, Invoice IVR technology and voice analytics End-to-end system integration (front end, CRM, policy admin system, claims) MI and reporting tool Fast track simple claims Documented customer journey feedback (NPS, surveys, social media) Defined retention and loyalty strategy Develop QA framework to address robotic shortcomings s in simple plain language Workforce optomisation