The Intelligent Quarterly from the publishers of The Insurance Insider

Summer 2018

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Story time

Mark Grocott

We all tell stories. They begin, as often as not, where questions arise and a decision has to be made. What will I do if I win the lottery? Where will my business be in five years' time?

A story provides the framework that embeds choices in actions that have a past, a present and a (still uncertain) future. And, in business, one of the greatest driving forces behind the stories we tell ourselves these days is the pace of technological change.

Clearly brokers, insurers and all those involved in service delivery to the insurance industry need to embrace technology, particularly to support those customers who themselves embrace technology, in order to remain relevant in today's market.

Technology can, when deployed correctly, improve our processes, speed up our business flow, add value and shorten the distribution chain. But how specifically should we use technology to respond to our customers' expectations?

A new narrative
In the aftermath of an escape of water, for instance, policyholders demand action. The small food processing company with a business interruption claim is primarily concerned with getting the business back on track as quickly as possible. The homeowner doesn't want his or her family spending months in temporary accommodation. Yet, every year after a flood, we hear complaints that the insurance industry is lacking in urgency and empathy.

Technology, closely married to customer service skills and great processes, can play a big part in alleviating this frustration. But there are big decisions to be made.

At Davies we've established beyond all reasonable doubt that when it comes to claims a single platform is the best way to provide the desired insight into the customer experience, as well as the ability to feed seamlessly into major clients' and providers' own systems.

It helps us support the customer, make decisions more quickly and identify fraud patterns. And all that data can be used to develop more sophisticated claim strategies with insurers and reinsurers.

But that's just the beginning of the story (since all stories have a beginning, a middle and an end). The next step is to harness the power of technology to provide smarter service and better outcomes. Here again there are decisions to be made over priorities.

For example, technology can allow us to receive input data just once and analyse it on the spot. Or we can overlay new data sets with our claims data to help us identify fraud potential more accurately. Or use analytics to help our clients with their own risk management strategies.

Finding the plot
The way we use technology is critical. Consider the motor claims market, which in a typically risk-averse space has been in the vanguard of technology, empowering claims handlers to make virtually real-time decisions.

At Davies we use a lot of online video evidence provided by policyholders - and this has now been widely extended to property claims too. But it's not a silver bullet. It works only if backed up by expert handlers who can interpret the evidence and respond to each individual case.

There's a long list of technologies helping to cut claims times. We now regularly use drones to assess property damage in areas where access is difficult. Smartphone technology makes it possible to agree on-the-spot instant variations on works with contractors through video data capture. And the future will bring more and more options. The connected home where all risks are diagnosed, or the smart car that can pinpoint the events leading up to an accident are no longer the imaginings of science fiction.

Connectivity is the future for the implementation of technology in the claims arena. Some claims will be resolved instantly without the insurer's intervention. For instance, facts about a delayed flight will be relayed instantly and the appropriate sum paid directly into the insured traveller's bank account.

But what impact will all this have on the claims culture? What are the legal implications? And, above all, to what extent will the new world support customer choice?

In stressing the importance of choice in the implementation of technological innovation, it is clear there is a wide range of approaches to individual claims and it's our job to select the best solution in each case. Of course, this is particularly true of complex major loss claims where it is essential to get the right technology in the hands of the loss adjuster on the ground.

The human factor
With every choice there's the risk of taking the wrong path. The strategy must be to enhance the overall service with technology and not impair it. Other strategies - such as simply taking out cost through technology - may not in the long run mesh with the client's objectives.

Think of your own experience with, say, internet banking. Most of the time you may be happy with online connectivity without the intervention of any human operator. But there will be times when you long to talk to a real person.

In handling insurance claims we have to be very sensitive to these varying needs. It would be a massive mistake to think that all claims could be settled using artificial intelligence (AI). The secret is to allow technology to carry out the simpler processes, freeing up your team to make the harder decisions and focusing on the more complex concerns of your clients. For instance - in employing measures, such as net promoter score and client satisfaction surveys, to segment the customer base in a way that achieves the best outcome.

If claims administration companies are to play an integral part in the future value chain, it will only be by adapting to clients' needs, both by embracing new technologies and investing in the skills of their people.

Take just two key areas: customer complaints and regulatory services. Innovations for supporting both of these disciplines will come from both technological advance and the intervention of skilled professionals. The reputation of insurance providers will depend on balancing these new solutions to the satisfaction of their clients.

Happy ending
My experience in the claims industry tells me to rely on people because they tell stories better than machines.

The use of technology in claims is only about responding to the needs of the customer. That entails first knowing your customers' needs inside out.

Are they time-poor? Do they need extra support through the claims process? Can you help them to manage their business and reduce risks?

People still answer these questions better than machines, but they need support in collecting and analysing the raw data.

The processes we develop need to be grounded in hard evidence and continuous improvement. That's where AI comes in again, monitoring outcomes - claim costs, complaints, life cycles - through joined-up technology and providing a much faster and more dynamic way of driving improvement and service delivery.

We must offer a broad toolkit of options to support customer choice. By adopting technology and automation we will be able to release skilled staff to solve harder problems and implement effective strategies to further improve service.

If we don't take this route and instead opt for an entirely automated approach to claims, then there will be plenty of new entrants into the market - including Google and perhaps Amazon - that have the skills to out-compete us.

It comes down to a never-ending story, based on evolution and renewal, but always dependent on choice.

This is how the poet, Robert Frost sums up the question of choice and deciding:

"Two roads diverged in a wood,
and I-

I took the one less travelled by,

And that has made all the difference."

Mark Grocott is chief digital officer of the Davies Group.

This article was published as part of issue Winter 2017

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