Preserving the human touch in insurance claims transformations

Key messages

• Mobile apps, virtual appraisals, and artificial intelligence-driven straight-through processing are among the innovations reinventing the claims value chain and helping insurers meet rising service expectations of tech-savvy customers.
• However, while freeing up adjusters and managers to do higher value work, many chief claims officers are concerned that overreliance on technology might undermine customer experience in the moments that matter most, requiring insurers to balance integration of efficiency-enhancing automation with differentiating personal service.
• Striking that balance likely means upgrading the capabilities and roles of claims professionals to exponential levels from both technical and business perspectives. Yet Deloitte’s analysis of over 100,000 job descriptions advertised by insurers globally over the last five years found gaps in recruiting those with several critical skills, including data analysis and familiarity with emerging technologies.
• To make sure their teams can support an exponential transformation, insurers should develop comprehensive claims strategies revamping the types of jobs claims professionals perform, the tools they use, how they interact with internal and external stakeholders, as well as their ability to incorporate the latest technologies and data streams without losing the human connection with clients.

The case for the exponential claims professional

Claims is by far a property and casualty insurer’s biggest cost component, as paid losses combined with investigative and settlement expenses accounted for around 70% of US premiums collected in 2020.¹ The pressure is always on to augment claims processing with new technologies and data sources that can increase efficiency, productivity, and accuracy, since every dollar saved goes straight to the bottom line. This transformation was greatly accelerated during the pandemic as necessity became the mother of reinvention, prompting implementation of widespread digital and virtual claims handling practically overnight. (See sidebar, “Pandemic forces faster digital transformation.”)

Digital tools adopted across the claims value chain

Today’s tech-savvy customers are increasingly seeking greater convenience, faster turnaround time, and more self-service options—expectations that insurers are attempting to meet with mobile apps, virtual appraisals, and straight-through processing of more routine claims, among other innovations.

These technologies should free up staff from routine tasks across the claims value chain. For example, with intake and triage, the use of live virtual inspections, photo estimating software, and automated repair shop scheduling can create a digital pathway to contactless claims. The same goes for drones and satellite imagery, which may permit detailed assessments of widespread catastrophe zones or damage to a single home or business without having to waste time sending live adjusters to the scene, often under hazardous conditions.

Such technological enhancements can make a big difference in turnaround time and customer satisfaction. A report from J.D. Power found that for homeowners claims processed digitally, including online filing of first notice of loss and acceptance of the insurer’s digital damage assessment, the time to payment was reduced by up to 5.5 days, compared to those who didn’t file their claim online along with photo proof of damage.⁴

At the same time, these technology tools are likely to change the day-to-day work and responsibilities of claims professionals in fundamental ways (figure 1).

However, these new tools will do little good for insurers or their customers unless claims professionals are trained to derive the most value from them and are prepared to handle more challenging tasks after automation relieves staff of routine data gathering and administrative work.

Many might be repurposed to higher level data analysis—for example, in managing portfolios of risk rather than individual claims. Others could focus more on fraud detection, coverage analysis, and dispute resolution for outlier claims. And rather than devoting all their attention to settling losses after an event, a claims contingent could work more closely with underwriting colleagues who are integrating many of the same emerging technologies and data sources, offering valuable feedback on how policy language, terms, conditions, and pricing are playing out in the market.

Some might even leverage their forensic expertise more proactively to support loss control services. One auto insurer CCO interviewed has aligned the company’s risk engineering and claims departments to create a continuum to keep losses from happening in the first place.

The crucial role of human interaction in the digital claims journey

As more digital tools come online, insurers will likely be able to apply accelerated claims handling and automated decision-making to an increasing proportion of their overall cases, thereby boosting claims professionals’ productivity while freeing up capacity. However, a natural follow-up question that’s likely front of mind for many in claims is whether automation will make them redundant? And the answer is that it depends on whether they can adapt, so they keep adding value to the customer’s claims experience.

With new data and technology at claims professionals’ disposal, their roles and responsibilities will likely change. Traditional activities such as data collection and verification, loss estimation, and claims settlement could take somewhat of a back seat as automation solutions mature.

But this does not mean claims professionals will play second fiddle to emerging technology. In fact, claims professionals armed with these tools would be able to accelerate the pace of claim settlement, which should increase overall customer satisfaction, while supporting the continued evolution of automation solutions. Claims leaders interviewed also repeatedly highlighted the importance of personal engagement when clients need it, which should be a differentiator in an increasingly automated world.

Claims can still make or break insurer reputations

“Here is where I go old school,” declared one personal lines CCO interviewed. “If there’s anything wrong with all this emphasis on new technology, it’s the belief that maintaining one-on-one face time, virtually or otherwise, isn’t as important as increasing efficiency.” While automation can cut time and expenses, this CCO added, “that doesn’t necessarily mean you need to do away with customer interaction, which is an essential element to the overall experience, especially if a problem arises.”

He cited the example of his company’s dedicated catastrophe team. “The last thing you should do is cut those people, as you still need boots on the ground to provide comfort to traumatized customers. You can’t do it all with drones and bots.”

In addition, while an automated system might simply reject a claim because that particular loss isn’t covered under the policy’s terms, a human claims professional might seize an opportunity to provide value-added service. “A denial doesn’t have to be a door slammed in a claimant’s face,” said a homeowners insurance CCO. “We need to create a good experience for those not getting paid, not just for those who do.”

For example, even if an algorithm determines correctly that a policy provides no coverage for a particular loss, claimants may still need help getting a fair damage estimate and reliable contractor. “Yes, that’s a cost,” said the homeowners CCO, “but it can also create customer stickiness and a lot of good will.” The result is more likely to be a positive experience the claimant shares as opposed to complaining about being summarily dismissed by the insurer’s bot. This can make a significant difference, as one technology entrepreneur calculated it takes roughly 40 positive customer experiences to undo the damage of a single negative review.⁵

Hence insurers should strive to create a flexible digital experience that capitalizes on the many benefits of automation and more advanced technologies while allowing live adjusters and claims managers to seamlessly weave their way in and out as their presence is required.

In the end, claims professionals are very likely to remain the heart of their function at most carriers, only in different ways than before. It’s important to upgrade their skill sets and broaden their horizons to exponential levels, so they can complement automated systems, take advantage of more advanced technologies, and continue to add value for their employers and customers.

Analyzing the impact of emerging technologies on claims skill set needs

So, where might all these new technology tools, alternative data sources, and increased need for customer management leave existing claims professionals in their day-to-day work?

Most of the CCOs interviewed stressed that such enhancements are unlikely to do insurers much good if their claims units don’t integrate them productively or understand when and how to use them effectively. This puts the onus on claims professionals to expand their technical capabilities and adapt their roles to handle a higher level of work and wider array of responsibilities.

“It’s really not about replacing skills; it’s about adding some and amplifying others,” as one personal lines CCO aptly summarized it.

Breaking down the exponential claims skill set

Claims departments should be developing augmented professionals blending elements of four distinct skill sets to reach the exponential levels needed to provide a hybrid customer experience that can be both digital and in-person (figure 2).

Such individuals should possess a mix of business and technology skills, speaking the language of both sides, and able to bridge the divide often separating the two in order to make cognitive systems effective and seamless in a business context.

1. Technology skills: Beyond knowing the intricacies of insurance policy language as well as trends in disputes over terms and conditions, members of a claims team should be closely involved with developing and testing automated systems—not only to ensure they perform properly but to provide mechanisms for human intervention when necessary. A malfunctioning or mistakenly designed algorithm, for example, could result in systemic underpayments (and likely prompt blowback from customers and regulators) or overpayments and reopening of cases (which could leave insurers with a serious claims leakage problem).
2. Data analytics:Exponential claims departments should have team members closely involved when developing quantitative data models driving straight-through processing, as well as those skilled at deriving actionable insights from all the alternative data and emerging technologies being deployed. Data gathered via sensors (whether from automobiles or in insured properties), for example, could turn out to be the biggest game changer over time if claims departments manage to use such real-time information proficiently.
3. Business acumen:Many of those interviewed suggested that as claims departments automate more functions and cases, skill sets will shift towards critical thinking and problem-solving on a departmental and even enterprise level. “Managers are responsible for a whole ecosystem now,” remarked an auto insurance CCO. “It’s more of an outcome orientation rather than a task orientation.” For instance, many interviewees were hopeful new technology will enhance the ability to get past what one CCO characterized as “tunnel vision”—that is, spending too much time managing files one at a time rather than assessing claims portfolios across lines and regions.
4. Customer management: Claims professionals should be available to handle more complex claims as well as more routine cases requiring individual attention. This includes being trained to present defensible narratives that could defuse misunderstandings and avoid seeing disputes taken to third parties, such as trials or arbitrations.

In addition, adjusters and managers won’t necessarily be handling a claim end-to-end anymore, as they encounter more people already along the way with a digital solution, but who have been popped out by the automated process because of an anomaly or some other issue outside the system’s guidelines, requiring human intervention. Many interviewees, therefore, suggested building claims models that recognize when a customer is having a problem while enabling live adjusters or managers to step in and provide whatever support is required.

Are insurers recruiting professionals with exponential skills?

Deloitte performed advanced text analytics on more than 100,000 detailed job descriptions advertised by various global insurers over the past five years. (For methodology details, see sidebar, “Deloitte’s human capital data lake analysis.”)

Our analysis showed most insurers already seeking several skills that would be needed in an exponential claims professional. However, we also found gaps in the talent recruitment process, which if allowed to persist might inhibit the transformation of claims departments to exponential levels.

Traditional, but still relevant skills such as claims management, customer management, and teaming have been consistently sought across all five years, advertised by at least 90% of job profiles listed by carriers.

Encouragingly, as we focused on the top skill categories for exponential claims professionals described earlier, it is also evident that capabilities involving business acumen (such as market sensing and critical analysis) and customer engagement (such as relationship management and negotiation) are indeed already being actively sought (figure 3).

However, at an industry level, under 50% of job descriptions have listed the need for data analysis skills. While all claims professionals won’t have to be full-fledged data scientists, most will likely be required to have a working knowledge of the field to take advantage of all the new information at their disposal and be able to communicate the implications to stakeholders. Many also should be able to help data scientists incorporate the specifics of how the claims process works into their systems, as well as determine how data analytics might alter their roles and day to day duties.

Carriers do appear to be making progress in seeking this capability, with mentions up by nine percentage points from 2016 to 2021, but there is still a long way to go before these essential data skills are sought as actively as those involving customer engagement and business acumen.

Meanwhile, only 10% or fewer insurer job descriptions indicated the need for people able to handle emerging technologies, such as artificial intelligence and various types of robotic process automation. Indeed, the percentage of job descriptions advertised by insurers explicitly seeking those prepared to handle these cutting-edge tools has actually dropped by half from 2016 to 2021, to only 5%. While not all claims professionals need to be fluent about every new technology, they likely should be familiar with how most of them work so they may deploy them properly and double-check outcomes.

These gaps could indicate a disconnect between what insurer recruiting departments think they should still be advertising to fill legacy positions versus the types of skills needed for the more exponential roles adjusters and managers will actually be expected to fill going forward.

With reliance on advanced technologies quickly rising, insurers should be much more proactive in working with their talent recruiters to seek out individuals experienced in these cutting-edge areas. An alternative is to enhance their training programs so they may quickly get recruits up to speed with the latest data and technology tools available to claims professionals, while also schooling them on the exponential roles they will be expected to fill in conjunction with technology transformations.

What are the key components of the claims transformation journey?

There may be no “magic formula” for exponential claims transformations since carriers should take customized approaches based on their line of business and customer segment. However, feedback from those interviewed helped us distill these important guideposts for the transition:

• Technology should enhance fact-based claims management. The ultimate goal should be to create a more data-driven feedback loop that also improves turnaround time and outcomes. One example is placing sensors in various properties and wearables to capture real-time data documenting accident details.
• Engage with customers where they feel most comfortable. Even as carriers embrace digital platforms for long-term cost effectiveness, they likely would be ill-advised to force all claimants into virtual channels, making a hybrid system with access to live claims professionals the preferred operating model. 
• Manage the change transformation journey. CCOs interviewed were cognizant that misunderstanding, fear, and resistance from claims professionals worried about losing their jobs to automation could undermine the transition to an exponential future. Clear communication to explain the need and place for exponential skills, as well as organizational support to help staff develop them would likely go a long way in allaying some of these concerns. Cooperation from frontline claims professionals up through to the leadership team should make transitions easier and more successful than top-down direction alone.

• Map out your reinvention. To support a smooth transition and claims transformation, insurers should develop a comprehensive claims strategy to incorporate the latest technologies and data streams without losing a human connection with clients. This will likely be an ongoing journey with several interconnected and interdependent parts, covering rearchitecting of the work claims professionals do, revamping the capabilities of the claims workforce, as well as adapting how claims teams are organized and deployed (figure 4).

This tripart strategic game plan should be tied closely to recruitment and training efforts so insurers can either acquire and/or develop the necessary skill sets cited in figure 3 for exponential claims transformation. Roles and responsibilities may also need to be reassigned or redesigned so that staff and technology-driven elements of claims management complement one another, allowing team members to focus on higher-level duties while leaving room for ongoing personal engagement with customers when necessary.

Adaptability will be crucial. Claims professionals can’t afford to think in a static way as the evolution in systems, processes, and tools accelerates to keep up with intensifying competition and rising customer expectations.

“We’re already seeing big changes, but over the next five years our jobs will be very different in ways perhaps we can’t even imagine,” a multiline carrier’s CCO noted when asked what developments excited him about claims as well as what looming challenges were keeping him up at night. “What sounds far-fetched in claims handling will be routine before long.”