insurance broker going over policy with client

In Claims, Maximizing ROI Hinges on Reimagining the Customer Experience

In the insurance industry, organizations might view digitalization as a solution to back-office efficiency issues. It isn’t hard to see why – by investing in the digitalization process, insurers can reap benefits like faster case resolution, more accurate product pricing, and increased insight into claims. According to the Harvard Business Review, undergoing a transformation can drive: 

Cutting costs in these areas is an attractive prospect for most, especially since claims departments tend to generate a considerable portion of insurers’ expenses. According to research from Deloitte, costs like paid losses, settlement expenses, and investigation fees equated to roughly 70% of premiums in 2020. With every dollar saved padding insurers’ bottom lines, insurance companies pursue increased efficiency however they can – and some could see implementing new technology as a significant step toward achieving that goal. 

However, according to Gerent’s Insurance Practice Lead Donn Vucovich, focusing transformation efforts solely on back-office improvements wouldn’t address the full scope of insurers’ needs. 

“People tend to focus on digitalization’s cost-savings potential because the statistics are impressive,” Vucovich noted in a recent Gerent white paper. “And make no mistake, cost reduction is important. But back-office innovation can’t be conflated with true transformation. An effective claims digitalization initiative fundamentally reimagines claims processes from an omnichannel standpoint — and improves both efficiency and customer experience as a result.”

The customer experience is a crucial area of growth for insurers – one that is just as important as cost-cutting and back-end process improvements. If insurers want their transformation initiatives to maximize ROI, their digitalization must center on improving the customer experience in tandem with end-to-end claims processes.

Broken processes create fragmented customer experiences

Providing positive customer experiences is paramount in claims, especially given the inherent stress for consumers. According to EY research, 87% of policyholders noted that claims experiences were a driving factor in whether they remain with their insurer. Notably, a similar majority – 86%, according to a 2018 Gartner poll – reported that they would pay more for better claims experiences. 

“Claims provide an opportunity for meaningful interaction during some of the most emotional times of a customer’s life,” Vucovich elaborated. “If an insurer addresses a claim in a communicative, empathetic, and solution-oriented way, they can forge a relationship with a customer that lasts for years. If they handle it poorly, they could alienate that customer forever.”

Unfortunately for insurers, the definition of a “good” customer experience has changed drastically. The dominance of e-retail giants like Amazon has irreversibly changed the definition of “convenience” for customers, and omnichannel, personalized service experiences are now part of the norm. Conventional claims processes aren’t designed to provide these experiences, nor do insurers have the technology to support seamless interactions – and as a result, their service sticks out as painfully clunky. 

The typical customer journey is certainly far from ideal. Today, a customer might call to report a claim and receive a notice by mail that their claim has been filed, then wait weeks or even months for their insurer to deliver a decision and provide payment. Every time the customer calls to check on the status of their claim, insurers and adjusters may need to scramble to attain an up-to-date perspective on the account – and as customer frustrations mount, the risk of revenue leakage rises. 

The pre-digitalized status quo is failing to serve customer needs. As such, reinforcing old processes with new technology isn’t guaranteed to result in improvement. What institutions need is a reimagining of operations centered around the customer experience. 

As Vucovich explains, “You can’t just add technology into an aging process because what worked for consumers fifty years ago might not work today. Customer lifestyles, communication preferences, expectations — all of it has changed. You can’t add a tool or two and call it a transformation; you need to rethink your process from the ground up.”

Redesigning claims experiences around modern consumer behaviors and preferences

This re-evaluation offers insurers a unique opportunity – instead of just focusing on how technology can repair process pain points, insurers can proactively find ways to tailor claims experiences to suit customer preferences. With this approach, technology is not applied in an isolated manner, resolving individual customer pain points as needed. Instead, it is woven throughout the consumer journey, making the claims process as intuitive and straightforward as possible.

Those who embrace this approach to digitalization can receive crucial cost savings, operational efficiencies, and service improvements in return. Though it requires dedication to full-scale change, insurers who put the customer experience first can set a new standard for their industry. 

If you’re interested in learning more about what re-designing claims experiences might look like, check out our white paper, “Digital Claims Provide Satisfying Experiences, Deliver High ROI,” or give us a call to start a personalized journey with our consultants.

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