Celent report analyzes how British insurers can improve claims process

Insurance companies in the United Kingdom can “shift the customer satisfaction curve” in claims by focusing on big data, analytics and operational excellence, according to a recent study by Celent.

“Tweaking” the claims process by ensuring that insurers communicate using their customers’ preferred methods (i.e. SMS, email, letter, etc.) is the easiest investment for insurers to make, the research company states.

“Few insurers make use of proactive communication during the claims process, and this can be a strikingly effective method of keeping the customer informed,” notes Catherine Stagg-Macey, the report’s author. “This will impact the customer perception of being treated fairly.”

A second area of improvement is linking speed of payment to value of settlement.

But as insurers increase the speed of claims payments, they become vulnerable to fraud. Therefore, in addition to improved fraud detection, Stagg-Macey suggests that insurers can use:

• more granular and up-to-date information on the value of the asset insured before the claim occurs; and

• analytics and big data, particularly in the area of social media to complement data already provided by current fraud tools.

Operational excellence in claims is the third area of investment for insurance companies looking to improve claims management.

“After some level of investment, we need to accept that the marginal increase in customer satisfaction is not worth the marginal investment,” Stagg-Macey stated. “At this point, the insurer chooses to invest in other areas that will help support broader operational objectives of the claim area and the overall organization.”

This involves benchmarking claims performance against financial and operational objectives, which included the following measures:

• Minimizing claims leakage, the difference between what should be paid on a given claim and what was paid on that claim.

• Controlling claims expenses, both allocated loss adjustment expenses (ALAE) and unallocated loss adjustment expenses (ULAE).

• Time to settle, taking into account the days, weeks, months or years between the time of loss and time of payment or restoring the claimant to its pre-loss status.

• Reserving accuracy, defined as how much reserves change from first notice of loss to final settlement.

• Claimant experience, monitoring the subjective evaluation of whether the claim was settled quickly and fairly.