Claims transformation bigger than modernization: SMA report

Insurers are in a position to transform business models but need to understand the importance of efforts around claims, the moment of truth for insurers, where they deliver on their promises to policyholders in terms of customer service and restoration, suggests a new report from Strategy Meets Action (SMA).

Claims are the single most critical touch point between insurers and their customers

“Insurers are positioned to transform their business models to predict rather than detect, alert rather than react, and prevent rather than restore,” says Denise Garth, SMA Partner and co-author of Claims Transformation: The Journey Beyond Modernization, issued Tuesday.

“Claims transformation allows for new value propositions and leading-edge, value-added services that encompass safety, security, protection, mitigation and prevention. We’re looking at the evolution of the entire philosophy of claims, and the market leaders are already starting to reap the benefits,” Garth comments in a press release from SMA, which blends research findings with expertise and experience to deliver business and technology insights, research and advice to insurers and IT solution providers.

“Claims transformation is bigger than modernization, encompassing changes to the entire claims business model and philosophy rather than simply the day-to-day processes of claims operations,” suggests Karen Furtado, SMA partner and co-author of the report.

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“Transformation touches all areas of an insurer’s business, establishing an organization with the right skills to support the new technology and vision of claims, the business capabilities that support the elevation in services, the redefinition of risk management, and the technology that supports – and takes advantage of – the continued advancements in the market,” Furtado continues.

The report provides a look at how to achieve true claims transformation, using modernization as a springboard to reinvent claims processes across the enterprise, details a new paradigm for the claims business model in the 21st-century, and offers examples of what that will look like for the Next-Gen Insurer.

Garth points out that when insurers modernize their claims management solutions, they are laying the foundation for a better customer experience.

Because policyholders bring their customer service expectations from other industries, “suddenly the old claims process looks very old, indeed,” the statement notes.

“Claims is the single most critical touch point between insurers and their customers and can have a huge impact on renewal decisions,” SMA reports, emphasizing that a single claim can make or break a customer’s loyalty.