An insurance claim comes at a stressful time in a customer’s life, often making it a negative experience. At least that’s what one can assume. That’s why I was surprised when our latest research report, Why AI in Insurance Claims and Underwriting, showed high claims satisfaction rates in personal lines across all geographies. In this article, I’ll explore exactly what drives these satisfaction rates—and what you can learn from it.
Settlement speed drives claims satisfaction in insurance
Overall, our survey found that 70% of policyholders said they were either satisfied or very satisfied with how their insurance company or agent handled their claim.
For claims, this is quite high. And our survey isn’t the only data point to show this. A 2021 survey by JD Power focused on auto insurance showed record customer satisfaction on claims, reaching 880 on a 1,000-point scale. A similar 2021 JD Power survey of property claims showed a small drop in satisfaction scores (from 883 to 871), but this broke a 5-year streak of steadily increasing satisfaction scores and is likely due to circumstances not directly related to insurers (such as supply ). chain disruptions and material shortages in connection with the pandemic). So, what is causing these growing satisfaction rates?
Omnichannel communication and transparency are two reasons. Most insurance companies allow customers to open a claim on a website or app. The technology offers the convenience of using images for an inspection instead of scheduling a person to come on site. And some insurance companies offer a dashboard to track a claim throughout its lifecycle.
These are all important modernizations that have helped the damage experience become more seamless. But there’s one thing that, according to our research, drives satisfaction more than anything else: fast checkout. The longer it takes to settle a claim, the less satisfied the policyholder will be.
This insight is particularly important for insurers, as claims dissatisfaction is a major factor in driving policyholders to switch, with 74% of dissatisfied customers either saying they have switched providers (26%) or considering it (48) %).
Insurance companies should focus on AI to build on high claims satisfaction rates
Knowing that settlement speed is a key driver, how do insurers continue to achieve high levels of satisfaction and, more importantly, build on it?
For many years, insurance companies have been focused on the omnichannel. We are now at a point where continued investments in omnichannel produce diminishing returns. Of course, that’s not to say that omnichannel should be ignored. New routes targeting younger generations, such as chat apps (WhatsApp, etc.), will continue to be an important strategy for insurance companies to expand their customer base. And perfecting or modernizing the omnichannel offerings insurers currently have will be critical to staying relevant. What I’m saying is that omnichannel is low-hanging fruit – most of which we’ve already picked.
Instead, insurance companies should focus on AI to automate the settlement process to be fast, easy and accurate. Of course, this is easier said than done. Automating the settlement process requires robust data and analytics capabilities, all connected in a single ecosystem.
Disconnect intention and action
Managers already know the importance of using AI in claims. The graph below shows that at least 75% of executives for each area of the claims value chain said that AI and machine learning can provide “significant” or “great” value.
Yet there is a link between this intention and taking action. The same graph shows this gap, where even the most advanced area (claims adjustment) still only has 44% of executives saying they are advanced in their use of AI, automation and machine learning. In this scenario, our definition of “advanced” is after the level of “users in the early stages.”
Insurance managers should look at priorities holistically
So, about 80% of managers recognize the value of AI in claims, and about 40% consider themselves advanced in various areas. Not surprisingly, claims investment will accelerate over the next three years, with 65% of those we surveyed planning to invest more than $10 million.
However, insurers should not be dissuaded, as the priorities for rapid settlement align with other executive priorities, such as reducing administration costs and plugging claims leakage – and the solutions are the same. That’s why managers should avoid trying to solve each problem separately and instead ask how AI, machine learning and other automation can transform the business in a way that will simultaneously hit multiple priorities. For example, increased settlement speed through automation will naturally reduce administration costs and avoid claims leakage, while increasing customer satisfaction and retention.
Insurance leaders must also be brave enough to tackle these bigger challenges and avoid spending too much time and energy on simpler priorities (like omnichannel).
Insurance companies know the kind of value AI can offer, but they are lagging behind in implementation. Fortunately, the recent surge toward the cloud will help. The cloud is a critical foundation for leveraging the real-time data and modeling that will fuel this type of automation.
Overall, there is still a lot of work to be done to get technology platforms to the point where they can automate the speed of deployment and better leverage AI across the business. But it’s clear that AI and automation is where the investment should go for insurers to reap the most benefits: happy customers, empowered employees and a more resilient business. Read our full report on AI-led transformation in insurance to learn more.