The Future of Insurance Claims


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The general insurance industry is facing an unprecedented set of challenges, and insurers are struggling to adapt to the “new normal”.

Claims management is one of the most important levers for high performance and will continue to play a critical strategic role in the development of the P&C industry.

Insurers who continue to take incremental steps to improve the existing model risk falling behind the pack. The future belongs to the pioneers who can interpret the rocky landscape ahead and take the claims function to the next level.

This paper explores these new frontiers in claims, and sets out a blueprint for fundamental change.

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The Future of Insurance Claims

  1. 1. The Future of Claims Exploring New Frontiers A point of view on new challenges and opportunities facing the next generation of Personal Lines Claims Management in the UK
  2. 2. Claims will be at the heart of the battle for lasting competitive advantage, and will require a complete rethink of the role that it plays in delivering business value 1
  3. 3. Executive Summary The general insurance industry is facing an unprecedented set of challenges, and insurers are struggling to adapt to the “new normal”. Claims has always been one of the most important levers for high performance, and it will continue to play a critical strategic role in the development of the industry. Indeed, as the economic, regulatory and consumer pressures increase, Claims will need to move even further towards centre stage in the battle for lasting competitive advantage. Most players have long since recognised the enormous financial benefit in Claims, and many have already completed transformation programmes to unlock some of that value. The most successful companies were those that had a robust view of the opportunity and value levers from the outset, executed with appropriate pace and rigour, and also planned for sustainability of the results achieved. Today, however, Claims functions see that the world has moved on yet again, and have found themselves struggling against a tide of new challenges. Claims teams are better equipped than ever before, but are struggling to keep up with - let alone overcome - the rapidly mounting pressures. Rampant Claims inflation is pushing premium rates to the limits. Hard pressed households are struggling with unaffordable premiums, and increasingly Claims is the subject of political, regulatory and media scrutiny. At the same time, Claims propositions across the market still look very much the same to buyers. This needs to change as perceptions of insurer brands, offerings and value for money play an increasing role in consumer purchasing decisions. As a result, Accenture believes that the three major Claims imperatives today are: • Containing Claims inflation and seeking ways to drive the next wave of structural cost take-out • Meeting the higher service expectations of consumers and distributors • Building the agility required to thrive in rapidly changing markets In addressing these Claims challenges, we think that Chief Claims Officers will be required to contribute even more to overall company performance. In short, this means that it will no longer be enough for Claims to simply be an effective custodian of Claims spend and service. These new frontiers are not without material challenges in their own right, and they can probably be tackled most effectively as a whole. As always, it is sharp clarity of purpose combined with delivery discipline that will be needed to break the current cycle and achieve competitive advantage. Insurers who continue to take incremental steps to improve the existing model risk falling behind the pack. The future belongs to the pioneers who can interpret the rocky landscape ahead and take the Claims function to the next level. This paper explores these new frontiers in Claims, and sets out a blueprint for fundamental change. We believe that this requires a fresh view of the enormous strategic value yet to be exploited in Claims. “Next Generation Claims” will require a complete rethink of the role the Claims function plays in the extended enterprise and eco-system of stakeholders. It also requires some real innovation in the core people, processes and technology enablers required to achieve the next step change in performance. Accenture has a vision for the future of Claims, which involves an extension of capability over five “new frontiers”: 1. Personalisation and segmentation of Claims services 2. Extended collaborative networks 3. Effective multi-channel and digital experience 4. Advanced analytic insight and real time decision making 5. Career models for Claims professionals 2
  4. 4. The “new normal” The UK general insurance industry is currently facing an unprecedented set of challenges: hostile regulatory and macroeconomic factors, an exceptional pace of consumer change and the digital revolution. • Intense competition for market share, particularly in the most profitable segments While the industry is used to living with a constant stream of change, this time it is different – the forces of change are more additive and more profound. Insurers are now struggling to adapt to what is commonly regarded as the “new normal”. • Consumer churn is increasing, with little reward for loyalty The Personal Lines landscape is bleak: • The market is hardening, but underlying volume growth is static • Further commoditisation of core products and services • Aggregators and online trading have redefined distribution and new brands are strongly challenging incumbents • Regulators are responding to market failures, and are likely to become more intrusive • Fraud and the “compensation culture” are large and growing problems • Many major innovations driving change have originated outside the industry, putting insurers on the back foot Claims functions are feeling the impact of this volatile and disruptive market. This hostile environment combined with many changes specifically in the Claims arena, means that there is no place for “business as usual”. Claims Management need to rapidly adapt and change their mindset in terms of the way in which they operate. This paper follows on from Accenture’s “Claims at the Crossroads”. It aims to give a further point of view on the rapidly shifting landscape and set out a blueprint for the fundamental change that we think is required in Claims. The value of Claims As the biggest single area of controllable cost, Claims has always been pivotal in achieving business results. Excellence in Claims has meant winning in all the key elements of the business that drive performance, and most efforts have been aimed at achieving an optimised balance across these. The standard “Claims Playbook” has a four dimensional view of opportunity, namely: 1. Claims Efficiency 2. Claims Effectiveness 3. Claims Customer Service 4. Claims Staff Engagement In the future, as the economic, regulatory and consumer pressures increase, Claims will play an even more vital strategic role in the development of the industry, and will move even further towards centre stage in the battle for lasting competitive advantage. 3 In light of the considerable pressures on all Personal Lines insurers, we think that CEOs will increasingly ask Claims Executives to stretch themselves further to contribute more to overall company performance. Indeed, our point of view is based on two fundamental premises that will have a profound impact on the shape, size and role of the Claims function in the future. 1. There will be a growing expectation that Claims must extend its franchise beyond the traditional boundaries in order to contribute more to broader enterprise challenges such as brand differentiation, profitable growth, capital efficiency and cross organisational synergies. 2. Previous transformation programmes mean that much of the “low hanging fruit” has already been picked, yet the pressure to achieve more value from Claims is growing faster than ever. There therefore needs to be a radical rethink of how Claims can deliver the next wave of value. In short, this means that it will no longer be enough for the Chief Claims Officer to simply be an effective custodian of Claims spend and service. The bar is about to rise.
  5. 5. Leveraging previous investments in Claims Around the world, the enormous potential value in Claims has been proven in countless change projects. In the past decade, most players have invested heavily in Claims capability, and many have already completed transformation programmes. Accenture’s “Unlocking the value in Claims” studies in the past have shed light on many of these experiences. • Streamlining the core processes and improving the end to end customer experience The change work that has been undertaken has varied widely in its ambition and in the results achieved. Some of this re-engineering has been through investments in Claims people – for example attracting and retaining quality staff, developing skills and improving career models. However, the focus of these transformation programmes has typically been to replace legacy core Claims handling systems with modern components that are fit for purpose. The outcomes from such changes have been impressive. For example, some have achieved up to 15 percent reduction in settlement costs and 20 to 30 percent reduction in unit cost-per-claim. This technology has played a very important part in transformation, enabling great improvements. Typically this has been achieved by driving a balanced portfolio of changes to deliver higher performance across a scorecard of Claims dimensions and outcomes. Common examples include: • More efficient and structured data capture • Expansion of available contact channels and media • Improvements in key “moment of truth” processes such as controlling the Claim at FNOL, express settlement and third party contact • Improved segmentation and assignment of Claims to appropriate case handling pipelines • More effective organisational models such as case ownership, specialisation, and fast track resolution • Tighter process controls and operational governance • Taking more control of supply chains, including deeper external integration with partners • Field-force optimisation and mobile enablement • Development of point solutions for specific high value challenges such as fraud, credit hire, personal injury, water damage and medication costs) Our experience suggests that the best results have been enjoyed by those who had a robust view of the opportunity and value levers from the outset, executed with appropriate pace and rigour, and also planned for sustainability of the results achieved. However, even the most successful of these programmes has not prepared them for the current set of challenges. The world has moved on yet again. Claims teams are far better equipped than ever before, but the goal posts have changed. Claims staff are grappling with new challenges such as “Claims Farming” at an industrial scale, extraordinary high frequency of third party injury, and sophisticated fraud rings. In addressing these issues, there have been many bright ideas and experiments to apply new technologies such as social and mobile platforms, predictive analytics and cloud. However, whilst pockets of innovation exist, we still see no clear leader in the Claims space. Although there have been some notable successes, most players are struggling to keep up with, let alone overcome, these rapidly mounting pressures. At the same time, Claims propositions across the market still look very much the same to buyers. Accenture research indicates that consumers do not perceive insurance companies as being clearly differentiated against each other at all, and more than two thirds do not think that any insurer stands out as having a better Claims service. In the UK, internet and price comparison websites have become mainstream distribution channels, normalising shopping around at renewal and increasing the base level of churn in the market. As more than 80% of consumers research online before they buy, the way that insurers and their Claims offerings are ranked and rated on comparison sites and the social networks is going to increase in importance. We believe that there is a clear opportunity for Claims functions to exploit digital media to enhance the brand proposition. Some insurers have been able to leverage previous technology investments to respond, for example with improved data capture and business rules, to address emerging threats. However, in many cases, entirely new approaches have been needed. Typically this has involved a series of focused interventions to become more proactive and drive greater operational consistency, control and cycle speed. Improved customer service has also been high on the agenda, as have a number of point solutions to tackle high value problems such as water damage to buildings. 4
  6. 6. Three Claims imperatives Accenture believes that the three major Claims imperatives that insurers face today are: 1. Seeking ways to drive the next wave of structural cost take-out 2. Meeting the higher service expectations of consumers and distributors 3. Building the agility required to thrive in rapidly changing markets These imperatives manifest themselves as a set of strategic change needs for Claims organisations. This is illustrated in Figure 1 below: Figure 1 – Claims Imperatives Cost Customer Change • Keeping control of rampant claims inflation • Stepping up to meet much higher and different service expectations • Meeting regulatory & competitive challenges • Cutting overheads and processing expenses • Finding a role for claims to help tackle declining loyalty and price led purchase decisions • Keeping up with more technically savvy consumers, employees and partners • Satisfying demand for new, bespoke and personalised services at the right price point • Reducing the prohibitive cost and complexity of change • Finding means to pinpoint root causes of failure or cost escalation • Overcoming organisational and functional barriers to innovation Strategic change needs • Point solutions to attack key drivers of claims inflation • Meeting demand for multi channel service and digital propositions • Enhanced productivity through improved data integration and collaboration • Shifting from transactional process to engaging experience • More analytic insight to drive the right interventions in a timely manner • Improving quality and effectiveness of human interactions • Exploiting digital channels to promote claims brand and reputation • More customer centric process management and controls 5 • More configurable systems and business rules to support multiple variants • New skills and capabilities amongst claims professionals • Better collaboration to achieve internal organisational synergies
  7. 7. The next generation of Claims will be driven by strategic investments in analytic insight, connectivity and agility. The following sections further explore these imperatives and their implications for Claims Management, and sets out some practical areas of opportunity that can inform the next generation of strategic investment in Claims. The recurring themes we see here revolve around insight, connectivity and agility: • Deeper, more analytical insights through the intelligent use of all available data 1 Rising Cost Claims will therefore need to be at the forefront of actions to rebuild trust and loyalty amongst a disenfranchised set of stakeholders. This does not just mean containing the rate of growth of loss costs, but actually driving them down to more sustainable levels. The first major imperative is the cost of Claims. For example, in motor insurance, the relentless rise in the cost of Claims has been phenomenal. Despite this underlying inflationary pressure insurers were able, in the short term, to keep premiums artificially low by offsetting against investment returns and reserve releases. As the potency of these measures has dried up, insurers have had to compensate for rising Claims costs through a hike in premiums. In recent times this has driven huge rate increases and record levels of premium. As a consequence, millions of hard pressed households are struggling with the high cost of motor insurance, and this is a topic that is increasingly under the spotlight by regulatory, political and medical bodies, as well as consumers. These factors, not to mention the intense competition, mean that it is unsustainable for premiums to simply continue to track an inflationary spiral of Claims cost. The challenge has to be addressed to find the root cause of the problem. • More proactive and joined up data, collaborative processes and interactions • More configurable and flexible systems that enable innovation and rapid proactive change At the same time there is also a burning need to reduce operational expenses across the board, and Claims will need to play its part in this too. So now it is time to really ‘change the game’ to achieve the next level of cost take-out. This includes: • Ground-breaking measures to improve Claims related services and attack the underlying causes of high cost. For example, better provision of hire cars, improved rehabilitation and access to quicker settlements have all helped to mitigate the rising cost of motor claims. Undoubtedly there is still opportunity to go further, for example by improving ‘customercentric resolution, giving swifter access to fair and simple third party solutions, and providing appropriate incentives for low cost settlement routes. We also believe that Claims will be more intelligence led, using analytic insight to drive the right interventions in a timely manner. For example, we envisage the widespread use of proactive models that give alerts when an individual case is likely to result in a delay, or when the Claim characteristics are predictive of a cost escalation. • Measures to enhance efficiency and effectiveness across the end to end Claims value chain. For example, there are still huge opportunities to close the “white space” across the Claims eco-system through improved data integration, transparency and collaboration. At the enterprise level this means closing gaps between functional silos, and extending collaboration with the distribution and supply chain. Equally, there are still opportunities for better industry level solutions, such as payments clearing mechanisms, data sharing portals and shared responses to large Claims events. 6
  8. 8. 2 Changing customer Secondly, there is an over-arching need to reinvent the Claims experience around the changing consumer, digital technologies and a much tougher business environment. Although polls show that most customers are satisfied with the way their claim is handled, expectations are rising and insurers are very aware of the need to provide an even better service. Many companies have attempted to improve the customer Claims experience without really understanding what “better” actually means. In our experience, success requires a clear definition of success across the service spectrum. For example, it is likely to include a broad range of performance factors across multiple dimensions, as illustrated in Figure 2. Yet defining and delivering an improved Claims service is only half of the battle. The other real challenge is to understand the linkage between the service and value, and to optimise how investments in claims service are made. On the first of these points, there are conflicting perspectives on whether Claims service is tightly correlated with customer loyalty and value. Accenture’s view is that for individual consumers, claims service remains a hygiene factor, and only the very highest levels of satisfaction are likely to have any real positive impact on renewal behaviour. And claimants are, of course, just a minority of an insurer’s customer base. The majority of policyholders do not actively seek a better claims service, and generally perceive little differentiation between the claims offerings of competing insurers. However, this by no means indicates that claims service has no serious role to play in value creation. Accenture research of motor consumers shows that brand is a strong secondary influencing factor in purchasing decisions, and the claims proposition can be part of that equation. For example, our research also shows that claimants are more likely than nonclaimants to be vocal about their overall experiences, and satisfied claimants are more likely than dissatisfied ones to recommend their insurer. 7 Digital technology has increased the impact of service as a secondary influencing factor as people are becoming more interested and informed about comparative service, and taking account of this in purchasing decisions. Whilst most people still do not actively seek out providers with the best claims service, more than 40% of motor and household customers are sensitive to this dimension. Consumers are also more likely now to use social networks to discuss insurance, in both positive and negative ways. For example, the negative effects of poor service are magnified by consumers airing their complaints online. According to another Accenture survey, 19% of consumers who complained about their motor insurer in the last 12 months told other people through Social Networking sites or Twitter. In summary, superior claims service should not be so much about securing the loyalty of a (relatively) small number of Claimants, but more about leveraging real and perceived claims experience to drive the behaviours of the much larger buying population of past, present and future policyholders, distributors, advisors and influencers. This will play a vital differentiating role as consumers increasingly compare propositions on features other than price. This leads to the final part of the puzzle: how to optimise investments in service improvement initiatives? We think that many insurers spread service initiatives too thinly in a well-intentioned, but possibly misguided, attempt to delight every customer every time, rather than adopting a more focused, segmented approach based on value. For example, this could consist of a tiered strategy, as illustrated in Figure 3. For example, according to an Accenture consumer survey in 2011, people that had claimed on their motor policy were largely happy with the claims service they received; 63% of claimants indicated that they were very satisfied. In spite of this, claims experience had no discernable impact on overall satisfaction. However, it did influence how likely a consumer was to recommend their provider; over 56% of claimants were very likely to recommend their motor insurance provider to friends or family, in comparison to 50% of consumers on the whole. So what does this all mean? At the highest level, this could lead to a proliferation of customer centric improvement initiatives, which have the potential to add significant costs to the organisation. Accenture thinks that investments need to be prioritised around the most pressing areas of focus, namely: • Meeting demand for multi-channel service and digital propositions • Shifting from transactional process to engaging experience • Improving quality and effectiveness of human interactions • Exploiting social and media channels to promote Claims brand and reputation • Developing faster, more customer centric processes and controls
  9. 9. Figure 2 – Illustration of Claims Service Dimensions Performance Factor Service Dimension • Degree of customer participation • Claims ownership • Individual empowerment to get things done Customer-centricity • Soft customer skills • Technical proficiency • Accreditation levels Competence • Choice of indemnity / settlement method • Individual service levels • Contact preferences Choice Convenience • Multi-channel access • Self service enablement • Appointment flexibility Consistency • Avoid extremes of service levels • Manage surge/peak volumes • Apply collective knowledge to every Claim Communication • Proactive contact • Personalised content • Empathy Claim settlement • Early acknowledgement of intentions • Transparency of settlement (and impact on premium) • Perceived fairness of resolution • Handling of complaints Figure 3 – Illustration of a service segmentation model Service Initiative Example Core service predicated on resilient and efficient processes that drive reasonable, “good enough” levels of cost-effective performance • Why target transaction time when end to end resolution time is what really counts for consumers? Implement strong process governance and quality management controls to eliminate key drivers of dissatisfaction • Tackle root failures such as abandoned or misdirected calls, basic errors and omissions, failing to meet agreed deadlines Focus efforts to delight customers where this will deliver the best return on investment • Key “moments of truth” such as first contact or acceptance of claim are most likely to create a lasting customer impression Leverage actual Claimant experience to enhance perceived brand value in the insurance buying public at large • Increase gearing ratio through clever use of social channels, feedback forums, media • What is the true worth of an 80:20 call answer metric in which the call is poorly handled, compared to a slightly longer wait time that results in a full and final resolution • Address slow service, which is consistently one of the biggest concerns in consumer surveys • Focus on the right customers based on specific criteria such as advocacy, spheres of influence or lifetime value 8
  10. 10. 3 Rapid Change The Claims business environment is becoming more complex and fast moving. Insurers have found themselves grappling with a constant barrage of Claims specific change themes, including: • Pressure to achieve non-risk income • Managing the knock on impacts as digital distribution trends feed in to downstream service expectations • Finding the right balance between quality service and cost to serve • Coping with legal and regulatory change impacting core Claims processes and compensation landscape (e.g. MoJ, TCF, Jackson, OFT) • Identifying dishonest, exaggerated and inflated Claims whilst fasttracking legitimate cases As it is impossible to predict or even outrun the pace of change, the focus needs to shift to resilience, adaptability and entrepreneurship. 9 This translates into a strategic business need for true agility. This requires: • Superior monitoring and early warning systems that can help to anticipate new scenarios, sense change in the market and point to appropriate responses • Even more configurable systems and business rules to support multiple variants of service propositions • Better collaboration to achieve internal organisational synergies and leverage external relationships • New skills and capabilities amongst Claims professionals to identify, respond to and proactively manage business change • Better collaboration to achieve internal organisational synergies and leverage external relationships
  11. 11. Taking Stock Tomorrow’s challenges will probably require different strategies. We therefore need a fresh view, and for Accenture, this means helping our clients to fish in different places to exploit untapped opportunities in Claims. Looking forward, we see many challenges ahead. Among these are the digital revolution, talent shortages, emerging forms of risk, new competitor disruption and intrusive regulation - to name just a few. The answer begins on the outside, with an extended view of the role that Claims can play in changing an insurer’s relationship with customers, colleagues and business partners. It also involves putting dedicated Claims professionals at the heart of the business, making a real difference to human experiences and perceived Claims outcomes. Finally, it must be enabled by the wealth of new technologies that can transform the way that Claims are handled, allowing companies to do things which may previously have been unimaginable. As always, the best approach is to adopt a holistic view of the target end state and plan a value driven change strategy. So where next? We think that the road ahead can be defined by two major considerations: • The role the Claims function plays in the extended enterprise and eco-system of stakeholders • The scale and nature of innovation required to transform the end to end Claims experience 10
  12. 12. There is a pressing need for some real innovation in the way that people, processes and technology enable Claims to deliver more value. 11
  13. 13. The Role Claims Plays Claims Innovation Accenture believes that Claims can still make a massive contribution to enterprise performance beyond the payment and servicing of Claims. Accenture’s global consumer survey in 2011 indicated that there are very real opportunities for insurers to use consumer-driven innovation to achieve differentiation. The study illustrates a material gap between what customers expect and what they actually get from their insurers. Claims departments have historically been inward looking with a silo mentality. Increasingly, they will be expected to “extend the franchise” to other parts of the value chain. Not only is there an opportunity to tackle the immediate cost and service challenges, there is also much more to be done to help improve existing portfolio profitability, deliver targeted growth and create truly differentiated propositions. Claims departments will now be expected to become more joined up and contribute infrastructure, resources and skills to create value outside of their immediate sphere of operations. Claims will be expected to achieve closer integration with other functions, using Claims insight to drive enhancements in many areas such as: • Product development – e.g. supporting new Claims services and bundled propositions • Brand value - e.g. establishing a reputation that people will pay for • Organic growth – e.g. attracting and retaining the most profitable customers • Inorganic growth– e.g. effective post merger integration • Pricing and underwriting effectiveness – e.g. risk profiling, loss avoidance • Sales and service – e.g. tailored processes for renewals on policies with a recent or outstanding Claim. A more active role for Claims to influence perception of the Claims service • Capital efficiency – e.g. cloud based platforms, pay as you go services Accenture experience also indicates that although pockets of innovation exist within Claims, these have tended to be incremental improvements rather than transformative. In the UK, we still see no clear leader in the Claims space, and so there is still an opportunity for first mover advantage. Hence there is an absolute need for Claims to drive some real innovation in the core people, processes and technology that underpin current operations. Without this, it is hard to envisage how insurers will achieve the next step change in performance. In this context, moreover, innovation is more than simply coming up with good, creative ideas. Successful innovation is a blend of insight, creativity, commercialisation and delivery excellence, and therefore requires an integrated, continuous process of sustainable change at all levels. The innovation process should also be “hardwired” into social media and digital communication channels, allowing companies to leverage employee, consumer and third-party networks and the insights held within each. By establishing an open environment that welcomes ideas, collaboration, contribution and evaluation, Claims functions can engage their key stakeholders as active participants in the innovation process—expanding the range of possible ideas, reducing development lead times, and maximizing market impact. Insurers who grasp the opportunities within this extended role will be the winners. 12
  14. 14. New frontiers for Claims Claims will be a major battlefield for profitable growth and sustainable competitive advantage through innovative, differentiated propositions. In order to succeed, Claims departments will need to expand their horizons beyond the traditional scope and boundaries of Claims handling. The four core Claims management disciplines are as relevant today as they always have been. But in addition to these, there will need to be more focus on achieving other contributions to profitable growth. An illustration of this is shown in Figure 4. Figure 4 – Examples of other contributions to profitable growth Growth • Play a greater role in managing the loss ratio through risk selection, pricing and loss avoidance rather than post claim cost containment • Support growth through collaboration with other enterprise functions such as product development, marketing and channel management • Scalability and agility to accommodate new offerings and deal shapes Excellence in Claims Management Effectiveness Efficiency People Service • Develop new digital, process management and analytical capabilities to transform the claims experience • Re-engineer the core claims process to eliminate waste in duplication, failure demand and low value activity across the extended claims value chain • Transformation to become a lean, responsive and service led organisation that is the shop window • Innovate to provide genuinely differentiated claims proposition that customers and distributors really value • Build capability to personalise claims experience and provide different service offerings (e.g. by individual, segment, channel) Differentiated Proposition Accenture has developed a blueprint vision for the next generation of Claims. This is based on a wholesale extension of performance over five dimensions of capability. • Process flexibility to align service levels to different propositions and price points (e.g. basic v premium service) 3) Effective multi-channel and digital experience 1) Personalisation and segmentation of Claims services 5) Career models for Claims professionals 2) Extended collaborative networks 13 For most Claims organisations these provide a wealth of opportunity, but they are also relatively new areas of exploration. We think that the five “New Frontiers” for Claims are: These areas of opportunity are illustrated in Figure 5. 4) Advanced analytic insight and real time decision making
  15. 15. Figure 5 – New frontiers of claims opportunity Personalised/segmented services From ‘one size fits all’ To segmented levels of services • Recognition • Segmentation • Personalization • Education • Listening & advice Collaborative networks From ‘Silo’ To integrated and collaborative networks • Collaborative tools • Knowledge management • Integrated systems • Extended enterprise Claims Professional From overhead to overperform • Claims as a profession • Fair rewards and incentives • Growth of soft skills • Equipped with the right support tools • Ownership and empowerment Effective multichannel proposition • Provide emotional and social bond with customers From call centre To multi channel offering • Convenience/ availability • Selfservice enabled • Rich user interfaces • Channel optimisation Analytic insight From data To insight • Predictive claims • Process control • Smarter decisions • Next best action 14
  16. 16. Personalisation and segmentation of Claims services A common feature of many current Claims processes is a “one size fits all” approach, trying to be all things to all people. The key here is to achieve the right level of differentiation to drive incremental value without increasing the cost to serve. Claims service cannot exist in isolation from the broader customer market strategy, which is becoming more focused on different branded propositions for each target segment and distribution channel. Claims functions will increasingly need to move away from a generic, homogenous Claims process. One obvious area of opportunity is to optimise digital platforms to provide much richer, engaging user experiences at a significantly lower price point than conventional channels. For example, where Accenture has deployed specialist tools, it has been possible to generate new insights from automatic observation and analysis of actual customer behaviour. This has enabled web pages to be tuned, in real time, to achieve some impressive improvements in user adoption and outcomes. This will be replaced by a managed set of differentiated service offerings that cater for each relevant segment. Segments may be defined in many ways, from personal preferences to attributes defined at the customer type or channel level. Some obvious examples of personalisation include: • Dynamic process flows and data capture based on Claim profile and attributes • Customisable digital services to enable customers or partners to set preferences and pull Claim information (e.g. settlement path, loss adjuster visit details, tracking of phone calls and emails, contractor information and Claims handler contact details) on demand • Adaptive technologies to enable content to be delivered in the context of a specific geographic location, situation or device 15
  17. 17. Extended collaborative networks Claims staff will need to be equipped with the tools and skills that allow them to interact differently with all internal and external stakeholders in the value chain. One opportunity is to build on previous investments in customer contact centres, for example by adding layers of intelligence to ‘skills based routing’ solutions. Here we can draw on experiences in other service industries, where there is a much higher sophistication in matching specific customers with appropriate contact channels and servicing models. Essentially this represents a shift in mind-set, from capacity management towards a more strategic, segmented service model. For example, it is possible to track a customer journey through different contact channels and route them towards the most appropriate service. In this way, a low value transaction may be fulfilled online, whereas a high value “at risk” customer may be steered into a conversation with a named individual or profile. There has also been an upturn in the adoption of enterprise collaboration tools to share the collective organisational knowledge and maximise the impact of scarce talent. Where advanced collaboration capabilities are embedded directly into Claims applications it is possible to deliver a step change in customer experience and quality. Improved integration with other insurer functions, for example in the case of underwriting or billing referrals, can accelerate Claims cycle times and increase the rate of single step resolution. Another opportunity is in file sharing, which can help to optimise the mix of Claim handling between experts and low-cost resources. Improved integration with external distribution and supply chain partners is a rich area of unexploited benefits. Despite some work to integrate with supplier systems we still see vast opportunities, not only to expand the footprint, but also to create information rich networks and processes that take out the frictional costs associated with a traditional, fragmented Claims lifecycle. There are many examples of household, travel and pet claims that are relatively straight-forward and, with the right process integration and business rules, could be substantially automated along the lines of the motor windscreen Claim. Of course there are always going to be exceptions and limitations on the applicability of such solutions, but technology advances have substantially changed the boundaries of feasibility. Collaboration does not have to be restricted to technology solutions. Whilst we observe an increase dialogue between internal insurance functions, there are still many political and organisational barriers that inhibit more effective working approaches. Once again, experience in other industry sectors is that some of the most creative, promising innovations arise at the boundaries of disciplines where there can be a cross fertilisation of ideas and experiences. In the field of scientific achievement, many advances can be attributed to networks established across research institutions, industry and government. In business, we are seeing more examples of new collaborations, such as exploiting lessons learned from social media in the entertainment sector into new insurance distribution ventures. The most fertile ground for Claims innovation will be where the right conditions exist, namely: • Cross functional collaboration across the whole internal and external enterprise • Mix of insurance industry and non insurance experience • Creative mix of assets, intellectual property and knowledge Accenture believes that the right direction of travel is for Claims to take a more outward looking view of the whole business, and thinking about how further collaboration can improve the whole. We think that there is considerable value in joining up many fragmented entities across the value chain to drive innovation, such as in telematics or smart meter propositions, that can deliver benefits to more than one function. However, this type of collaborative joint venture cannot achieve its full potential without a more fundamental review of barriers and incentives to cross organisational co-operation. 16
  18. 18. Effective multi-channel and digital experience Claims capabilities will need to converge with a broader move towards an integrated multi-channel service model. For example, Accenture global insurance research in 2011 indicated that 84% of consumers expect insurers to provide multi-channel access, and 63% expect services via mobile devices. In the UK, we predict that digital capability for self service, including basic Claims registration, tracking and settlement processes, will become a hygiene factor for consumers and business partners within the next 2-3 years. Many Insurers are already exploring how digital service can be deployed across all operations, including Claims. This is not just a pure cost reduction and capacity optimisation play, but also delivers value through richer interactions. Mobile applications for smartphones are becoming increasingly important as they provide an ideal platform to reach the mass market in a fast and personalised manner. Tablet devices offer the prospect of even richer applications. Potential opportunities include: • Accelerate Claims capture and registration process • Provide greater customer service and support at point of need • Differentiate Claims service proposition with value added utilities (e.g. emergency assistance, reporting tools) • Maximise field-force effectiveness (e.g. location and route information, appointment scheduling, mobile payment services) • Provide Claims managers with realtime visibility to key data (e.g. MI exceptions, service alerts, complaints) 17 Beyond the provision of basic transactional services, we see that the next generation of digital Claims will also include the following features: • Social networking will become a crucial component of a Claims service strategy as it enables insurers to interact with customers in a more intimate and relevant context. • The creation and participation in online communities to achieve better publicity of Claims offerings and points of differentiation, including customer reviews and experiences • Provision of web services aimed at third parties such as Claimants, potential customers and other relevant stakeholders
  19. 19. Advanced analytic insight and real time decision making Data analytics is not new, yet many more companies are now thinking about it in a different way. The equation is simple: it enables companies to gain actionable insights from data, make better decisions and improve business outcomes. For example, “next best action” solutions in the Sales and Service environment could be readily ported to Claims. Many insurers are realising that analytics offers powerful investigative and predictive tools that have many interesting applications in Claims. The real innovation is the use of data driven insight to predict future business events before they occur, and take timely action on the front line where it really makes a difference. There is a clear opportunity to optimise cost and service levels even further through the deployment of new integrated analytical solutions. This is particularly true as analytical capability is increasingly being packaged up as point solutions for a range of issues. Fraud is probably the most common use for Claims analytics today. However, we see predictive analysis rapidly spreading in to new areas to tackle thorny issues such as injury and litigation management, service failures and operational workforce planning. An illustration of the wealth of opportunity areas is shown in Figure 6: Many insurers are deciding to conduct short analytic pilots to test a hypothesis or experiment with new ideas. For example, Accenture have developed a prototype analytics platform that illustrates a number of ways to transform day to day visibility and control in front line Claims: • Identify cases with a higher / lower propensity to generate ‘failure demand’ or adverse development patterns • Integration into process control software to identify anomalies and exceptions before they happen and trigger alerts Speech Analysis is another growing area of opportunity to identify the underlying intention behind customers’ calls, drivers of call inefficiency, and reasons for low customer satisfaction. Previously it was only deployed in specific areas such as training, complaints and counter fraud, but now its application is extending to wherever it can be useful to ‘understand’ speech patterns and reveal the value of data hidden in telephone conversations. For example, voice analytics can help identify problem areas and trends and root causes such as repeat calls, misdirected calls, long hold times or long non-speech time. Another interesting opportunity is to explore how speech analysis can help the prompt identification of key words and create appropriate warnings to agents or supervisors. Just how often have mentions of words such as ‘fatal injury’ or ‘witness’ been missed - to the great cost of the insurer involved? • Dashboard to help with workload forecasting and skills planning Value Chain Figure 6 – Opportunities for analytics in Claims Notification Set-up & coverage Assignment Investigation Evaluation Negotiation/ disposition Medical management Litigation management Recovery Identification & Management Fraud Detectioin & Investigation Process adherence/compliance Injury/treatment management Claim segmentation & assignment Loss reserving Predictive Claims Opps. Customer Contact/Customer Service Litigation propensity Customer service/Attrition propensity Recovery idevntification/propensity to recover Fraud propensity Workforce productivity/performance Speech analytics Areas of opportunity 18
  20. 20. Career models for Claims professionals Finally, we think it is time to re-examine the role of the Claims professional in the overall insurance value proposition. Historically, Claims has been seen as a poor relation to other functions such as finance and underwriting. Whilst there certainly have been some positive developments in recent years, this still remains the last unexplored frontier. In many jobs, including within insurance, it is normal for the best people to be incentivised and rewarded based on their economic value add. This has never been true in front line Claims, even though the impact of a high performing Claims team to the bottom line is pretty clear. As a top Claims professional can deliver many multiples of their annual remuneration in hard benefits, why does this anomaly still persist? Traditionally this may have been partly because the linkage between individual job performance and final Claims outcome is not as direct and auditable as with traders, sales people and other such occupations where performance based pay is commonplace. Accenture envisages a next generation where the Claims Professional is at the centre of the business. We also believe that they should be viewed more as value creators rather than cost overheads, with more focus on appropriate rewards for behaviours that drive superior Claims outcomes. Advances in process management and analytics, as well as a more refined view of key measures and indicators of Claims outcomes, mean that it is much more feasible to design intelligent reward systems. 19 The other unanswered question is how to attract, retain and develop the right number and types of skills to support an effective Claims function. According to a recent survey by the Chartered Insurance Institute (CII) in the UK, there was a large jump (by 22 percentage points to 72%) in those who say that skills shortages are having a detrimental impact on their business in. Some of the most negative views of skill levels were in Claims. Whilst some of these issues may be localised, there is evidence to suggest that talent and professional development is taken very seriously across the Claims sector, as indicated by the outstanding response to The Aldermanbury Declaration. However, even by its own admission, the CII admits that insurance lags behind other professions in developing talent. Claims people need to be masters of technical disciplines as well as softer skills such as empathy, influencing and advocacy. This is widely recognised, but there is still a capability gap in most Claims organisations. By way of example, Accenture research suggests that 74% of complaints to UK motor insurers are rooted in poor interactions with people, including poor staff knowledge, lack of professionalism and basic courtesy. Efforts should therefore be focused on service areas involving human interaction, with investments in coaching and simulation to support customer needs. There are many other factors that contribute to the reinvention of the Claims Professional. Many of these are not unique to Claims, and therefore align to best practices within Human Resource Management. In our experience, however, there are a few characteristics of the Claims business that require special attention: • An operating model that puts people in control of the process, and empowers front line staff to do the right thing by each customer • An outcome oriented performance model, with measures and targets that drive the right behaviours • Investment in a programme of rigorous professional development, training and on the job coaching • A dedicated career path for Claims, with incentives and rewards to attract and retain the best people • A high performance culture, where continuous improvement and innovation are embedded in day to day activities The key point here is that Claims is very much a people business, and so people must form a large part of the “right” answer.
  21. 21. Making it happen - tackling the whole We believe that the future belongs to the pioneers who can interpret the rocky landscape ahead and take Claims to the next level. Insurers who continue to take incremental steps to improve the existing model risk falling behind the pack. This is the time to stand back and completely rethink how the entire Claims function can be transformed across many new frontiers. These new frontiers are not without material challenges in their own right, and many of them overlap considerably. They can be tackled most effectively as a whole. As always, it is sharp clarity of purpose combined with delivery discipline that will be needed to break the current cycle. We believe that a collaborative partnership approach is the best way forward, enabling a shared vision, implementation and rewards. 20
  22. 22. How Accenture can help? Accenture is well positioned to help insurers respond to the opportunities and challenges likely to arise ahead. As the leading professional services provider in the UK insurance market, Accenture is able to bring extensive experience of addressing strategic and operational change. The chart in Figure 7 provides an illustration of the breadth of execution capabilities required by insurers on a journey to high performance in Claims. Accenture has a unique ability to bring together thought leadership, assets and skills in these capability areas to help our clients build a high performance Claims business. We would be delighted to discuss any of the topics covered in this paper. 21
  23. 23. Figure 7 – Capabilities for high performance in Claims Personalisation & Segmentation Core Claims Administration • Business Process Management • Digital Platform Optimisation • Web Analytics Multi-Channel Proposition • Collaborative Networks Analytic Insight • • • • • • • • • • • Digital Marketing • • • • Multi-Channel Enablement • • • • eService • • Claims Professional • Predictive Analytics Intelligent Decision Support • • Collaboration Tools • • • • • • • • • • Claims Supply Chain / Procurement • • • Knowledge Management • • • Systems Integration • Learning Services • Performance Management • Talent Management • • Claims Strategy & Innovation • • • • • Claims Operating Model Design • • • • • Programme & Change Management • • • • • 22
  24. 24. About Accenture Accenture is a global management consulting, technology services and outsourcing company, with 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is If you would like to hear more about Accenture’s views on this topic or would like to discuss how you can address the strategic and operational questions highlighted in this paper, please contact: Jeremy Lefebure Senior Principal, General Insurance +44 (0)20 7844 8921 Copyright © 2012 Accenture All rights reserved. Accenture, its Signature, and High Performance Delivered are trademarks of Accenture. 12-3230