Digital Claims Study
German insurance companies are increasingly directing their digitalization efforts towards claims management. This has been revealed in a recent study by the digitalization expert Eucon and the management consultancy zeb. Accordingly, the majority of insurers have already established a digital strategy and aligned it with their business strategy. But despite a multitude of digital initiatives, there is still a considerable need for action in end-to-end digitalization and the integration of all process stakeholders. As a result, only a few companies reach the maturity level of a fully digitalized insurer in claims management (“digital leader”). The authors of the study also found out that there is untapped potential particularly in the areas of artificial intelligence (AI) and data analytics. Insurers need to enhance their digital skills in these areas in order to offer their customers a simple and fast claims settlement process. This is the only way to remain competitive, retain existing customers and acquire new ones.
Michael Rodenberg, Managing Director at Eucon, explains: “Service providers and insurers need to rethink, overcome fragmentation and jointly offer new standards for the industry. If this succeeds, claims management areas that so far have hardly been digitalized can be transformed much more quickly and efficiently.”
Coronavirus accelerates digitalization at the customer interface
Looking at loss reporting, the study showed that the digitalization projects of German insurance companies were further accelerated by the contact restrictions imposed to contain the coronavirus pandemic: 84 percent of the insurers surveyed now offer digital tools that allow policyholders to report and record losses. Almost one in five of these insurers has implemented fully digital loss reporting processes for their policyholders. Numerous insurers have initiated or enhanced the digitalization of loss reporting and ascertainment. Insurers who do not use these digital tools run the risk of falling behind.
However, the insurance companies surveyed exhibit a lower digital maturity level when it comes to digital services and channels for transparently communicating the processing status. Hardly any insurer offers claims status tracking – similar to shipment tracking offered by parcel delivery companies – or relevant chatbots. Loss prevention is another field that lacks concrete digitalization projects: only half of the insurers offer their customers products in the areas of smart home, telematics or health apps.
Philip Franck, Practice Lead Insurance at zeb for the DACH region, states: “Insurers are aware of the importance of digital tools for the benefit of the customers. But of all areas, claims management has so far been slow in taking up these tools. This will change in the future. Insurers have recognized the fields in which they need to act. In our view, claims management is on the verge of a significant digitalization push.”
Technology as both driver and bottleneck
Many insurers face the challenge of integrating their innovative ideas for a digital claims process into their operational production processes. Nearly 60 percent of insurers surveyed reported a lack of capacity for implementing data-driven claims initiatives. Although approximately 40 percent of respondents have sufficient budget for digital claims initiatives, it is not enough to compensate for bottlenecks in internal IT resources. As a result, even externally purchased software and services can only be introduced slowly.
Untapped potential in data management
In the survey, only about 40 percent of insurers said they systematically used data to optimize claims management. Many of them already have an extensive pool of data at their disposal. However, the majority of respondents do not take full advantage of this treasure. This is also due to the poor quality of the data. One in two insurers only works with partly structured data, even for current claims. Overall, companies lack the integrated and effective data management required for profitably using data in the claims process, so that the insights gained can also be used consistently for customer centricity.
Variety of AI initiatives launched
Around 70 percent of respondents have started initial projects in AI and data analytics. Data-driven methods are tested and applied in particular in fraud detection as well as data preparation and claims or document verification. What is interesting from the authors’ perspective is that many respondents hardly use AI technologies to predict verification requirements. Insurers could use it to speed up the claims process and thus increase customer satisfaction and reduce costs for verification.
Christine Utendorf, study author and AI expert at zeb, explains: “Overall, insurers have recognized the potential of artificial intelligence and data analytics for claims management. This is evidenced by the high number of pilot projects. However, AI has yet to move beyond the conceptual status and be deployed in day-to-day operations – this step is still pending in many areas of claims management.”
About the study:
The Digital Claims Study “Digital Claims – Die Zeit ist reif!” (only available in German) is based on a survey carried out by Eucon, the digitalization specialist for automated processes, and zeb, the strategy and management consultancy for the finance and insurance industry. From September to November 2020, both companies joined forces to survey almost half of the German non-life insurers and used the responses to draw conclusions about the digital maturity level in the claims area. The main aim was to take a closer look at the current status of insurers’ efforts to balance customer requirements, technological progress and persistent cost pressure.
Further information on the Digital Claims Study by Eucon and zeb is here available.
Eucon is a digital pioneer for data and process intelligence. As a trailblazer for digital change, Eucon has been supporting companies in the automotive, insurance and real estate industries in digitalizing their processes, profitably leveraging data treasures and implementing digital business models since 1997. The company has comprehensive market data and in-depth expert knowledge and combines this expertise with cutting-edge technologies such as Artificial Intelligence (AI) and Robotic Process Automation (RPA) to create intelligent automation solutions. With around 400 employees, Eucon serves 250 customers in more than 80 countries from offices in Europe, North and Latin America and Asia-Pacific. Eucon has received numerous awards for its data-driven platform solutions and its corporate culture.
As a leading strategy and management consultancy, zeb has been offering transformation expertise along the entire value chain in the financial services sector in Europe since 1992. In Germany, we operate offices in Frankfurt, Berlin, Hamburg, Munich and Münster (HQ). Our international locations are in Amsterdam, Copenhagen, Kiev, London, Luxembourg, Milan, Moscow, Oslo, Stockholm, Vienna, Warsaw and Zurich. Our clients include European large-cap and private banks, regional banks, insurers as well as all kinds of financial intermediaries. Several times already, our company has been classed and acknowledged as “best consultancy” for the financial sector in industry rankings.
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