Living In a Parallel Reality

In the last decade, perhaps one of the least surprising aspects of the much-proclaimed revolution in the provision, management, and delivery of insurance is that the over-hyped and over-promised outputs of new business models has not been forthcoming.

Ultimately, successful insurance financial models depend on only three factors – underwriting, pricing, and claims management. Everything else is just the fluff that goes around the edges. Should you fail in one or more of these elements, then the marketing, the bean bags in Reception, and a willingness for older people (who should know better) to dress in chinos and ragged t-shirts, will all count for nought.

The ‘new kids on the block’ have come and gone, with barely a ripple on the surface of a glacier-like sector renowned for its resistance to change (but which has somehow survived for centuries). Those that have looked even remotely successful are simply acquired by their much larger brethren, where the sub-brands will surely disappear (along with the original founders of the so-called disruptor insurtech) in a labyrinth of new rules, red tape, and risk avoidance committees designed to strangle the entrepreneurial spirit.

However, if you, the reader, thinks me too cynical in my assessment, then let me pause awhile and mention my favourite (and obsessive) subject, one that may serve to assuage some of your fears.

Claims Management

In the world of claims, there are also only three elements that truly matter. Most importantly, the insurtech world has developed a greater understanding of the role these elements must play in helping to develop new answers.. but more of that later.

The three undeniably critical and all-consuming factors are, of course, indemnity spend, operational expenses, and the customer experience. The claims department is constantly seeking the right balance within this Holy Triangle, with occasional forays into one or other extreme corner (usually by abandoning anything remotely resembling a half-decent customer experience), before a cautious equilibrium is restored.

New tools to detect fraud, extensive use of imagery and 3D modelling, intelligent use of a new ability to auto-read documentation; these are just a few of the more innovative, useful applications with stickability that have found their way into the mainstream of claims handling. By and large, they have also been developed by external players. Insurers may still have been a little slow to adopt and adapt to these new tools, but nevertheless, the trend is welcome and set to embed itself in future developments.

Destination Failure

But let me finish, if I may, with a cautionary tale of how not to implement new technology solutions in the claims department – particularly around automation.

I know of an organisation (not one of my clients I hasten to add!) who is seeking to replace a relatively small scale, old and dying claims management system. To determine their needs, the IT department (non-claims and supply chain specialists) have asked the claims operations team to describe the existing manual processes, workarounds, and all other idiosyncrasies that prevail today. That same IT department is now seeking to automate those same processes with the help of external suppliers who are also not specialists in the claims and supply chain arenas, (but who are probably cheap!).

The result will, of course, be a stunning ability to do the same (wrong) things as they were doing previously, but now even faster. And the claims system that looked cheap in the first instance? You guessed it…

If you think me too cynical, dear Reader, may I refer you to the opening paragraphs of this article!


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