Our customers must believe that monies will be available to meet their costs and settlement will be on a fair and equitable basis in the event of a valid claim. Without that trust, the whole ecosystem of insurance comes under threat. Customers will feel short-changed, deceived, and even mutinous – perhaps to the point where fraudulent behaviours are seen as somehow acceptable.
Therefore, it seems obvious that claims settlement systems must reflect that core principle in both design and application. Be it a human-centred, technology driven, or hybrid decision-making modus operandi, there is a requirement upon us to deliver a service that is transparent, accountable, and beyond reproach.
It seems to me that one way is for those involved in the Al world – in whatever guise that may take – to agree on a voluntary Code of Conduct that will guide their thoughts, deeds, and activities. An Al ‘Ten Commandments’ perhaps, that drives us to ever higher standards of ethical behaviours, helping to ensure that the amazing Al-driven developments of the coming years are not ‘the tail wagging the dog’. However, as much as we can marvel at Al’s extraordinary feats of analysis, insight, and automated decision-making, we must always have a set of guiding principles as our reference points, that help to avoid poor practices or simply the mistaken application of the power of Al.
We all know the Little Britain catchphrase of ‘computer says no’, and we’ve all met this barrier to trust and mutual comprehension in our daily interactions with financial institutions and other service suppliers. Imagine that frustration and breakdown in relationships when writ large on the Al platforms of the future. Like any technology, we must have regard not only for what we can do with it, but also what we should do with it.
That old dictum of being comfortable with headlines on the front page of the Daily Mirror if anything were to go wrong might well be the best advice that we could give ourselves as we contemplate a future world of claims, in which technology will eclipse human beings as the primary decision makers.
Of course, we must also grasp opportunities offered by ethical Al applications with both hands. No Code of Conduct should ever act as a brake on the rapid development of this amazing technology. Instead, it should serve as a great catalyst for all stakeholders to mutually agree the ‘stake in the ground’ that we will need if we are to retain public trust in our industry.
Because, and I repeat, without that trust there is no solid foundation on which we can build. Technology is not the driver of our industry but the enabler. It is not Al that ultimately determines who is right and who is wrong, whether a claim should be paid or not, if a claim is fraudulent or valid.
Instead, it is the human beings behind this technology on which our future depends, and a voluntary Code of Conduct can only serve to improve the chances of us getting it right- to the benefit of all the players and policyholders for generations to come.
Every vendor will tell you that they are the best at what they do, whilst the claims department will demand a range of competitive propositions from their suppliers which are intended to convey some sort of advantage over other insurers.
Occasionally, you do see a stunning proposition in the supplier marketplace that is a clear winner. The recent wave of independent insurtech developments has seen a very welcome growth in new ideas and applications. However, rare is the claims department with a firm grip on how they want to position themselves – other than, of course, the all-pervading demand to reduce indemnity and operational expenses.
But, despite some of the great innovations that have been happening on the tech front, vendors still find it especially hard to differentiate themselves from their immediate competitors.
Claims departments are also not that great at finding the golden nuggets that they’re looking for. In the former case, it is often a failure to invest time, money and research into designing and implementing the compelling proposition needed, whilst insurers and their claims departments are too often bound by corporate culture, process and internal politics to have the freedom necessary to experiment and challenge the norms.
For vendors, having a great product or service (if you have one) is rarely enough to stand out from the crowd. It seems to me that part of the secret involves the ability to tell a convincing story; not just the operational stuff in terms of who you are and what you do, but also the skills to draw the buyer in on what you are trying to achieve.
Strong examples of this in the motor market might be the progress made by companies such as Tractable and RightIndem, who have taken us on a journey around how the claims market could change for the better. They have been ultra-consistent in their messaging and positioning about this over many years.
For insurers and their claims departments, the task is made a little more difficult in that their customers have little option but to work with them. There are very limited options for reporting your claim to anyone other than your insurer (or their agent), and so there is a captive market mentality. The key driver is cost management with a nod towards customer service and, in truth, there is very little else to differentiate the positioning of a typical insurer.
Even when there’s real competition to manage a claim (a potential credit hire/personal injury situation, for example), insurers are very focused on the speed with which they can find the customer, rather than the offer being made. In other words, everyone looks pretty much the same from the consumer perspective, and it is simply a matter of who gets there first!
Of course, there are exceptions. In the US, Lemonade has made a great effort at storytelling, and they’ve seen huge success in that respect. In the UK, we can see High Net Worth companies positioning themselves as the service-driven claims operation that costs money – but is worth it in the end!
There’s a compelling need to be able to tell an interesting, engaging
and meaningful story about who you are and where you are going. Without this, you are just another vendor or claims department.
Responding to a tender on behalf of one of my supplier clients (not an insubstantial company), I was struck by the gulf between insurer expectations and supplier reality. A veritable tsunami of questions flooded the inboxes of the supplier bid team across a vast array of subject matter, but all of the questions had a single thread of connection between them.
Namely, that the questions were written by a very large company (an insurer), seeking to procure services from a relatively small company. Because of this, it soon became clear that the former had little cultural understanding of the latter, and were ruining their chances of finding the right supplier to suit their needs.
A Triumph of Style Over Substance
Procurement and claims professionals will have spent months preparing the Request for Proposal/Information, but will demand comprehensive answers within a few short weeks. The timetable from the viewpoint of the vendor is incredibly short – and is not so much a test of knowledge, skill and corporate attributes, but rather the ability to drive a square peg into a round hole.
With no time to revisit, revise or re-engineer, the vendor is left with no choice but to manoeuvre and manipulate information that they hope will satisfy the buyer. In other words, the RFP and the process surrounding it is no longer an instrument for the intelligent buying of goods and services by the insurer, but is instead an obstacle on the road to success for the vendor. A hurdle to be navigated, crawled under, leapt over.
The RFP is not a facilitator of making the right purchasing decisions but, instead, has become a mere shop window of presentation and style.
It’s Easy When You Know How
As someone who spends a great deal of time both drafting RFPs and, conversely, working with vendors who want to win business from insurers, I know that this is not the core intention. Purchasers genuinely want to hear about the competencies and attractions of the vendors. The latter are anxious to be able to respond positively and with integrity. Unfortunately, it doesn’t always work that way, and the blame lies firmly with the insurer procurement and claims teams.
But there are some solutions
Firstly, the RFP content should focus almost as much on the future as the present. Vendors do not stand still. Understanding their growth and development plans tells you more about a business than any number of queries regarding present day practices.
Secondly – add 8 weeks to the proposed date for responses. If you were thinking of giving 4 weeks to reply, then give 12. If you were thinking of 8 weeks, then give 16 – or earlier if the vendor wishes to submit. Suppliers need time to consider, reflect, and maybe even change how they are working as the demands of the RFP become clear. It’s better to have an honest and considered response than a response built on smoke and mirrors.
Finally, the RFP content and scoring should be weighted towards non-commercial considerations in the first instance – a ‘blind’ tasting of the proposal. Of course, the price matters – but not until much later in the consideration. Determine what the vendor is proposing to deliver before you make a judgement on price. Better to understand the former without your eyesight being ruined by the latter.
Requests for Proposals have a massive potential value to create meaningful relationships between buyer and seller. At the moment however, that potential is being wasted because of flawed process, cultural incompatibility, and too many boxes to tick!
Not too long ago I addressed a meeting of Claims Team Leaders. All of them, I guess, were technically competent. Some of them will have superior management skills of planning, organisation and decision making. A small minority might have exhibited signs of future promotion potential.
How many of them deserved the title of “Leader”?
I am pretty sure that the final tally would be close to zero. A better title might be “Claims Convenor”, “Senior Claims Handler”, or “Chief Cook and Bottle Washer” (as my mother used to say).
In other words, we bestow the title and supposed functionality of ‘leadership’ in a cavalier fashion on people who do not deserve it. That is not to say that they are not good at their real job. Simply that leadership is not amongst the skills that they exhibit. In truth, if we had 20 claims ‘Leaders’ in a single department the result would be an anarchic mix of outputs reminiscent of an arcade pinball machine.
Leadership is not bestowed from the Human Resources department. It is not an automatic rite of passage amongst senior personnel. It is not even an intrinsic characteristic of the Claims Director, COO, or CEO.
To me, the skills of leadership combine original insight with strategic vision. A clarity of purpose and an overactive drive to achieve. A leader need not be the most popular person in the room, but they will have an ability to inspire and motivate. A willingness to make decisions and an equal willingness to accept the consequences. Someone who wants to be held accountable for their outputs and who desires acknowledgement.
A leader is not always the greatest manager, but a good manager can be a great leader.
At almost every level in every organisation you will find those who see things more quickly than others; who are sharper in their analysis and less likely to accept the norm. People who want to know more, understand more and who embrace change. Leaders from the Post Room to the C-suite who are not just passionate about what they do today but are equally passionate about finding new solutions for tomorrow.
Working amongst my colleagues in the claims arena I see plenty of people who “get it”. Genuine leaders in their field. Claims Directors, and those lower in the pecking order, who really do want to make a difference to their department, business or, sometimes, the industry as a whole.
At the same time though it must be admitted that many aspects of claims management require technical knowledge. Put one foot wrong and it could cost the company big money. It is not at all unusual therefore to find the Heads of Department having oodles of ability in understanding the intricacies of law, regulations, current practices, and myriad other aspects of the role.
But that does not make them leaders. It makes them great at the job and immensely valuable. It means that we can rest safe in the knowledge that what needs to be done is being done. Stakeholder money is being well managed. However, it does not always make them the best people to lead the claims transformation effort.
The role of a Claims Leader is not just to fix the present problems but to design a new generation of solutions that make current worries redundant. With the advent of the Fair Pricing initiative, we have a tremendous opportunity to bring claims to the fore of the insurance proposition. If price is to be less of a factor in customer renewal, then insurers will surely focus more on the service being offered, including the claims department.
In 2030 (less than 9 years distant) we will look back on the way we handle claims today and wonder how we ever managed. We will also identify those Claims Leaders who took the risks to make change happen.
Thank you, one and all.
In five years’ time we can expect that huge swathes of claims, especially those triaged by AI-driven magic, will be settled ‘en masse’. There will be little, if any, human intervention.
Most personal injury claims will hit the new portal and every tick box will be filled in the blink of an eye. Self-service motor claims will be the default modus operandi. Household claims will have automated at least some of the process. Claims for contents replacements can already be managed almost entirely by IT systems. Parametric settlement systems for weather-related events will be the norm. Some of this technology and process will still be a little new. There will still be teething problems to overcome. But rest assured, in just ten years, hundreds of thousands of claims per year will settle — mainly for cash — at the merest hint of opportunity detected by the omnipresent AI every insurer will install. If they have not done so already.
This is all good news.
Except, of course, for the thousands of people who will lose their jobs. Regrettably, a necessary price to be paid for progress, as any Victorian Luddite will tell you.
We can also be sure that this switch from handler-centred claims management to machine-led automation will herald a new style of relationship between claimants and their insurer.
Or rather, the absence of a relationship.
If claims settlement for many people is as easy as taking cash from the ATM, then where is the need for any emotional connection between claimant and insurer? When were you last impressed by your bank just because they could give you your cash in a speedy and efficient manner?
Let’s be clear. Technology destroys human inter-relationships.
So, in becoming more customer centric as we use technology to fulfill legitimate desires for speed, fairness, and consistent service, we lose any sense of connectivity with our customers. A fair proportion of the policyholders who make a claim will become ever more remote and disconnected from the mothership.
This may not be a bad thing. After all, it is only the insurers or their agents that pine for an empathetic umbilical cord with policyholders. Never, in all my years in the claims sector, have I heard a claimant demand a closer relationship with their insurer. The marketing department seeks to exploit claimant weakness at a time of greatest need when, in truth, claimants only ever want a quiet life.
The outbound push for loyalty, renewal, and advocacy is a one-way street with little, if anything, by way of compensation for customers. Indeed, any claimant willing to express their gratitude for a service they have already pre-paid to enjoy would, until recent FCA intervention, be met with renewal pricing practices that are manifestly unfair.
Like claimants around the world, I welcome the drive towards a digitised, AI-led, RPA-driven future. At last, those policyholders with relatively simple and/or low-cost demands will get the ease and speed of service they have always deserved.
But in doing so, let us be clear that this transactional future will signal an end — for this group of policyholders at least — to any forlorn hopes we might still harbor of customer commitment, loyalty, and auto-renewal.
The sales departments’ job just got a little tougher.
The Value of Collective Wisdom Outweighs
Other Considerations
The fact that you can do something does not mean that you should. It is perfectly possible to leap from an airplane without wearing a parachute. The consequences, of course, would be disastrous but it can be done if you so choose.
Equally, the claims industry has demonstrated that it can ‘work from home’ and still manage claims very successfully. However, the fact that you can manage claims with a home-based workforce does not mean that you necessarily should.
In my view it’s time to bring our people back to the office, and this has nothing to do with the desire by the government to see this happen for the better health of the economy. Instead it is driven by 3 key reasons – all of which are an integral part of the complex jigsaw of actions, reactions, and logistics that we call claims management.
It is suggested (by Wikipedia no less) that Aristotle was the first person to formally identify that the collective wisdom of crowds is better, in certain circumstances, than that of the individual – even if that individual is an acknowledged expert in their field.
Much the same can be said of the claims office environment, where continuous interactions in the contact centre, team meetings, management discourse and a vast range of other activities brings with it the benefit of collective wisdom. Ranging from the simple claims query asked by one colleague of another, to more in-depth workshops and planning sessions, there is every reason to believe that collective wisdom will arrive at a better answer than the current forced individual isolation of claims handlers and senior staff.
Of course, working from home is great. I’ve been doing it for 23 years and there are many advantages. No need to commute (other than to your nearest kitchen table or dedicated office ‘suite’). But when it comes to really ‘nailing’ customer service, operational delivery, and future planning I would argue that no amount of Zoom, Teams, or Google meetings is a patch on the formal and informal discourse of the office environment. How many times have you wished for that informal chat with a colleague or in-house expert who stands ready and willing to assist only to find that – when working from home – that informal circle of expertise is not available at the time when you need it most?
The easiest way to keep customers happy is to spend money on them. Particularly in the current circumstances, where the economy is disappearing into a black hole of despair and anxiety for many households, an insurance claim may come as a boost to family income.
I am not suggesting that there is necessarily an increase in casual fraud from customers (although there probably is) but, more simply, claims handlers do not have easy and instant access to the collective security blanket represented by the office environment and their colleagues. Working from home is a lonely and, at times, very trying atmosphere and it would be all too easy to settle claims in a more relaxed and less appropriate manner simply in order to reduce customer ‘hassle’.
However, the primary job of the claims department is not to secure customer satisfaction, contrary to some claims operations that I have seen. Customer satisfaction (or, heaven forbid, dissatisfaction) is a result of all the prior actions that occur in claims and supply chain management during the course of an incident. Being tempted to buy satisfaction is more likely to occur when claims handlers and their team leaders do not have instant and easy access to each other as they would do in an office environment
I have seen it suggested that the forced experiment with working from home will accelerate the trend towards digitisation and self-serve claims management.
Not true.
The current WFH environment may indeed accelerate the intent of senior managers and leaders to drive the digitisation agenda. It may also persuade sceptics that claimants really can do more for themselves. It may even encourage those controlling the purse strings to loosen their grip and facilitate investment for the future.
However, we all know that technological and related change management challenges move at a glacial pace in the insurer community.
With insurers being naturally risk-averse, and the claims department too often being seen as the last stop on the bus route of investment, the claims digitisation journey is often characterised by delay, indecision and hesitation as competing interests fight over limited resources.
These tendencies can only be exaggerated by the current need to work from home.
Essential conversations that often occur in the informal atmosphere of the office cannot take place. Brain storming is intensely difficult when conducted on-line. Vital work can be delayed because operational team working normally conduced across a desk or in a meeting room is difficult to replicate when working on line.
Working from home is a blessing in many respects and for many people – but not when it comes to advancing difficult, costly and challenging IT projects. The pandemic crisis has shown us what can be achieved and it has certainly moved the goalposts as far as the digitization journey is concerned, but now we must turn digitisation ambition into day-to-day reality and that will not be achieved in a Zoom meeting!
From the Claims Director to the FNOL service agent, from the total loss manager to the team leader, from the engineer to the supplier, we owe a debt of thanks. The continuation of service to claimants has been fantastic and there is much to be learned from the way in which the claims industry has been able and willing to respond.
No doubt there will be some welcome changes to the core working environment as a result, but now is the time for normal service to be resumed for the benefit of claimants, the business and, of course, the employees themselves.