Insurance transformation

As featured on BusinessMirror:  Insurance transformation

Claims is one of the most underutilized strategic assets within many insurance organizations today and insurance leaders recognize it will take nothing short of a transformation to unlock the value that the function could deliver.

Insurance businesses understand that claims can make a material difference to their balance sheets. The function also plays a leading role in defining the customer experience and bringing the organizational strategy to life for clients. Yet traditional claims functions were not built to deliver on this strategic value. More often, claims organizations were built upon a foundation of technical claims handling expertise. Now the function is being asked to augment this with technology, including the potential use of artificial intelligence (AI) in order to redesign and transform how the claims function operates.

To unlock the true potential of the claims function, a deeper, more holistic and transformative approach is needed. At its core should be a steel thread that connects claims with underwriting, actuarial, finance and other key functions though an integrated, end-to-end business architecture.

Transformation starts with a vision of what the organization wants to become. That means understanding how the claims function can add value to the business and how the business wants to evolve in the future. A clear strategy — well-articulated — can help the business make the right investments and decisions as the transformation progresses and specific business use cases and needs change.

At all times, the customer should be kept at the center of the business strategy and the claims strategy. That will require claims functions to really get to know the business’s customers, what they want and how they want to interact with the claims handlers. It will also be important to understand your internal customers and how they plan to use claims data and insights in their processes. Helping to ensure the alignment of the customer experience across distribution, service and claims will be key.

Data is central to unlocking the strategic value of claims. By leveraging data analytics, organizations can develop more precise risk and behavioral profiles for customers, allowing them to tailor pricing, coverage and underwriting decisions accordingly.

The problem is that insurance data is often spread across the organization, locked up in silos or inconsistently tagged. However, there are now a range of technologies that can be applied to help improve data access and enhance consistency. It does not necessarily require a massive lift and shift.

True transformation comes from reimagining processes with the desired outcome in mind – combining the best of business design with the best of digital claims capabilities so that the business can orchestrate all parties to support a claim and get deep visibility into each step of the processes. While thinking end-to-end, also think function to function. There are handoffs that should be considered, integration opportunities that can be found and data that can be shared.

As the claims function transforms into a source of strategic value, new and different skillsets and ways of working will likely be needed. In part, this is about how the claims function can interact with the business so that — together — they can deliver value to the customer and help to maximize financial efficiency. Some of this will be dictated by the reimagined processes, data requirements, and the business’s appetite to adopt AI technologies.

At the same time, capabilities should shift to support business architects, operational leaders and those who understand how to connect data with insights. As the more manual activities start to become automated, claims leaders will likely be able to shift their capabilities to focus on architecting the end-to-end experience using data and analytics to engage business partners and suppliers in new and different ways.

One of the main reasons that many transformations fail is because people tend to fall back into old habits. But there are tools and mechanisms that can be put in place to help assess and manage how new approaches are being adopted.

For example, KPMG firms have helped organizations set up centers of excellence (CoE), where dedicated teams assess to what extent new processes are being followed — and KPMG’s transformation teams have worked with change champions to empower them to validate and check themselves. Indeed, there are a lot of very practical steps that can be taken to provide confidence that the new ways are working. These teams can also provide insights into the things that are not working, thereby allowing claims functions to reassess their processes or approaches as part of a program of continuous improvement.

This is a unique point in time for the claims function. The business often wants the function to transform — The tools and technologies for transformation have matured, and the risks of functional transformation are better understood. It is an opportunity to create competitive advantage across the industry, to encourage innovative ideas and models, and to significantly differentiate the customer experience. We believe that now is the time for insurers to start reimagining how the claims function can live up to their full strategic potential.