Insurers constantly are looking for new ways to improve services to customers and at the same time keep their costs down. Tapping into technology, such as location-based services and geographic data mapping, at the beginning of the claims process can help them achieve those goals.
The tools can enable insurers, including Amica Mutual Insurance Co. and American Family Insurance, to offer claimant services at first notice of loss (FNOL), so that they can be more proactive about processing claims, keep customers better informed about progress and cut down on the time it takes to settle claims.
"Carriers are trying to differentiate themselves by providing superior claims services," says Karlyn Carnahan, a principal at Novarica, which offers consulting services to insurance and banking firms. "There are also real financial benefits. The sooner a carrier can begin to resolve the claim, the better their results."
Through geographic information systems (GIS), enabling data mapping and location-based services, insurers are beginning the claims adjusting process sooner. And, mobile plays a vital role. According to "The Accenture CIO Mobility Survey 2013," location-based services are most important on insurers' lists of mobile needs.
Insurers that have deployed data mapping technology for claims have seen benefits. Amica Mutual Insurance Co. has been using a GIS to help with its claims processes for about six years, initially as a desktop application and more recently via a server-based solution custom built by Esri, a geographic information system developer, says Adam Kostecki, manager in Amica Mutual's claims executive department.
The system has been especially valuable for processing claims related to hail storms, Kostecki says. "With our GIS system we're able to start with a footprint of a storm and project where claims will come from, and how many claims might be reported," he says.
With the GIS system, claims data is updated on a regular basis, "so we can see in real time what's happening," Kostecki says. "It provides a service opportunity that never existed before. In the past, we had to sit and wait for claims to come in. Now we can be more proactive. Sometimes we send adjusters out before claims are even reported."
Having real-time GIS data is a powerful tool for claims, Kostecki says, in large part because it helps the company ensure that the right adjuster is sent out.
For example, in the hailstorm scenario, in areas where very large hail has fallen and the damage will be obvious, the company can send out less experienced adjusters. In those areas where smaller hail has fallen and the damage is more difficult to discern, it can send out more experienced adjusters.
The system also helps with claims from other catastrophes, such as recent tornadoes in Illinois and Oklahoma. "Even before the tornadoes lift off the ground, we generally have a good idea of the properties that will be impacted," Kostecki says.
The technology also helps from the standpoint of looking back at past catastrophes for analysis. "We can pick a catastrophe code and see all the different claims overlaid on the catastrophe feature," including hail swaths, tornado paths, wildfire perimeters, earthquake maps, etc. "Individual claims can be reviewed, and different patterns can be identified," Kostecki says.
Perhaps most important, GIS has helped Amica Mutual process claims more quickly for customers and at a lower cost to the insurer.
"In the hail example, if you can accurately identify areas where roof damage is highly likely, it opens up the option to desk-adjust claims in those areas - something we hadn't even considered until GIS technology came along," Kostecki says.
Another insurer, American Family Insurance, also leverages location-based technology for claims.
"Once we receive notification of a hail storm event in a particular geographic region, we immediately utilize our [catastrophe] analysis tool to identify the storm path and the diameter of the hail stones," says Bruce Clark, catastrophe claim manager at the company.
"This storm information is integrated with our policy count and locator to determine the potential severity, number of policyholders impacted, and the resources necessary to enhance the efforts of the local office claims department to resolve these claims," Clark says.
"Our ability to deploy the services and personnel needed in any storm is at the essence of why people have insurance," Clark adds. "For those storm events where homes and businesses have been destroyed and the local community infrastructure is disrupted, it is important that communication channels remain open and we have a seamless workflow utilizing technology and self-contained response vehicles to be in the community during their time of need."
Consumer Expectations
The use of location-based and data mapping technology during FNOL is becoming prevalent in the insurance industry, as is other technology to enhance claims processes. According to a survey of nearly 100 carriers by Novarica in 2013, about 40 percent say they are able to offer location-based services during FNOL.
Faster intervention results in fewer days of needing a rental car, fewer days of needing storage, and a generally happier client who is less likely to defect, Novarica's Carnahan says.
A customer's perception of the quality of service impacts the customer view of the carrier, Carnahan adds. "Claims often is the only contact with a carrier, and a bad claim experience is a top reason for non-renewal," she says.
Consumers' expectations are being set by organizations they work with every day that might not be insurance carriers. "Customers expect a smooth process with no paper-based delays and no requests for information the company should already have," Carnahan says. "They expect quick resolution, as they see advertisements from other large carriers showing an adjuster cutting a check at the accident."
They also expect the process to be transparent. "If you can track a package delivery online, why is it so hard to find out the status of a claim?" Carnahan says. "And they expect the process to be collaborative. Consumers demand collaboration in other aspects of their life and expect to participate in the handling of their claim."
More Than An App
Many people in the industry associate technologies such as location-based services and geographic data mapping with applications, says Craig Beattie, senior analyst at research and consulting firm Celent. "And while there are many claims apps out there, that is not where this technology is finding adoption and use," he says. "More often it's desk-based map services with aerial photos that can help show the circumstances around where a claim is posted that are most useful. Pinpointing a claim to a location is very helpful in identifying risks, exposures, fraud and likely causes of claims."
Among the factors driving the trend toward using location-based and data mapping technologies in claims are that it's easy to get access to the technology now, and it increases opportunities to reduce costs or improve income, Beattie says.
"Since the launch of Google Maps, we're used to being able to see a map of a location for free, near instantly," Beattie says. "Since the launch of the iPhone we're used to having that capability within arm's reach, wherever we are. As young people enter the industry with these new expectations about access to data and technology, it's inevitable they will change operational processes."
Novarica says insurers can leverage a variety of other new technologies in the claims area, such as predictive analytics, automated straight-through processing of simple claims, or automated reserving.
In its survey of insurers, the firm found more than one-third of carriers are offering multiple channels for claims notification, including Web or mobile entry by agents or claimants that goes directly into the claims admin system for certain claims or customer profiles.
Forty percent are able to give claimant-specific advice at the time of the claim, and 45 percent of carriers have instant access to policy and detailed coverage information at time of claim. More than half of the companies use software applications to assist with the evaluation of claim value, but only 12 percent use advanced valuation tools to improve the accuracy of payments.
And although 80 percent of carriers have the ability to communicate with claimants via e-mail, few are using other mechanisms, such as texting and instant message. Most carriers have automated their workflow to some extent, Novarica says, with only 10 percent of carriers still having manual processes.
Clearly, not all insurers are equal when it comes to the use of claims technology. In its report detailing the survey, Novarica says significant differences exist in the carrier landscape in terms of the ability to apply modern technology to improve the claims management process.
"With the trillions of dollars being spent [on claims], some carriers can realize significant financial benefit by applying some of the newer techniques," the report says. "Those carriers with newer systems are more likely to be utilizing leading claims technologies and may be creating a competitive advantage today that may be difficult for those who are using legacy systems to match."
Bob Violino is an editor and writer who covers a variety of technology and business topics.
The Power of Time
Offering an accurate timeline of the claims process and helping claimants avoid settlement negotiations can greatly improve customer satisfaction with the claims experience, according to the J.D. Power and Associates' "2014 Property Claims Satisfaction Study-Wave 2."
The study — which is a followup to "Wave 1," which covered claims filed between April 1, 2012 and June 19, 2013 — of property claims experience measured satisfaction rates of 1,740 homeowners who had filed homeowner damage claims since June 1, 2012, by examining settlement, FNOL, estimation process, service interaction and repair process.
When insurers do a better job of setting claimant expectations of how long it will take to settle claims, it can be a significant contributor to overall satisfaction, according to J.D. Power.
On a 1,000-point scale, overall customer satisfaction rose to 848 in Wave 2, up from 832 in Wave 1, according to the firm. Satisfaction among first-time claimants improved by 17 points, which J.D. Power attributed to an increase in the percentage of insurers that offered an accurate timeline of the claims process length, and an increase in the percentage of claimants who avoided settlement negotiations.
