Superstorm Sandy hit the East Coast on Oct. 30, 2012 and for days lashed the region with high winds and rain. From that day through November 5, Allstate Corp., the nation's largest publicly traded personal lines insurer, received almost 14,000 claims submissions online and through mobile claims applications, representing a 116-percent increase compared to a non-catastrophe week.
By integrating telephony, text messaging, e-mail, video conferencing, Internet access, as well as photo and video capabilities, into a single personal technology, mobile devices have transformed the ways people communicate, entertain themselves, shop and transact business.
Insurers need to realize the potential value of mobile claims technology, just as consumers have realized the value of self-service applications in other contexts. Through customer self-service, mobile claims applications potentially provide for better allocation of resources by the insurer, offer greater transparency into previously opaque processes, potentially faster claims-cycle times and, when done well, enhance the perception of customer centricity and technological savvy for everyone.
"If insurance companies are looking for an opportunity area, it's how they can deliver a customer experience across multiple channels that's comparable to the retail experience," says Celia Ramos, insurance principal, Deloitte Consulting. "That's the experience claimants and policyholders are familiar with, especially younger generations."
Despite their potential, however, mobile claims technologies can prove to be a double-edged sword. Consumers have higher expectations for mobile apps that have been set by their experiences with similar technologies from other industries, observes Ian Campos, VP global insurance practice leader, Capgemini Financial Services.
"In some ways, [a mobile claim application] is a way to 'tangible-ize' the services provided by insurance companies. So from the claims perspective, it is critical to have applications and services that meet those expectations," Campos says.
Front End
Economics are an important driver of the push to self-service via mobile and online applications, and first-notice-of-loss (FNOL) applications are now table stakes for large personal lines P&C insurers, says Donald Light, Celent's director, Americas Property/Casualty Practice. "Going back three or four years, it became a mark of coolness for an insurer to hack together an iPhone application of some kind; and reporting a loss was seen as a fairly straightforward application they could create without a lot of trouble," Light says. "Does that represent a thoughtful response to mobile computing across the board? Probably not."
As a result, many FNOL apps didn't make customers happier, more loyal, improve the claims process or generate revenue, Light says.
To more effectively reevaluate a mobile claims strategy for both policyholders and claimants, Light recommends breaking out the percentage of FNOL reports by communications method: mobile device, online, calls to the agent, and calls to the claim center, for example. From there, he recommends frequently sampling customer satisfaction with each process. "Ask them: Was it fast, fun and easy, or not?" he says.
Another reason mobile claims applications have been successful is that they are not very complicated to build, offers Mark Breading, partner at insurance research and consultancy Strategy Meets Action. "They're usually a front end to existing applications. The transaction processing logic and database management is already in place. Simple mobile apps just enable those existing capabilities to be available via a mobile interface. More sophisticated mobile apps rethink the user experience and may also result in some changes to the back-end systems," he says.
While larger firms are creating sophisticated mobile apps, many medium and smaller companies lack the resources. "It's all they can do to keep their core systems updated and operating and keep underwriting and servicing their business," Breading says. As a stop-gap measure, many are merely extending their claims systems' Web capabilities to accept data feeds from mobile devices, which is not optimal.
"Building a mobile app is better; the challenge is that you have to support all the different devices on the market and their different form factors," operating systems and distribution methods, Breading says. However, a number of intermediary companies will now build the apps and test them on the different platforms and operating systems.
For those insurers that would build the app themselves, Breading cautions that building the interface requires a new mindset. "You see some that look like you're filling out a form, and that's not necessarily the way you want to do things with your iPhone. You really need an intelligent rules engine behind it, so you're presenting one question at a time, so it's visible, easy and a logical flow. You can do drop downs or touch selections from a category. That's really using the capabilities of a tablet or whatever the user has."
Prefilling as many data fields as possible is another important consideration in light of the customer's likely agitated state during a claim, how much insurers already know about policyholders, and the vast amount of information in the public domain about the characteristics of autos and property. "Don't ask people questions where you can already get the answer," Breading says. "That's the traditional way to design data collection in the insurance industry: you present a form. But we know all that information already. We have all that data. There are a number of nice tricks you can use to make it simple for mobile data collection," Breading says.
Insurers Speak
Pocket Agent, State Farm's mobile claims application, grew out of the insurer's desire to create self-service options for customers. "We wanted to get the customer connected to the claims process," says Tom Dulee, project manager for claims automation and processing at State Farm. Pocket Agent is entirely homegrown, Dulee says, and the company used an agile approach to creating it, starting with basic claims information. "Then we surveyed our customers to see what other information they were interested in. Based on that, every six weeks we'd push out new functionality that allowed them to see more and more of what they wanted." Using Pocket Agent, users now can open a claim and almost immediately see the claim status, who to call, estimates, payments and other coverage information. Users also can use the app to get a tow truck, taxi, rental car, or a locksmith, find an agent, as well as bind and purchase a policy, Dulee says.
"We could have sat on it forever trying to make it perfect, but we wanted to get something out that was, from day one, driven by customer feedback," says David Ross, State Farm project manager P&C claims. "It's helped us grow. It's what customers want, not just what we want."
State Farm has made a variety of efforts to promote the distribution and use of Pocket Agent, and over the past two years, Dulee says there has been a 586-percent increase in use by customers coming in to look at a claim and get basic information. That usage jumped 40 percent when the company began mentioning the app in claims correspondence. Adoption by agents is even more impressive. "From an agency standpoint, it's been a 995-percent increase in that same period of time," Dulee says, adding that the app gives agents and their staff the same real-time view into the claim work being done.
A genuine focus on addressing the customer's needs, for both information and services, is critical to the success of mobile claims applications.
Using Allstate Mobile, that company's mobile claims application, users can file and track claims, and also set up rental vehicles and inspections, sign up for event-driven reminders and updates, as well as set communications preferences, such as by text or e-mail.
"About 10 percent report their first notice of loss on a mobile device. That number might be a little higher for Sandy, considering the infrastructure issues," says Kathleen Mahne, Allstate's SVP claims—innovation and field support. "And 81 percent of customers who file a claim with an agent use the self-service technology [either online or via mobile device] during the life of the claim."
Back End
Understanding customer information is critical to the claims process, as is having a single view of the customer. Unfortunately customer and claims information can be very fragmented and unstructured across the organization.
To present the pertinent information in a mobile claims application, data must be consolidated for presentation. The problem is claims and policy administration systems tend to be older and not designed to facilitate access. According to recent research by Accenture, more than half of claims executives surveyed said their systems were more than five-years old, and almost one-third said they rely on more than five systems to process claims. On average, insurers with net premiums written of greater than $500 million plan to invest more than $20 million to upgrade their claims function (See "Insurers Plan to Invest in Claims Functions to Remain Competitive," right).
"There is a fair amount of work on the back end that has to happen," Capgemini's Campos says, including workforce management and claims management. "The point is we made it easier to file a claim, but the volume of work on the back end for the insurer didn't get easier. The converse is true and the expectation of speed and the accuracy of the response is higher. But the back end still has to process it and it remains relatively complex," he says, adding that many insurers still have significant paper-based processes when claims come in, requiring digitalization before they can send them back out, further slowing the process.
"A lot of this is about data," says Deloitte's Ramos. "Companies need to be able to sort that data in a format that allows them not only to derive analytics internally, but also to provide the right information at the right time in these specific situations to accelerate settlement time, or valuation, or whatever process it is within that claims life cycle."
At State Farm, the Enterprise Claims System stores all of the customer data, aggregates and compiles it for presentation in a logical order, essentially opening the claim file to the claimant and the claims personnel. "It's grouped together by payment, by document, by an overview page. It's a logical ordering based on the questions we normally get from customers," Dulee says. "We have our normal grouping of questions that we get on status, and we try to provide those answers within those pages. We've done customer experience surveys that told us what to do."
NextGen, Allstate's claims-component platform was implemented in 2009, and its flexible architecture is credited with enabling the company's initial self-service capability in less than six months, Mahne says. This system enables Allstate to identify, based on rules, where claims are routed based on their attributes, or other characteristics, and get them to the right person to handle them as quickly as possible. "There is less hard coding of key information, so that allows you to make changes to that information more nimbly. Over time, as your needs change, there is less information that is hard coded," she says. "That drives shorter cycle times and allows us to handle claims in parallel, so when we have several claims professionals on one claim, they can handle things concurrently as opposed to sequentially, and that has given us the opportunity to leverage our size and scale," Mahne says.
With Allstate's old claims system, the regions couldn't readily communicate. Now, when weather events or catastrophes generate large call volumes, Allstate is able to reroute phone systems and other technologies, allowing the company to leverage all of its 15,000-plus claims employees.
"That's a huge capability for us, and one we didn't have with our legacy systems," Mahne says. "It also allows the agents to see the same kind of claim information that claims people can see, so the customer is going to hear the same things from their agent as they are from the claims person. And that for us is huge: continuity in that claims experience."
Catastrophes
If a claim is the moment of truth for an insurer, then a catastrophe is the acid test of a mobile claims application. Catastrophes test not only the insurer's commitment to the customer, but the customer's commitment to the insurer, and does so in an emotionally charged time, when the customer is potentially without the infrastructure and services that were present when those contracts were signed and those promises were made.
Superstorm Sandy has proven to be among the largest catastrophes in American history, with estimated insured losses ranging from $16 billion to $22 billion, according to disaster modeling company AIR Worldwide, as of press time. For October, Allstate estimated catastrophe losses at $1.275 billion gross of reinsurance. State Farm Mutual Group reported 95,203 total home claims and 16,334 auto claims, but had not released dollar figures.
A variety of factors, including extensive flooding and damage to transportation and communications infrastructure, have slowed consumers' ability to file claims and insurers' ability to collect claims submissions, dispatch inspectors and adjustors and issue payments. Despite those logistical challenges, New York Governor Andrew Cuomo and the New York Department of Financial Services have shortened the mandated period insurers have to send adjusters to inspect home and business claims, to six from 15 days, in an effort to help consumers receive payments sooner.
"In catastrophes, where large numbers of claimants are concentrated in affected areas, many insurers now deploy mobile claims trailers - bristling with satellite communications technology - to facilitate claims, provide survival basics, temporary cash advances and generally assist affected policyholders at the scene," says Steven Applebaum, senior analyst, P&C Insurance for Aite Group. "The more advanced units feature wireless satellite services that allow carriers to extend Internet access to field adjusters equipped with laptops, air cards and mobile printers. Claims representatives can perform onsite inspections, document claims, write estimates and cut checks."
After a catastrophe Allstate's Catastrophe Response Vehicles arrive equipped with FNOL kiosks, iPads loaded with an FNOL app that streamlines the process of filing a claim to six or seven questions from 30 or 40, and Good Hands Connection, an iPad-based application that enables claimants the opportunity to record a video, send e-mail, Facebook or text messages through the CRV's satellite connection to alert friends and family that they are OK after the catastrophe.
Next Generation
Beyond FNOL and claims-status tracking, the next iteration of mobile claims applications will offer better ease of use and integration of photo and video support, for example, and greater visibility into the claims process through detailed claims status alerts, as well as extending the ability of claimants to edit and update claims information. And the philosophy behind them likely will continue to evolve as well (See chart in
Allstate for example will soon launch Settlement by Images, a mobile app now in testing, which will enable Allstate to settle simple claims via photographs, bypassing the inspection process and further speeding the lifecycle of the claim. "Evaluation and settlement are based solely on a picture of the damage," Mahne explains, adding that claimants wouldn't need to bring vehicles for inspection or be inconvenienced by an appointment. For simple claims that don't require adjustor involvement, claims can be resolved and settled in well under an hour.
"The state of the art is moving from loss management to loss prevention," Campos says. "It's moving beyond being able to file and report a claim. It's moving to, when you have weather-related events, being able to predict the path using location-based services and geographic data to provide notices and alerts, text messages, calls, e-mails, etcetera, to say 'here's how to avoid losses from the approaching hail storm.' That's really part of the claims process, because it's about managing the event as it occurs. That's important. It's also about avoiding the loss to start with."
For insurers that would create mobile claims apps, Deloitte Consulting's Ramos advises that they must be easy to use, multi-channel and designed to personalize the interaction. "Making that interaction relevant has the ability to increase customer retention, and in doing it right, reducing the servicing costs. It's about being transparent and delivering on your promises that were made at the point of sale or in the contract; providing higher levels of customer satisfaction, which can reduce price sensitivity and increase referrals. Mobility has the ability to play across all of those dimensions."
