Millennials will form half of the insurance customer pool within the next ten years. Millennials have different expectations than older generations; they have grown up in an entirely digital world, with an expectation of complete transparency, and instant delivery. With 50% of policyholders today, stating that they wouldn’t use an insurer that did not offer digital channels, this percentage is only set to increase.
Unfortunately, the majority of insurers today cannot serve this type of customer with their existing claim processing systems. Insurers need to adopt a design-orientated approach towards their product architecture to put customers’ needs first.
In insurance companies across the globe, legacy software is commonplace. Unfortunately, paper files and silos of claims data are standard in these legacy systems, making it impossible to mine claims data. Cloud-based technology, computing power, and data acquisition all form the foundations of digital claims transformation.
Digital claims transformation opens up the opportunity for insurers to conduct effective data analysis to improve competitiveness. Analyzing claims data can help in many areas, including:
- Fraud detection,
- Upselling or cross-selling to an existing customer base, and
- Highlighting low-risk claims suitable for automated claims processing, increasing claim processing efficiency.
The Financial Services Board (FSB) has identified a number of inconsistencies across the insurance industry, including ineffective controls relating to the reporting and tracking of claims, lack of transparency in the claims process and an absence of root-cause analysis on the reasons for claim refusals. In response to these findings, the FSB will expect insurers to have a clear and comprehensive claims management framework in place going forward.
With multiple factors in play, it’s hard to determine where to begin. But one key point to come out of this trends briefing is that now is the time for insurers to consider upgrading their legacy systems and adopt digital claims transformation to stay ahead in this competitive market.