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Design Thinking: The Future of Insurance Claims

May 10, 2016

For decades, insurers looked at claims only through convention-colored glasses. But at a time when competition is stiff and margins shrinking, you need to ask yourself: What do your consumers really want? A consumer doesnt want to be displaced for months after a basement flood; a business owner doesnt want to close shop after a kitchen fire. They want to continue with their normal daily activities and, ideally, avoid these events in the first place.

There have been many changes over the past decade in the ways insurance companies administer claims. The ability to model and analyze information about catastrophes, in particular, has driven some of the biggest advances in how insurers approach, handle, and manage claims. Still, the focus as it always has been continues to be on protection, i.e., compensating for damage or loss incurred.

What if you could leverage both traditional and non-traditional data sources to prevent a claim from happening in the first place?

For insurers to take a more preventive approach, the claims process must become more predictive. Making this shift will depend on your ability to harness the potential of digital technologies, such as predictive analytics and Internet of Things (IoT), and adopting “design thinking,” where the focus is on what end-users want, rather than only on internal process efficiency.

Although design thinking in the insurance context may sound far-fetched, all you need to do is follow three simple principles eliminate, automate and optimize to make your claims efforts more predictive and preventive.

Eliminate: You can use technology such as geo-location tools and predictive analytics to identify potential risks, allowing customers to take preventive measures and eliminate claims from happening. The expansion of the IoT illustrates the changing nature of the claims ecosystem, as well as how data from non-traditional sources is going to transform claims operations. Data from connected vehicles and appliances already is helping insurers identify potential risks of damage or accidents. The design-thinking, customer-centric approach enables insurers to look at and monitor potential risks using the IoT, and even prevent some risks from materializing. In instances where it is not possible to completely prevent the risk, you will be able to minimize its impact.

For instance, say you identify a storm brewing in an area where your consumers reside. Rather than paying the claim for damage following the weather event, you can hold down claims expenses by encouraging consumers to take proactive measures to minimize damage.

Automate: For claims that cannot be eliminated, you can explore automation, so that when claims occur, you can settle them in the most efficient way. For example, a smartphone-based first notice of lost (FNOL) app solution can automatically pick up most of the necessary information (such as location and time of accident), use the built-in camera facility to allow consumers to easily take and upload pictures of the damage and/or incident scene, and even annotate them with notes and/or necessary identifiers automating the steps involved in claims submission to simple clicks. This also reduces the data errors associated with traditional claims applications.

Design thinking also can help bring together a partner ecosystem for claims settlement at the point of origin. You can integrate various partner APIs to provide a smartphone app that can help consumers submit an FNOL following a car accident. Based on telematics data, the app can inform all stakeholders, then book a rental car and towing service, as well as direct payment of the claim settlement amount to the repair shop all without the customer needing to do anything.

Optimize: Where you cannot automate, you can look at how to make your claims processes more efficient. For instance, after a catastrophe, insurers are faced with many claims. They need to capture them quickly and push cases to different risk adjusters and claims handlers in a timely and efficient manner. And this involves processing by humans. As an insurer, what can you do differently? Robotic automation offers one huge opportunity for optimization. You can use robotic automation to upload data into your systems and reduce manual intervention. Although this doesnt automate the end-to-end claims settlement process, it does optimize the process by bringing in a high level of operational efficiency where a set of repeatable tasks are completed using technology such as robotic automation.

In the end, it all comes back to these principles: Eliminate what you can, automate where you cant eliminate, and optimize where you cant automate.

While your organizations chosen approach may vary, there is no denying that claims needs to undergo a dramatic shift. How do you see this shift shaping up?

Join TCS at the ABI Property Conference to know more about simplification of Insurance claims process applying Design Thinking principle

Arunashish Majumdar (Arun) heads the Technology Group at TCS Insurance unit in North America. He specializes in transformation initiatives aimed at improving customer experience, business agility, operational efficiency, and technical currency. Arun has handled strategic initiatives to define and deliver enterprise digital strategy, IT portfolio simplification and core systems modernization for several TCS customers. He is winner of the prestigious TATA Innovista award two years in a row, which recognizes innovation across TATA group of companies globally. Arun is a CPCU, a Distinguished Architect (from The Open Group) and holds a Bachelor's degree in Engineering.