"Hastings Direct shares plummeted today by more than 8% as the insurer’s adjusted operating profit dropped to £59.7m (£68.1m before the ODR), compared to £105.1m in the same period last year."
Insurance Times 8th August 2019
Hastings is not the first, and surely not the last, insurer to look at pressured margins and ratios going the wrong way. to Looks like the time to look at the measurable benefits to gain with a modern digital claims platform
“A typical large auto insurer could more than double profitability over 5 years by harnessing the power of digital” Source: Digital McKinsey March 2017
Not only that! In March 2017 McKinsey published “Time for Insurers to face Digital Reality”. It presented compelling evidence that First Movers and a few Fast Followers will win the lion’s share of premiums and profits (details in References). Laggards will fight over a long tail of declining premiums and low profits or losses.
How to Double Profitability?
By tackling the complete insurance value chain from buying policies to settling claims and dramatically improving: -
- Customer Satisfaction
- Efficiency
- Effectiveness
360Globalnet has the metrics from processing over 3.5 million claims through its digital claims platform. The remaining metrics are from McKinsey & Company, Boston Consulting Group (BCG), LexisNexis and Bain & Company- all referenced in the bibliography. It is by combining improvements across the whole value chain that the largest benefits are achieved. Individual initiatives help but deliver less so start small but plan for the long term.
Customer Satisfaction
- From FNOL in days and hours to minutes; 35% zero-time eFNOL with AutoServe- 360GN
- Claims lifecycle reduced by minimum 40% 360Globalnet- 360GN
- Increase in Net Promoter Score by 20 or 30 points- McKinsey & Company
- Average of NPS 77% over all Home & Auto customers, 82% in Pet- 360GN
Efficiency
- 30% reduction in cost of claims- McKinsey
- Digital Lean Initiative leading to cost reductions of 15%- Boston Consulting Group (BCG)
- Digital customer journeys yielding cost reductions up to 20%- BCG
- From 20% of call centre calls being “what’s happening” to 50% drop in status calls- McKinsey
- Up to 70% reduction in call centre resource requirements- 360GN
- 60% Reduction in FTE staffing-BCG
- 5% to 20% reduction in expense ratio- McKinsey
- Up to 50% reduction in processing time per claim- LexisNexis
- Total Cost of Ownership reduced by 20% to 30% -McKinsey
- 3 points to 5 points reductions in combined savings ratio- Bain & Company
Effectiveness
- 5%-15% Annual Revenue Growth- Bain & Company
- Using data prefill at FNOL 14% improvement days to pay for PI- LexisNexis
- 3 points to 5 points reductions in combined savings ratio- Bain & Company
- 1 to 4 manual touches removed from claims process- LexisNexis
- 1 to 15 day reduction in processing time per claim LexisNexis
- 3 to 10 times more cases processed per adjuster- LexisNexis
Collapse Costs and Delight Users
One digital platform for the entire claims value chain and all perils that orchestrates the customer, internal teams and the external supply chain network to achieve these improvements
Customers often ask 360Globalnet how such a complex platform appears so simple- where’s the catch? The answer is in their hands now. Whenever you make a payment by smartphone the process looks simple but behind the scenes it is complex. So, it is with 360Siteview- an outcome of a $35mill and continuing investment. This five-minute video shows much of the processes visualised above and described below. https://360globalnet.wistia.com/medias/t1cat2xpbx
Loss and Damage (FNOL) and Injury (FNOI)
FNOL and FNOI are faster, even immediate, and evidence gathering complete. An optimal mix of self-service automation and human interaction for customer satisfaction and efficiency.
Claims Management
Automation and augmented intelligence routes claims and notifications to the right people. Dashboards alert claims staff to tasks that need a response and ensure no claim falls into a black hole. Customers are updated in real-time, so they do not have to constantly ring up to find out what is happening. A single digital record so that participants have a complete view of the status of each claim; what is planned, what achieved and, vitally, alerts on any shortfall performance to help mitigate potential problems.
Loss & Damage Assessment and repair
A key factor that results in delay, confusion, extra costs and client dissatisfaction is the challenge of communicating with and orchestrating action amongst: -
- Customers
- Insurance Teams and Specialists
- The Repair and Replace Chain
360Siteview builds a unique, single digital record for every claim and shares this securely (redacted when required to ensure confidentiality) with every person, team and supplier engaged in solving client issues. Auto Customers entering damage via “squashed frog” diagram , 360Siteview ranks vehicles as repairable, write-off or needing inspection. Customers book appointments with repair-shops for convenience and efficiency. 35% of costs in the supply chain could be waste time and materials which will be significantly reduced with 360SiteView.
Settlement
A prime reason for client dissatisfaction and complaints/calls for reimbursement results from delay, poor decisions based on incomplete data and the “What’s happening?” status calls in current claims processes.
Embedded real-time analytics and BI help ensure the insurer teams make the best decisions based on complete, current and accurate facts. Accessing, joining and analysing disparate and multiple data sources from structured, semi-structured and unstructured data. It is no good digitally transforming for just speed and reduced costs- it must result in better decisions for the customer, the repairer and TU.
Other Classes and Perils?
The same platform is suitable for all products. Take those Pet and Travel products on the insurer's website. Digitise them for self-serve customer delight and collapsing costs. Move into Commercial SME Insurance.
Good Value and Cash-flow efficient
Gone is the need for monolithic, expensive solutions. Pay-as-you-go transaction or subscription pricing deliver cash-flow efficient and low OPEX solutions. Faster deployment speeds up the measurable improvements
References
The Economist The future of insurance is happening without insurance firms
McKinsey “Time for Insurers to face Digital Reality”.
McKinsey “Capturing Value from the Core”
360GN “Why moving to digital insurance is easier than you think.”
McKinsey “Digital Disruption in Insurance: Cutting through the noise” ;
BCG Attacking complexity in Insurance Products and Processes;
LexisNexis 2019 Future of Claims Study
The insurer is continuing with its digital initiative. As Van der Meer pointed out, he said this continuation in focus has resulted in improvements in its net promotor scores and 11% reduction in customer service phone calls per policy.
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