Claims cost inflation has been front of mind for many insurers recently from Allianz to Zurich. It lead McKinsey to publish"The Productivity Imperative in Insurance" in August this year stating:- 

"The top quintile of insurers take all the industry profit whilst the three middle quintiles barely make their costs of capital. The bottom quintile lost an average $976m a year."

Dabbling in claims transformation and digitisation only delivers minor improvements to the bottom line. A strategy to address all claims in all geographies will make profound changes without imperilling customer satisfaction. Quite the opposite in fact. Just look below to see the quantifiable improvements all claims operations should aim for. 

“A typical large auto insurer could more than double profitability over 5 years by harnessing the power of digital”              Source: Digital McKinsey March 2017

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 and - 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 360Globalnet- (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

Tackling all these aspects will make the twenty times difference that sorts out the top quintile of insurers from the trailing 80%. 

References

“Time for Insurers to face Digital Reality”. 

Capturing value from the core

The P&C customer rediscovered through analytics

 “Digital Disruption in Insurance: Cutting through the noise” 

LexisNexis “2019 Future of Claims Study LexisNexis

 Attacking complexity in Insurance Products and Processes;  

What drives insurance operating costs?

The Productivity Imperative in Insurance