“According to a recent survey by Insurity, a pioneer in cloud-based insurance software and analytics, a noteworthy 52% of consumers expressed a preference for insurers who invest in new technologies to enhance the claims experience following severe weather incidents. This marks a departure from the traditional cost-centric approach to choosing insurance policies.”

Fintech Global Aug 26th 2024

Hardly surprising when customers from Australia to the United States have suffered considerably from wildfires, flooding, and extended freeze periods. Escape of water is a complex claim to process and the quicker and more effectively an insurer can respond to the first notice of loss (FNOL) and settle the claim the better.

The 2024 Severe Weather Consumer Pulse Survey conducted by Insurity offers deep insights into how severe weather events shape consumer decisions regarding their insurance coverage. The findings suggest that while a considerable portion of Americans, about 48%, believe their current insurance plans adequately shield them from the financial repercussions of severe weather, a significant 36% are open to switching providers for more comprehensive coverage, even if it costs more.

Escape of water happens in any cold snap and inconveniencing customers who cannot use rooms or need alternative accommodation is a serious matter. 

You can see a similar trend with electric vehicles (EVs). Batteries can represent almost 50% of the cost of an EV and many customers have complained that insurers are too ready to pronounce a vehicle a total loss rather than repairable. 

As home and motor premiums shot up in 2023 and 2024 it focussed consumers' minds on what they get in return. The management of claims is a key part of the value.

Nothing can replace the empathy, skills, and knowledge of professional claims handlers. As insurers find it harder to retain and recruit such high-skilled people the need to for technology to enhance claim teams has grown.

Digital FNOL (eFNOL) is a start. While many insurers have implemented this on a line of business, many have not applied a consistent user experience across all lines of business. The many different technology stacks and legacy technology typically found in carriers do not help that cause. Luckily modern cloud-native systems can bridge these unconnected systems to deliver consistently good customer experience. They offer a MACH-architected approach so make that one of your criteria.

What is a MACH-architected system?

  • Microservices 
  • API first
  • Cloud native
  • Headless

Microservices architected means that you can build a software product as a set of independent components — microservices — where each component operates on its own and interacts with others through APIs. As a result, teams can deploy, change, and improve separate software components without disrupting the rest of the system.

API-first architectures are more flexible allowing teams to choose the most appropriate frontend technology to solve priority business problems. Developers can unify logic across touchpoints and avoid duplication of development work, as well as eliminate channel silos.

APIs allow for fast communication between components, meaning that businesses can reduce the time to implement new touchpoints and accelerate speed-to-market processes.

Cloud-native platforms use the public, private, and hybrid cloud as part of a cloud migration strategy to develop scalable and dynamic data solutions. Insurers will be more resilient to performance issues that often bug on-premises systems.

Headless - far from being clueless!  Insurers that employ headless architecture don’t have a default frontend system that defines how content is presented to end users. You will be able to deliver personalised products and services to your target audience using any channels, devices, and platforms.

MACH claims management systems enable insurers to deploy the ecosystems necessary to be proactive, innovative, and customer-focused. They help tackle the perennial challenge of data silos which are a major hurdle to innovation and the leveraging of AI.

The best eFNOL and claims management software leverage AI to ingest data and triage claims to the right teams and claims handler skills.

Take the claims submitted by a broker to its carrier that vary from the briefest of descriptions to reams of unstructured data. Ingesting and transforming unstructured data into clear insights for the claims handler will save time and money. What else do I need to know and is there enough information to trigger FNOL? 

With fire, and/or flooding events will I immediately be able to alert the ‘emergency accommodation’ team that their help might be required so that they can contact the customer and offer support? That is service.

For simple claims, being able to analyse the claim, run fraud checks in real-time, find replacement products with software like SLVRCLD and BeValued, and offer these and the option of a cash settlement that day is service. The fabled Lemonade 3-minute settled claim is achievable for all carriers.

When choosing a new claimtech you could use the scorecard in the linked  article below  to shortlist your new technology partner. 

CoreTech, ClaimTech, and Ecosystems for innovative insurers

The article above broadens the discussion to core systems of record, policy admin systems (PAS), and the ecosystems that once connected and interoperable can lead to significant innovation, adaptability, and the ability to compete with specialist insurers with modern technology stacks. 

Finally, a perfect antidote to the blind development of automation from Rory Yates. It complements this article.

Why Automation Alone Won’t Restore Claims’ Reputation