In general, the insurance industry has not been quick to adopt new technology. Yet insurance automation can reduce claim costs by as much as 30%, McKinsey found.
As more businesses realize the potential impact of digital transformation, they are adopting new technology and expanding their offerings. Companies are increasingly implementing a “digital-first” strategy to meet their customers’ technological preferences.
The property and casualty insurance (P&C) industry is no exception. Insurance automation is changing how the P&C industry functions, allowing for 24/7 claims processing, freeing up internal support staff, and leading to time and money savings for both customers and businesses.
Automated claims processing enables customers to file claims when it is most convenient for them. Chatbots or automated claims-processing systems don’t require an agent to be working, so customers can make submissions at any time of the day or night.
Take Lemonade’s bot, “AI Jim,” for example. The insurance company has automated the entire claims process via chatbot. For straightforward claims, the bot can handle it from start to finish. If the request proves too complex, the AI routes it to the appropriate agent.
Technology like AI Jim allows customers to submit claims quickly and at any time, without waiting for an available agent.
AI technology also ensures that simple claims are processed more quickly. Lemonade set a record by processing an entire claim and paying the client in three seconds, including running multiple antifraud algorithms. That kind of speed simply isn’t possible without insurance automation.
Automated claims processing is beneficial on the company side as well. It requires less hands-on employee work, freeing up agents to focus on more complex claims. It also reduces the risk of fraud. Lemonade’s algorithm repeatedly foiled fraud attempts, even in one case in which the perpetrator used different accounts and disguised himself when submitting claim videos.
Insurance fraud costs businesses around $40 billion per year. Insurance automation can reduce this cost dramatically and increase customer satisfaction by lowering processing times.
The customer service department holds insurance automation opportunities as well. Businesses can free up their support staff to concentrate on more complicated issues by creating self-service options, like virtual assistants, for answering customer questions.
Virtual assistants can automatically generate quotes based on a series of simple questions. They can also guide users to self-help documents or help them check their policy information and claims status.
One example is GEICO’s virtual assistant, “Kate.” It can answer questions about policies and coverage and help customers find billing information, documentation, ID cards, and other resources. GEICO integrated the assistant into its mobile application.
Automation also helps with user onboarding and training. Sentry insurance exemplifies this with its use of a digital adoption platform (DAP). The DAP has automated walk-throughs and pop-ups, as well as a self-help menu so customers can easily learn the application and get instant answers to their questions.
Automated pop-ups direct users of Sentry’s app to relevant self-help materials
Virtual assistants, DAPs, and other self-help automation reduce the wait time for customers. They can resolve small problems quickly and get answers to their questions without having to contact support staff. Self-service training means customers can learn to use new applications and features on their own time, rather than having to schedule live training.
If your customer service team doesn’t need to provide training, they can focus on more complicated support concerns or on other tasks. Sentry insurance’s automated training resulted in $950,000 worth of savings in the form of salaries and resources. Sentry can now put those resources toward profit-generating activities.
Though it might seem that inspections and appraisals need to be done in person, this is another area that benefits from insurance automation. Imaging technology enables customers to perform inspections and upload pictures of damaged property without having to schedule and wait for an inspector from the insurance agency.
The need for self-service inspections became especially clear when the COVID-19 pandemic caused a shutdown of regular appraisals. Agencies switched to “desktop appraisals” or drive-by exterior inspections, which yield far less accurate results.
Automation solves this issue. There is still no in-person contact between agents and clients, but the company can collect more detailed information.
Flyreel offers automated, on-demand property inspections through its mobile app. The app guides users through the inspection process, instructing them to pan their camera around the inside and outside of the property. It automatically documents property features, including risks and assets that could affect the user’s policy.
Since customers don’t need to schedule and wait for an inspector, they can get their policy more quickly. Self-service inspections also lead to greater transparency overall. Customers can see the different features of their property and how those might affect their policy.
People appreciate the speed and transparency, which is one reason Flyreel has a 95% satisfaction rating from policyholders.
By adopting self-inspection technology, your company can collect detailed information needed for calculating policies and premiums, but with less appraiser legwork and lower staffing needs.
Automation is also changing premium adjustments. Where premium adjustments once required customers to call and work with support staff, automation can handle premium adjustments based on changes in value for covered property.
New technology also allows customers to stop and start policies as needed. They can turn on a policy when they’re out of town, turn it off when they return, and pay for only the time it was on.
Trov, for example, has “Smart Premiums” that track changes in retail value for the covered items and automatically adjusts the customer’s premium accordingly. Users can stop and start policies at any time, and their premiums reflect coverage for only the time the policy was active.
Automated premium adjustments mean your customers will see their premiums decrease without having to change their policy manually. The ability to turn policies on or off, on-demand, enables them to secure short-term policies with less hassle.
With fewer customers contacting you to update their premiums, you can save agents time and resources. In addition, seeing their premiums decrease will likely lead customers to experience higher satisfaction, and happier customers are more likely to stay with your company.
You’ve seen how prominent companies like GEICO and Sentry are implementing insurance automation to streamline customer interactions and speed up claims processes. These companies have realized that automation has significant benefits both for the company and the customer, and they can reduce the risk of insurance fraud while increasing customer satisfaction.
Incorporating AI into claims processes helps reduce the risk of fraud because AI can run multiple antifraud algorithms and scan user history significantly faster and more accurately than humans. You saw an example of this with the way Lemonade’s fraud-detection algorithm successfully foiled multiple fraudulent claims.
At the same time, customer satisfaction goes up because customers can get their claims and payments processed much faster. The potential impacts of insurance automation are enormous, and P&C companies are now starting to see the benefits.