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Creating an innovative environment in London Market claims, where technology has completely disrupted the way it operates seems like a near-impossible task. Some would argue that claims has enough to deal with trying to adapt to the new way of working technology has forced upon them. However, others are taking a more proactive view and see the brave new world as a place where innovation can flourish and add value to their businesses.
What is stifling innovation in London Market claims?
The insurance industry was slow to react to the internet, with traditional infrastructure not designed for the online world. This was more pronounced in claims where firms grappled with issues surrounding their current working practices. Insurers had to do a lot of groundwork before implementing measures to promote innovation. Things like:
Introducing new technologies also brought about a change in the skillset needed for those working in claims in the London Market. Simple, routine tasks can now be automated, reducing the need for admin roles. The increased reliance and use of data mean there are now more data-related roles, such as analysts and data architects. The technology itself also needs staff to maintain it effectively. Laying the foundations for introducing a new way of working by getting the right systems and staff in place had to take priority over innovation.
Technology has a dual role in the transformation of claims. On the one hand, it is the cause of massive disruption, forcing insurers to make changes or risk losing competitive advantage. On the other, it provides the tools to streamline operations, freeing people up to focus on innovative solutions for complex claims issues and improving the overall claims process.
Reliance on legacy systems is a well-worn excuse used by those opposed to embracing technology in claims. However, leveraging cloud technology allows insurers to integrate their existing systems with new technologies by moving them to SaaS or PaaS. The fusion of the old and the new also has a positive impact on cost. Insurers don’t have to replace their current systems and as the cloud works on a pay as you go system, firms will only pay for what they use.
Claims is an area benefitting from several technologies which are transforming both the customer experience and insurer & brokers traditional processes. There has been a significant reduction in claims processing times with the introduction of automated online claims notification and the opening up of digital communication channels. Machine learning and AI are being used to flag abnormalities in fraud prevention. Connected devices are recording accidents and assisting in apportioning fault and assessing damage.
Technology is being used innovatively to help insurers become proactive rather than reactive when processing claims. Lloyd’s of London’s Next Generation Claims Service aims to use a rapid notification system to tell their customers when there has been an event that has affected them. The service will pull together satellite images, CCTV and drone footage to assess damage, then verify the claim and make a payment.
An insurance company serious about transforming claims and making sustainable improvements should implement an innovation programme. A successful programme should include the following elements:
1) Lead from the top
Get innovation on the boardroom table and put together a strategic approach which encourages staff to get involved and take the programme seriously. Appoint someone to lead it who can communicate the positive changes innovation will make to the company.
2) Make innovation everyone’s responsibility
Encouraging people to innovate empowers them and makes them feel they can make a difference. Provide tools to capture people’s ideas. Reward them for suggestions that are implemented and positively impact the business. Motivate others to innovate by publicly recognising these successes.
3) Don’t dismiss failure
Not every idea will work. Sometimes it takes multiple attempts before hitting on the right solution to a problem or creating a viable product, so tell staff this. Make sure they are not scared of failure and commend their attempts so they will continue contributing ideas. Encourage them to take risks.
That adage about two heads being better than one is right. The quickest way to formulate innovative ideas is to collaborate. A group of employees bouncing ideas around, gathering feedback from customers or speaking to suppliers and other business partners will all foster innovation.
Can insurers afford not to innovate?
The London Market needs to be innovative with technology. Today's customers are tech-savvy and want digital versions of current insurance offerings. Innovation is reducing processing costs to create new revenue streams in areas historically an insurer couldn't compete it. It's exploiting business insights gained from using analytics technology and building self-learning models with AI and machine learning to optimise business processes.
The fundamental principles of insurance - identifying, quantifying and mitigating risk - won’t change. However, it’s still possible to innovate when delivering a customer-centric claims service which adds value to a business.