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Innovative Claims Strategies: 5 Ways Insurance is Changing

It’s not your imagination. Things are changing fast right now. In a span of just a couple of years, society has seen an explosion of new technologies that would not have been imaginable in the recent past. Many industries are changing rapidly, and that includes the insurance claims industry. Here are five ways insurance is evolving and how innovative claims strategies can help.

Slow Followers vs. Risk Takers

In a Reuters Events interview, Mike Fiato, EVP & Chief Claims Officer at Allstate says the claims industry is cycling faster than it ever has before in his experience. He sees opportunity, and instead of waiting, being conservative and being a “slow follower,” it’s time to take some risk and be proactive.

Some of the biggest changes are coming from the rise of generative AI. According to an EY survey of 200 insurance decision makers, 99% are on board with generative AI. However, only 42% are already investing in generative AI, while the other 57% are only making plans to invest in generative AI.

What Changes Are Happening?

Everyone’s talking about generative AI and new technology, but how exactly are things changing? Here’s a look at five changes happening now, both good and bad.

1. Claims processes are becoming more streamlined. According to Deloitte, the property and casualty insurance sector can use generative AI to streamline claims process and enhance workforce productivity.

For example, claims handlers can use AI assistants to summarize information and draft replies. This can free up time for other tasks, allowing workers to be more productive. As the claims sector deals with longer repair times, these improvements are critical.

2. Communications are improving. Strong communication is key to a positive claims experience, especially if there are delays or other issues. Technology is making it easier to maintain open lines of communication.

For example, modern systems can automate claims updates so claimants are always in the loop. It’s also possible to communicate via more channels, such as chat and text, and to switch between channels.

3. Fraud and fraud prevention are going high tech. The bad news is that fraudsters can use new generative AI tools. For example, Repairer Driven News warns that policyholders could submit AI-generated photos to submit fraudulent claims. To make matters worse, the Coalition Against Insurance Fraud found that many young adults don’t even consider insurance fraud to be a crime.

However, the good news is that insurance professionals can also use AI. Business Insider says insurance companies are investing in AI and data analytics to fight fraud. By flagging the indicators of fraud, AI tools can help insurers control their losses.

4. Natural disasters are leading to more claims, but technology can help. NOAA says 2023 was a historic year for natural disasters, with 28 separate weather and climate disasters that caused losses of at least $1 billion each.

While natural disaster claims are on the rise – and The Weather Channel says the 2024 hurricane season could be one of the most active ever recorded – new technology can help ease the pressure. In addition to better predictive analytics tools to help insurers and policyholders anticipate losses, generative AI tools can help with claims surges. For example, automated systems can take the first notice of loss, assign claims handlers and automate updates to reduce delays.

5. Claims jobs are becoming more enjoyable. The insurance industry is currently facing staffing challenges, but new technologies are providing solutions. One obvious benefit is that new AI tools can boost work productivity, making it possible for a smaller workforce to accomplish more.

However, there’s another benefit. By eliminating some of the most tedious tasks and allowing claims handlers to focus on higher-level, more rewarding tasks, new AI tools can also make the claims profession more enjoyable. This can help insurance companies and adjusting firms retain workers and attract a new generation of workers looking for tech-forward jobs.

It Can Be Overwhelming

Change creates opportunity, but it can also create obstacles. People often resist change because it makes them uncomfortable. While this tendency can hold people back, there’s also a good reason for resistance – change and progress aren’t always synonymous. If insurance companies and adjusting firms adopt new technologies that aren’t user friendly, it can do more harm than good.

As Mike Fiato says, the goal should be to “create a happy employee.” People are worried about losing their jobs to technology. To tackle these concerns and get everyone on board, companies need to focus on educating all employees, not just managers, while focusing on how to help individuals be better at their jobs.

Looking for claims innovation? VCA software supports a better experience for claims handlers and claimants. It’s intuitive, highly customizable, easy to use, and can be implemented in as little as two to three weeks. Learn more.

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