Claimants aren’t satisfied with the claims process. As a result, many claimants plan to switch carriers, and insurers stand to lose billions of dollars in the coming years. For any insurer still running on an inefficient claims system, this should serve as a wakeup call. The time to overhaul your claims management system has arrived.
$170 Billion at Risk
Insurers that provide poor claims experiences risk losing $170 billion in premiums over five years. That’s the conclusion of a report from Accenture called Why AI in Insurance Claims and Underwriting?
The report surveyed more than 6,700 policyholders and found that 31% of claimants were not fully satisfied with their home and auto insurance claims experience over the prior two years. Among this group of dissatisfied claimants, 30% said they had switched carriers, and another 47% said they were thinking about doing so. That’s 77% of unhappy claimants who either have already left or are considering it, representing that $170 billion in lost premiums over a five year period.
AI Is Part of the Solution
The report from Accenture didn’t just identify the problem. It also pointed to a solution: AI, used inside a modern claims workflow rather than bolted on as an afterthought.
Many claims processes suffer from gaps in communication and tedious tasks that eat up the claims handler’s time. AI can help close both gaps. Updates can go out automatically, keeping the policyholder informed of key developments without requiring any action from the claims handler, and ensuring that no messages slip through the cracks. AI can also automate tedious tasks, such as populating common forms, freeing up the claim handler’s time to focus on judgment calls that actually need a human. Efficient automated claims systems, built around tools like FNOL software and AI for claims, can easily save two hours per file handler per day.
AI Doesn’t Replace the Human Touch
When you’re dealing with a problem, sometimes you just want to speak to a person. According to First Orion, 49% of customers prefer speaking with a live person when they contact their insurance providers. Similarly, Nationwide surveyed customers and found that 58% want to be able to reach an agent or claims representative over the phone.
That’s not all Nationwide learned from its survey. It also found that 36% of customers want a digital claims tracker, and 74% want their claims handled quickly.
AI doesn’t replace the need for human agents. When customers are having a problem with their claim, they want to be able to reach a real person. Human interaction isn’t always needed, though. People also appreciate the ability to track claims progress on their own, and most importantly, they want a fast resolution. AI supports both the claimant and the claims handler at once. Claimants can check their claims status and receive automated updates through a claim tracking system, while claims handlers rely on automation to speed up the process and handle the tedious, repetitive parts of the job. That way, when a claimant actually needs a person’s time, that person has it to give.
Technology Is Changing Everything
As technology changes, expectations for insurance claims services change with it. With the rise of email, texting, online shopping, and digital banking, wait times that seemed reasonable a few years ago now feel painfully long. Companies cannot afford to tread water. If they don’t move forward, they risk drowning under new customer expectations. Progress is the only real option.
According to the World Economic Forum, innovations like the Internet of Things and mobile technology have reshaped everyday experiences. Because of that shift, insurers now need to meet customer expectations set not just by rival carriers, but by best-in-class companies in entirely different industries.
Some companies are getting it. Others aren’t. Adoption rates for AI and other claims technology vary widely, and the results vary just as widely. According to Accenture, technology leaders are growing up to five times faster than technology laggards.
Are You a Laggard or a Leader?
Your company has no doubt embraced some forms of technology. That doesn’t automatically make you a leader in technological innovation.
If you’re using an inefficient claims system, that’s a serious problem, and it’s not something you can bandage over and pretend is fine. You need a real change. Genuine digital transformation isn’t a piecemeal adoption of one tool here and another there. It’s a full overhaul of your company’s workflows and operations, the kind that comes from consolidating onto a single claims management software platform rather than stitching together disconnected point solutions.
If you don’t make that change, your competitors will.
Let’s revisit Accenture’s findings to consider the full implications. Many claimants are unhappy, and roughly three in four of those unhappy claimants may switch to another carrier. As a result, carriers could lose that $170 billion in premiums over a five year period.
Customer churn is a problem for insurers, but it’s also an opportunity. People may not always enjoy dealing with insurance companies, but most accept the necessity of homeowners and auto coverage. When a customer leaves one insurer, that company loses the premium, but the customer still needs coverage, so another company gains it. If carriers are at risk of losing $170 billion in premiums, carriers also have the opportunity to gain that same $170 billion.
How Customers Select a New Insurer
Although insurance companies can expect to gain some customers while losing others, they shouldn’t assume the two groups cancel each other out. A company that offers a superior claims experience may lose very few customers while gaining many, resulting in real growth. A company that offers a substandard claims experience may see the opposite: heavy churn paired with a struggle to attract anyone new.
Cost can be a big motivator, but it isn’t the only reason people switch insurers. According to ValuePenguin, 47% of people who chose not to switch auto insurers at their most recent renewal said it was because their insurer offered the lowest rate, but 35% said it was because they liked the customer service.
When customers do decide to explore other carriers, they’ll typically get some quotes and check reviews. The internet has made it easy to surface bad reviews and public complaints, and plenty of people weigh that information heavily when choosing a business. According to Think with Google, 53% of shoppers say they always research a purchase first.
If you’re providing a poor claims experience, you risk losing customers and their premium. You also risk negative reviews and public complaints, and that reputational damage can make it harder to attract new customers in the first place.
Making the Right Investments
Most insurers know they need to invest in technology. The real question is which investments deliver the greatest return.
Among competing priorities, the claims experience has to be near the top of the list. Poor claims experiences drive policyholders away and create reputational damage, on top of the added cost of running long, overly complicated claims processes. Whether you’re a carrier managing high volume, a TPA juggling multiple client programs, or an independent adjusting firm trying to scale without adding headcount, the fix looks the same: a modern, integrated claims management system.
A more efficient claims system improves customer satisfaction and drives real cost savings at the same time. Complex, high-stakes claims in particular benefit from the kind of structured handling described in our complex claims management guide, and unresolved inefficiency has a way of showing up later as claims leakage that quietly erodes your loss ratio.
To see how much you could save by switching to a more efficient platform, use VCA’s quick ROI Calculator, or request a demo to see how VCA claims management software compares to what you’re running today.
