Altus Insurance whitepaper spreads - Flipbook - Page 16
Lifting the barriers to
transformation (cont.)
Paying lip service to claims management issues is
unlikely to satisfy the regulator. In July 2023, the FCA
ordered Direct Line, the UK’s second largest private
motor insurer, to review 昀椀ve years’ worth of total
loss claims following a review into how the market
managed these settlements12. The regulator, it seems,
has located its teeth and is keen to use them.
The good news is that recent developments such
as the introduction of rules around the expected
treatment of vulnerable customers and the
management of customers in 昀椀nancial di昀케culty (now
part of ICOBS), should, in theory, mean that insurers
are already operating in the way the FCA expects.
“The biggest challenge in meeting
the Consumer Duty requirements
will be around supply chain
- metrics will need to be truly
outcome focused, and aligned
with both insurer and its service
providers.”
Jeremy Trott,
Claims Director, Ecclesiastical
However, in what is o昀琀en a complex and potentially
lengthy process, with di昀昀erent approaches and
philosophies driving di昀昀erent customer experiences
across the industry, it is likely that the regulator’s view
of what amounts to ‘good customer outcomes’ will
evolve with time.
The key point insurers should be focused on is that
the Consumer Duty is not a standard regulatory
exercise. This is no “one and done” operation as the
FCA is as concerned with how insurers do something
as they are with what they do.
For many insurers, this will require a complete rethink of
how they approach and manage claims and while many
will understandably turn to technology for the answers,
the real and lasting solution lies in understanding the
processes used to create better customer outcomes and
using technology as an enabler.
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The limits of legacy tech.
Regulation is not the only pressing issue that insurers
have to deal with. Any insurer that has been operating
for at least the last 10-20 years, will be burdened with
some degree of legacy technology. Awareness of the
need to modify the tech landscape in claims is high
with most insurers already embarking upon a ‘digital
transformation’ of some kind or another.
While the language being used suggests a complete
overhaul of how claims are managed, the reality is
that most carriers are tinkering at the edges, focusing
on the very front end by automating 昀椀rst noti昀椀cation
of loss (FNOL), for example.
This has less to do with a lack of ambition and more
to do with the restrictions of legacy systems that most
are 昀椀ghting with. The common approach across the
industry is to develop a core claims platform as the
system of record for claims and integrating it with the
policy administration system and other key systems.
Typically insurers partner with a third party technology
provider to facilitate this while others have taken the
plunge to build their own proprietary system.
Whatever approach has been taken, due to the
core record-keeping requirements and basic needs
for business process management, these systems
will have been built to 昀椀t with an insurer’s existing
operating model and, as a result, have limited
capabilities to support digital claims processes.
This starts to explain why most of the digital
innovation seen to date in claims seldom gets beyond
the foothills of what true digital transformation can
deliver. Introducing new changes to the IT estate
is undoubtedly a challenging undertaking, due to
existing complexity, resilience, and potential risks
around further change and few CEOs or CIOs wants
to be the one who uses their tenure to focus on the
wholesale digital transformation of the business - the
lasting bene昀椀ts will likely not be seen for years to
come, long a昀琀er the individual who drove the change
has moved on.
The reality is that most of these systems will either
need to be upgraded or replaced at some stage, but
rather than seeing this as a burden to bear, it actually
presents a rare opportunity to re-think the whole
claims process and what it is the company wants its
underpinning technology estate to do for the business
and its customers.
https://www.theguardian.com/money/2023/jul/01/direct-linecar-claims-underpayments-write-o昀昀s
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