Altus Insurance whitepaper spreads - Flipbook - Page 6
All aboard!
The current state of claims (cont.)
A rejuvenated regulator
A claims process that meets or beats the expectations
of today’s customers is also a key opportunity to
retain customers, but the regulator’s guidance around
the delivery of ‘good’ outcomes rather than simply
‘fair’ ones, adds another dimension.
Recent interventions from the Financial Conduct
Authority (FCA) have started to give the market a view
of the regulator’s latest thinking on what good looks
like, as the Consumer Duty is introduced, Insurance
Conduct of Business (ICOBS) rules are updated, and
public warnings are issued by the FCA3 about negative
behaviours in the management of claims.
It has been apparent for a number of years that
the customer claims experience does not meet the
standards set by other sectors or the expectations of
the regulator and this inability to meet customer and
regulatory expectations poses 昀椀nancial as well as
reputational risks.
According to one study, 31% of claimants were
unsatis昀椀ed with the handling of their home or motor
claim with 30% of those reporting they had switched
insurers in response with a further 40% considering
doing the same4.
Legacy technology
The struggle with legacy technology is not unique to
insurance but the impact of operating on multiple,
outdated platforms is acting as a particular drag in
this sector, most notably in claims.
While most insurers are embarking upon a digital
transformation of their claims proposition in some
form or another, the reality is that they can only go
as far and as fast as their existing platforms permit.
Research by Duck Creek Technologies found that
many insurers spend up to 80% of their IT budget on
maintaining these outdated systems5, strangling the
opportunity for real, wholesale change.
A new approach to an old problem
In simple terms, the claims handling capabilities of
insurers have not evolved as quickly as the world
around them, largely due to the broad spectrum of
complexity across claims, and the fractured nature of
how claims are managed both in-house and externally.
Taking a step back, the various external factors, in
conjunction with emerging technologies and models
for sustainability, should be seen as a real opportunity
for those operating in the insurance industry.
What is required is a complete rethink of how claims
are approached to focus less on insurer e昀케ciency and
much more on customer experience, but the delivery
of this requires not just a revolution in technology but
a revolution in mindset.
Those insurers seeking to make real and lasting
change to their claims experience, should consider
the following questions:
• Do we have an optimised target operating model
for claims handling?
• Have we fully addressed the key touchpoints that
deliver certainty in claims resolution?
• Is the structure of our supply chain truly delivering
for our business and our customers?
• Have we fully embraced the technology that can
help deliver the right outcomes?
These are the core questions this whitepaper will
seek to answer through the prism of well-established
Altus Consulting industry models, developed and
maintained by our insurance industry subject matter
experts.
“To deliver real transformation for
claims, there needs to be clarity
on the current overall state and
the target operating model, before
embarking on a programme of
change. For this to be successful,
the claims function and other
interdependent parts of the
business need to be brought fully
on board, and full transparency of
the transition states as an insurer
implements a new model will
help to ensure this is a smooth
journey.”
Patrick Hayward,
Altus Consulting
3
https://www.fca.org.uk/news/press-releases/fca-warns-insurers-about-support-provided-struggling-customers
https://newsroom.accenture.com/news/poor-claims-experiences-could-put-up-to-170b-of-global-insurance-premiums-at-risk-by-2027-accordingto-new-accenture-research.htm
5
https://www.duckcreek.com/blog/blog-insurance-industry-challenges/
4
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