Altus Insurance whitepaper spreads - Flipbook - Page 5
All aboard!
The current state of claims
Chapter Summary
• Claims functions needs to adapt to rapidly changing expectations from customers and a renewed
focus from the regulator, whilst also navigating the impact that inflationary cost pressures are having
on pro昀椀tability.
• Insurers embarking on claims transformation are broadly restricted by their existing technology stacks.
• Successful transformation can only be achieved by looking at the bigger picture, with the target
operating model (people, process and technology) being central to this, rather than focusing purely
on new so昀琀ware solutions.
• There are emerging technology solutions that provide real enablers to change, and an understanding
of these and how they can be applied will be a key part of any operating model design.
No matter how innovative or complex the insurance landscape becomes, one
thing will remain unchanged – the promise to pay if something goes wrong
always has been, and always will be, the core purpose of the insurance product.
While that truth remains unchanged, little else
in the wider insurance landscape has. Across the
industry, from reinsurers to company markets and
from brokers to loss adjusters, the management of
claims has reached an inflection point in recent years.
Increased regulatory scrutiny and changing customer
expectations are driving the need to make the claims
experience central to insurer propositions, whilst the
昀椀nancial impact of rising claims costs and the burden
of legacy technology conspire to limit their ability to
implement transformational change in this area.
Customer expectations
For today’s customer, ful昀椀lling the basic promise to
pay is no longer enough. The way in which a claim
is received, managed and settled is of increasing
importance, and, in line with other aspects of their
lives, customers are placing greater emphasis on
having some degree of influence and control over the
claims process.
According to research by sprout.ai, 21% of customers
expect a claim to be settled within hours and 100% of
18-24 year olds expect their claim to be settled within
one week1. Technological advances in the last decade
mean that smartphones are now near-ubiquitous,
there is an expectation of instant responses, and
for transactions to be completed through a simple
interface online.
Service expectations in insurance are no di昀昀erent
to any other brand customers engage with, and the
industry must respond if it hopes to remain relevant
in the long term.
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Claims inflation
Claims inflation, triggered by the pandemic and
compounded by the war in Ukraine, is hitting every
insurer hard with the knock-on e昀昀ect to customers
of sharp increases in premiums, particularly in the
motor market.
According to the Association of British Insurers (ABI),
in the 12 months up to Q1 2023, the cost of vehicle
repairs increased by 33% to £1.5bn, labour costs were
up 40% and the cost of replacement car parts had
increased by up to 21%2.
These costs are real, sustained and infecting every
part of the market and they must be managed
creatively to reduce pressure on pricing and,
subsequently, customers.
21% of customers expect
a claim to be settled
within hours, 100% of 1824 year olds expect their
claim to be settled within
one week.
“Responding to rising customer expectations in insurance”
https://www.abi.org.uk/news/news-articles/2023/8/sustained-cost-pressures-on-insurers-push-the-average-price-of-motor-insurance-to-arecord-high/
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