There are only a few touchpoints between most customers and their insurance company, typically when a claim is made and during annual policy renewal. Given their rarity, the stakes are especially high, and insurers need to make sure they provide the best possible customer experience.
Speed is of the essence particularly with claims processing, and one of the areas where insurers and customers stand to gain the most. From the time a claim is first made through to settlement, months or even a year can go by – a key source of frustration for policy holders, it is particularly upsetting for those who may have lost their homes in a natural disaster and are waiting for their insurer to disburse funds. To speed up the time it takes to process a claim and pay customers faster, insurers are now increasingly embracing touchless claims as well as real-time payments.
Touchless claims processing allows insurers to handle simple claims – a car accident with no injury or questionable blame for instance - from first notice of loss (FNOL) through to payment without any human interference, making the whole process both faster and cheaper. As soon as a car accident occurs, policy holders can use their phone to measure the damage, upload the necessary details through an app and can get an estimate as to whether it’s a total loss or a part can be replaced. Customers can then assign the repair to a preferred vendor, and have the vendor be paid automatically through their insurance company, or, if a customer is paying out of pocket, have funds disbursed directly to them. Features in apps such as built-in video and messaging bots can further speed up the FNOL process, with some claims now taking minutes rather than weeks or months to resolve.
More complex claims can also benefit from new technologies: Drones and augmented reality can enable insurers to figure out estimates and cost models, speeding up the whole process both for insurance companies who need to evaluate the damage and for their customers.
Meanwhile, insurance companies are also turning to real time payments to shave time off the claims process. Like touchless claims, if the payments process is standardized with a core that speaks to all the key players in the ecosystem, customers can benefit from an almost instant disbursement directly to their bank account, instead of having to wait weeks for a check to be issued, resulting in an all-round better customer experience. The benefits are manifold: a great customer experience during the claims process will generally lead a policy holder to stay with the same insurer in the future, in spite of other challenges or frustrations they may perceive, and it will often encourage them to tell their peers about the positive experience they had during what was possibly one of the worst times in their life.
Increased security is another benefit insurers can gain from real-time payments, since customers are able to receive payments 24/7 with real-time tracking, and additional layers of fraud and risk management, information security and operations infrastructure create further barriers to fraud.
Security is further strengthened when blockchain is added to the mix. Blockchain's ledgers are decentralized, which means they can’t be manipulated by a single authority. Instead, data is timestamped to ensure a clear recording of events.
Similarly, insurers should be preparing for Central Bank Digital Currencies (CBDCs) – which can almost be equated to cash with blockchain. CBDCs enable people to track cash, so they know that the dollar one person is handing them online is the only dollar that exists in the system at that time.
China and a growing number of other countries are already using CBDCs, and if you’re an insurance company in China, you had better be preparing for this now. While it may take a bit longer in the US, most central banks are now looking at deploying digital currencies because of the real savings they can make with transactions as well as the added transparency and trackability.
Overall, digital currencies will be deployed faster than people think, and along with touchless claims, real time payments and blockchain, will be another area innovative insurance companies need to embrace in order to meet their customers’ expectations and grow.