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Leveraging technology for speed of claims settlement

Oct. 21, 2021 · Authored by Bernard Regan, Jack Torpey

When it comes to innovation and technology, the commercial insurance industry has a lot of room for growth.

In contrast to the personal lines insurance class of business, the commercial sector has accomplished less technological advancement over the last 10 or 20 years. Personal lines insurance features more elements of modern technology (including AI and machine learning), as the commercial side continues to lag behind.

That is not necessarily for a lack of trying. Sometimes within the insurance industry – and other industries, for that matter – attempts to introduce technology are doomed by design flaws or issues with implementation or integration. In other cases, the technology proves to be effective, but the user simply does not want or need it. There is a resistance to change.

In some instances, the technology is to be deployed in the back-office settings, and external customers never see it, so its value isn’t as obvious. And sometimes the technology improves the customer experience but weakens the insurance company’s overall processes.

The current landscape presents the risk of technology overload. Many companies are attempting to utilize too many different forms of innovation because they sound exciting or because it’s the trendy thing to do, but the technology avalanche often makes life harder for employees and/or consumers. A bit like the dot-com era, everyone had an e-commerce, social media or internet idea, but many of the ideas proved to be overwhelming, and many of them failed.

There continues to be much work to be done on this front. In particular, the claims settlement portion of the commercial insurance industry has a long way to go. Much of the technology in insurance is focused on the sales, product development and distributions channels. The claims experience is an afterthought. But it’s the claims experience that really puts the company to the test. The policy or insurance product may sound and look great on paper (or, more likely, on screen), but the real test of its value comes when the policy is triggered and the policyholder expects a response.

At the moment, a commercial claims process could easily take three to four months to get resolved. Longer for more complex claims. An incident occurs and a claim is filed. The insurer is informed and they get back to the insured in a few days. And so begins the exchange and the claims clock starts ticking. Each stage of this back-and-forth dialogue can take days, or weeks, and sometimes a lengthy dispute can arise before a final resolution. Ultimately it could be months before the business receives its settlement money.