Other than the regular annual policy renewal, claims processes are one of the few occasions when a customer comes into contact with their insurance company. And it’s often a tedious and time-consuming affair. Practical use of sensor technology and IoT allows insurers to deliver more responsive claims customer experiences.
Imagine this. You’re out driving and suddenly find yourself in a car crash. You and the other driver are unharmed, but your cars are totalled. While the other driver frantically searches his phone to find his insurer’s phone number, you receive an automated call from your insurance company in which a robotic voice notifies you that they’ve received information from your car’s sensors telling them you’ve been in an accident. The voice asks you if you or anyone else is injured. You reply no. While the other driver struggles to connect with his insurance company, the robotic voice informs you that an Uber car is on the way to drive you to your destination and asks you if they can share your coordinates with their appraiser drone to perform the appraisal. Shortly after, a drone comes flying in to take photos and assess the damage. The other driver is put on hold by his insurance company, but the robotic voice of your insurance company tells you that they’ve authorised the repair, selected a qualified repair facility and have dispatched a tow truck to take your vehicle to that facility. Simultaneously, your insurance company has looked the other vehicle’s insurance, transmitted the appropriate data to create the claim and filed an accident report. All you need to do is to confirm the information which suddenly pops up on your smartphone. As the other driver still struggles with outdated customer service methods, you’re already on your way in the Uber car.
This short story, which is lifted from a humorous video I recently watched, effectively demonstrates the opportunities inherent in the Internet of Things (IoT) for the insurance industry in general and the claims process specifically.
Automated claims processes in an ecosystem of connected cars, sensor technology, robotics, voice technology, digital apps and drone technology may seem like science fiction. But it’s not. The story epitomises the concept of Connected Insurance, in which insurers take full advantage of sensor technology and IoT for data collection and transmission and advanced analytics to transform raw information into actionable insights to provide added value throughout the value chain.
Connected Insurance to Combat Higher Customer Expectations
Insurance claims processes often involve a certain level of stress on the customers’ behalf. Accordingly, insurers should provide them with easy access to customer service support staff and fast and efficient insurance pay-out. More often than not, this is not the case. According to a Central Bank of Ireland report, 53 percent of all surveyed claimants said they were dissatisfied with some aspect of the motor insurance claims process. 27 percent of these claimants were dissatisfied with the level of efficiency and the speed at which the claim was processed.
Customer expectations have changed, and consumer demands have become higher. Above all, consumers have become digital. Smartphones provide customers 24/7 access to services and products. Social media allows seamless communications between businesses and customers. Consumers expect self-service opportunities that require little effort on their part.
Rising customer expectations is no less valid for the insurance industry. Higher customer experiences are among the key drivers pressing the insurance industry to digitise their business processes. For insurers specifically, the PwC’s report “Insurance 2020: The digital prize – Taking customer connection to a new level” holds some interesting insights on how digital drives consumer demands within the industry:
- 71 % used some form of digital research before buying insurance
- 26 % bought their policies online
- 68 % are willing to download or use an app from their insurance provider
- 67 % would be willing to have a sensor attached to their car or home if it could result in a reduction in premiums
- 50 % are prepared to provide their insurer with additional personal and lifestyle information if it helps them find the best deal for relevant services on their behalf
IoT and sensor technology allows insurers to digitise their processes and revolutionise the way they interact with their customers. Intel predicts there will be 200 billion “smart” devices, or 26 smart objects for every human, by 2020. As the number of interconnected devices increases, the IoT offers opportunities to gain access to new data sources and new insights. This insight can be utilised to improve customer experience.
Connected Insurance for Claims Process Optimisation
According to CapGemini, IoT has a prominent role to play in customer experience by enhancing communication, reducing wait times and gaining greater insights. According to David Law, global insurance leader at PwC, technology will be an essential part of insurers’ ability to capture and analyse new sources of customer data and develop new relationships. As he also points out, the key is to effectively turn this information into new insights and a readiness to lead marketplace innovations. In a Frost & Sullivan survey, 68 percent of the surveyed participants perceived their IoT-enabled customer experience initiative as improving their brand equity and having a positive impact on the development of new disruptive business models.
IoT can be used to create valuable data about insured objects. This data can and should be leveraged to deliver more responsive customer engagement and faster and more customer-centric claims processing. However, to fully unleash the power of IoT in claims processing, insurers need to do the following:
- Access new data sources: Re-energising the claims process is not just about using existing data better but also about gaining access to new data sources. In the above story, the insurance company takes advantage of connected cars and sensor-packed drones to access the data required to optimise their claims process.
- Apply new customer service technologies: The above story leverages robotics, voice technology and mobile apps to deliver a truly omni-channel customer experience.
- Replace legacy IT systems: According to Gartner, improving the insurance customer experience requires an IT overhaul and increased IT spend to build a digitally enabled, multichannel IoT platform. Existing data management and analytics capabilities are unfit for real-time analytics of large datasets compiled from various data sources.
Connected insurance is a game-changer for the insurance industry. It allows insurers to gain new consumer insights and revamp their customer communications capabilities. The time to begin is now.