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Sep 2, 2015

The Claims Connection

by Jennifer Overhulse

Next to IT, claims constitutes one of the largest cost centers for insurance companies, so it stands to reason there is considerable focus around ways to take cost out of the claim process or lifecycle. Replacing an aging claim management system, on its own or as part of a larger core administration system modernization initiative, can certainly offer moderate success in terms of both process improvements and maintenance costs, but is it enough?

If I were in the practice of making sweeping generalizations, I might next say something like “Most insurance companies believe more can be done to improve the claim process.” Impactful statement, don’t you think? It’s also an understatement. Reality is that there is no insurance company which has a perfect claim process which does not need improvement. The most recent stats from the Insurance Information Institute (www.iii.org) indicate claims expenses for insurers holding steady with around $0.75 of every premium dollar going back out the door in the claim process. So, not only is it an area where insurers are spending/losing a lot of money, it’s an area where even small improvements can add up to significant savings quickly.  

All that said, there are companies out there rethinking claims and thinking beyond core administration modernization today. As one of the judges for the first round of the ACORD Insurance Innovation Challenge, I feel confident in saying that if you are looking for innovation in and around the claim process, some of this year’s applicants have you covered. 

LiveGenic, for example, is taking the sting out of insurance claim adjustments by putting control back into the hands of the claimant. By enabling live video, still photographs and audio, all provided by claimants with instructions specific to how the insurer needs the information, LiveGenic is transforming the adjustment process, potentially eliminating the need for independent or third-party adjusters, minimizing the need for complicated adjuster dispatch and scheduling, expediting claim resolution, and minimizing fraud-related risks. LiveGenic is one of this year’s ACORD Insurance Innovation Challenge finalists in the Insurance Disruptors category, and will be presenting live at this year’s ACORD2015 conference coming up in November in Boca Raton.

Autonomous Marine Systems used the inaccuracy of weather forecasting as a jumping-off point for innovation. According to Autonomous Marine Systems (AMS), the National Oceanic and Atmospheric Administration (NOAA) has approximately 1500 onshore weather stations and only 155 marine-based weather stations, equating to 1 for every 600 miles of coastline. In an attempt to capitalize on the convergence of recent advancements in sensor technology, new developments in robotics, and the increased need for better ocean/marine data, AMS developed the Datamaran, a “satellite for the seas” which is solar-powered, "fully autonomous, 100 percent renewable and able to survive hurricanes to provide persistent and reliable data collection without risking human life." Ultimately, the AMS vision is to "provide real-time intelligence of the oceans using networked drones to transform the weather insurance industry."

And, just in case you were wondering why the Internet of Things (IoT) hasn’t been included in the innovation in claims conversation, there are companies making forays into preventing claims via sensors in the increasingly connected home. 

Another ACORD Insurance Innovation Challenge finalist, SPLICE Software, has combined the use of strategically placed home sensors connected via the cloud with customer communication and engagement solutions to better inform homeowners of potential claims, or to notify preferred service providers for loss avoidance and claim reduction. When a sensor detects a problem and communicates it back to SPLICE, the homeowner would automatically be contacted by phone, text, email or even social media channels. If the homeowner is unreachable, SPLICE could be authorized by the homeowner in advance to contact a preferred provider who could potentially come to the site and hopefully prevent damage. Talk about proactive. 

Wallflower, also an ACORD Insurance Innovation Challenge finalist, researched the common reasons for residential home fires and found data which indicates an unattended range is most often the culprit. Wallflower’s solution provides homeowners with a device or sensor into which a range would be plugged before being plugged into the wall, in much the same way surge protectors are used today. Detecting inactivity based on data collected about power usage over time as well as when someone is present in the room, this sensor would shut off the gas or electric range without requiring homeowner intervention in order to prevent a potential fire. Considering fire claims cost insurance companies almost double that of wind or water damage claims, Wallflower could be an important part of lowering loss costs when it comes to fire damage.

These innovative solutions and ideas just scratch the surface of what is possible in terms of claims transformation. As insurance companies look to further incorporate technology and engage policyholders in the claim process as a way of preventing losses or minimizing the cost of processing those losses, there are sure to be more exciting innovations along the way. You can see some of these solutions for yourself in Boca Raton at ACORD2015, and since there will be an audience participation component to the final judging, you can be a part of selecting a winner for the ACORD Insurance Innovation Challenge as well.   

Jennifer Overhulse is the principal owner of St. Nick Media Services.  She can be reached for more information or comment via email at jen@stnickmedia.com