Survey: 4 Out of 5 Insurance Execs Say It Takes More Than 30 Days to Close a Claim
Our recent survey of senior insurance executives sheds light on the state of claims management and the use of innovative tech. Here’s a look at our key findings.
How efficiently do claims departments run? To what extent do they use innovative technologies? And how does your company stack up to the competition?
If questions like these are on your mind as a claims professional, you’re in good company – and with good reason. While the insurance industry has long had a reputation for taking its time to embrace new technologies, the central role that data plays in claims management makes this field especially ripe for intelligent automation. The ways claims departments now approach the challenge and opportunity of digital transformation can have a major impact on their overall performance.
To shed light on how effectively claims departments run and the role that technology plays in their operations, we recently commissioned a survey of 100 senior property and casualty (P&C) insurance executives in the U.S. The study was carried out in recent weeks by independent research firm Global Surveyz.
You can download the full report here.
While the results indicate that a widespread lack of automation results in significant inefficiencies and long processing times, they also show a notable openness to technological innovation. Taken together, they point to both serious room for improvement and a broad awareness of technology’s ability to drive that improvement.
Key takeaway: Slow and time-consuming processes
One central finding from the survey is that claims departments typically do not enjoy the benefits of automation as much as they could. Just 38 of the 100 respondents answered that their company uses a software solution to assign claims to adjusters automatically, and just 16 said they have automated processes for reserve setting and coverage opening.
In light of that lack of automation, the slow and inefficient processes reflected in the survey results should come as no surprise. Some 82 of 100 respondents said their company’s claims adjusters typically take more than 30 days to close a physical damage claim. And a whopping 90 respondents answered that their company’s loss takers typically take at least 11 minutes to create a new claim – a process that these companies could automate instead.
Meanwhile, all 100 of the respondents said their company’s closing ratio for physical damage claims is 100 percent or less, meaning that they open claims at least as often as they close them.
But while those findings might be unsurprising, they are remarkable – and so is their inevitable impact on insurers’ loss ratio, loss adjustment expense (LAE), and customer experience.
Encouraging signs for the future
While the survey results point to inefficiency, long cycle times, and a lack of automation, they also provide some reason for optimism about the future – including the near future – of claims management.
Notably, out of the 84 respondents who answered that their company does not currently have automated coverage opening and reserve setting, 78 indicated that their company plans to acquire those capabilities in 2023.
And one of the most encouraging findings was not primarily about claims management or automation, but rather about the use of digital payment solutions: Some 77 respondents said their company already uses a digital payment solution. And perhaps even more remarkably, all 23 of the remaining respondents said their company plans to start using a digital payment solution in 2023. In other words, 100 percent of respondents indicated that their company intends to have started using a digital payment solution by the end of next year.
While this does not tell us how soon most insurers will start using intelligent claims management solutions, it does show a real eagerness to adopt innovative technologies in at least one critical insurance process. If these companies embrace innovation in their claims management as heavily as they do in their payment processes, that could be a game-changer in addressing the inefficiencies and long processing times reflected in the survey’s key findings. And that could have a powerful impact on their KPIs across the board.
For a closer look at how effectively claims departments perform and the role that innovative technologies play in their operations, download the full report here.
