Page believes that the Covid-19 pandemic has had a far-reaching impact when it comes to customer acceptance of digital claims solutions. In an indirect way, yes, but the real driver of customer acceptance has been the high volume of claims, which we have also historically seen resulting from other causes, such as widespread weather events.
In such a case, insurers like any other consumer business might struggle to answer a high volume of phone calls because of staffing and other issues, and then customers are driven to the digital claim filing option, because it allows them to get their issue handled more quickly.
Surge or no surge, its essential to develop claims management technology in line with client or customer need and to ask the right questions about its value. For instance, said Smith, can a claims dashboard give insurers the bespoke, flexible access they may need to customer data? Can digital tools be controlled by clients if they so wish? Can tools segregate fraud risk efficiently by optimising front-end intelligence? Or, can they help insurers make intelligent underwriting decisions that have a positive impact on claims?
The open-source technology accepts cryptocurrencies and can autonomously issue policies and execute payouts for travel delays to insurance policyholders
Investing to stay on top
The latest figures from Alexsoft, a travel and hospitality technology consulting company, report that almost 61 per cent of customers want to check their claims application status with digital tools. Insurers need to pay heed that a lack of web presence equates with lower customer satisfaction.
Many insurers have set their sights on staying on top of if not ahead of the game. Gartner has forecast that global IT spending in the insurance industry increased by 4.4 per cent in 2019, with a total budget of US$225 billion. The latest figures suggest that the Covid-19 pandemic has only slightly dipped expenditure on tech investments.
In fact, a shift to more digital services can save money in the long term, creating growth opportunities for travel insurers and innovative third-party tech providers. A travel insurer with a varied offering of digital services has a competitive advantage over companies that have not invested for the future. According to a Boston Consulting Group report, the disruptive technology change allows for slashing up to 10 per cent in premium costs and eight per cent in claims expenses.
Customers are welcoming a digital-first service strategy which includes AI (artificial intelligence), geopositioning, application programming interface (API), instant messaging, and apps.
In the aftermath of the pandemic, a greater number of consumers are looking favourably upon companies that provide a strong digital offering. A recent PWC survey suggests that 41 per cent of respondents are likely to ditch their insurance company in favour of a more digitally advanced one.
There's little doubt that front-end automation is helping to accelerate claims journeys and improve customer experiences, or that digital tools are easing access to healthcare. But its also important to celebrate the agile technology that is transforming back-end claims management. Smith said: Charles Taylors new digital claims validation tool Discovery, for instance, is increasing intelligence-led decision making; providing deep dive open source and social media searches that can find impactful information or obscure global fraud to help validate or disprove claims.
Zena Carter, Managing Director of Firemelon, shares how AI can help insurers automate sales, claims and benefits, as well as control fraud and maintain compliance
Firemelon has been offering AI solutions for claims processing for many years, but recently interest in the product has ballooned thanks to the ability to automate question sets, where the customer answer triggers different follow-on questions, is a game changer and enables an automated outcome of pay, decline or referral to an underwriter. This is becoming invaluable for our clients. They have full control of questions they want to ask and the answers theyd expect back to facilitate straight through processing for a section of customers. They have a variety of tools at their disposal for those who choose to ensure regular checks are made for any automated outcomes.
Combating fraud
Whilst the risk of fraud can increase with less human interaction, automation can be used to help combat this and mitigate such risk. Automation allows a much richer set of data to be collected from the customer. This can be used to immediately flag if there is a potential fraud case based upon a set of algorithms defined by the claims handling experts. Rich data provides the opportunity to analyse claiming patterns easier and to work out where potential fraud has taken place and could occur in the future. The key is to adapt quickly to ever changing ways that fraudsters try to game the system.
Parametric insurance solutions
There are some innovative solutions out there and weve had engagement with parties offering plug in solutions that may benefit our Magenta system. Were excited to get this into our roadmap this year if these solutions are embraced by the industry and are cost effective enough to drive some real benefit. Our priorities are very much based on how our clients can use digitalisation to move their business forward, so where they see other enhancements as being more cost effective for them, or adding more value, especially as they recover from the last 2 challenging years, well be swayed by them.
Data security
Compliance with financial regulation, data security and privacy laws has to be at the heart of everything we do at Firemelon and we have invested heavily in this area over the last 4 years. We ensure we have a base layer of recognised security certifications, from Cyber Essentials and PCI certifications to international best practice such as IASME Governance. We are audited by external third parties in these areas and continually review and update processes, policies and our systems.
We are very fortunate to have fantastic relationships with our clients and have continuous open dialogue where we share information for the good of the industry and debate the best way to achieve compliance. Where we cant find a common approach to dealing with regulation (which is always our preference) we ensure different ways of handling it behind the scenes so that our clients are comfortable with their own solution. Regulation is costly for all of us and can be painful at times, but we all work together to make the best of it!
An end to the paper trail?
Once Covid hit, online claim submission spiked, with paper claims dropping drastically. The take-up of online submissions increased significantly, says Brice King, SVP Travel and Accident at Arch Insurance Group. Our paper cheques were down by around 96 per cent post-Covid, with an uptake in the online payments. A greater appreciation of technology [leads] to a better claims experience.
Brice believes that technology is helping his company to communicate better. We use predictive analytics to calculate when we think a customers claim will be complete, based on when they submitted it. We can then let the customer know when they can expect payment. We can also shorten timelines and adjudicate more effectively. We are using AI for fraud detection. Using analysis at pixel level, we can see if documents have been tampered with, such as copied and pasted.
Preparing for the uptick in travel insurance queries and requests in 2022 is firmly in Brices sights. When travel comes back, its going to be booming. We are trying to prepare for this through our technology to improve processes across the board, not just claims, but also on the sales and distribution side, API integrations with partners in order to get data from them faster also to verify data.
All the information in one place
Anything that speeds up paying claims fast and with the least amount of aggro such as simplification of claims filing, easy-to-understand claim status updates, fast decisions on claims, and automatic crediting to bank accounts is going to be popular with customers. And preferably, claims can be filed from anywhere in the world.
Agile methodology should enable frontline claims teams to see a customers entire claims and medical assistance profile on a single platform. This will help them join the dots of the customers information and calculate the most suitable support and solutions.
AI is also transforming travel insurance claims. Use of chatbots via mobile apps can help customers quickly communicate with policyholders to impart information and come to a speedy solution. AI insurance solutions also offer companies a platform to provide personalised quotations for customers, integrate robo-advisors, and assist in fraud detection.
Milan Korcok asks whether technology can continue to drive the travel and health insurance sectors forward to more accurate underwriting and risk rating, and considers the cost of sharing health
Predictive analytics will transform the claims process
According to the Insurance 2030 The Impact of AI on the future of insurance report, the industry will shift from its current state of detect and repair to predict and prevent, and will reshape the insurance industry over the next 10 years.
Experts estimate there will be up to one trillion connected devices by 2025. The huge amount of data created can be sifted through via AI, enabling travel insurers to offer real-time service delivery and claims, which ultimately is what the customer wants.
McKinsey research estimates that by 2030, more than half of current claims activities could be replaced by automation. AI algorithms can create risk profiles and automated customer service apps handle most policyholder interactions through voice and text, following self-learning scripts that interface with the claims. The turnaround time for claims could be within minutes rather than days or weeks.
Global Excels John Spears, VP Marketing and Business Development, says that now more than ever, having the ability to deliver digital-first assistance services, claims processing and claims management is essential to any organisation and their members, especially if some of them are travelling, relocating for work or looking to take a holiday. He continued: Our claims management technology enhances the value provided to our clients by using our intelligent systems to handle the more routine processes so our claims managers can focus on utilising their high-value skillsets and oversight. Short and sweet, we let machines do what theyre good at and humans do what theyre really good at. By combining AI and machine learning with automation and experienced human oversight, our claims management technology drives greater efficiency and effectiveness while eliminating a variety of billing errors, detecting potentially fraudulent activity and ensuring all charges align with benchmarked, reference-based pricing.
Detecting fraud through AI, machine learning and natural language processing
Digitalisation can also be a vanguard in the fight against travel insurance fraud and detection software is on the increase. According to Coalition Against Insurance Fraud, US carriers suffered a loss of $80 billion every year, with up to 10 per cent accounting for claims losses.
Insurance companies can harness mobile or cloud technology to gain access to real-time information in dealing with duplicate or inflated claims, insurance data inconsistencies, overpayments and other fact-checking to assess payouts.
Paris-based Shift Technology provides a solution that differs from traditional claim scoring by using probability analysis. It also provides users with actionable analytics that will red-flag suspicious claims.
The SaaS delivery model can connect up with existing operations. Shift claim that their software is 250 per cent better at fraud detection than the industry standard.
Travel insurance providers rely on huge amounts of unstructured data often in the form of pictures and scanned documents to determine the veracity of a claim.
Arlene Lebrn, Customer Success Team Leader LATAM at Shift Technology, told ITIJ: We have seen how quickly fraudsters are able to evolve during the pandemic. We saw an increase in phantom brokers offering Covid-19 policies. People are taking advantage of the reimbursement coverage.
Lebrn also reports incidents including travel rings operating in the US and Europe, who were inventing bogus claims.
To counteract this, Rob Morton, Head of Corporate Communications at Shift Technology, says: We are using AI and weve been doing that from the very beginning. In addition to machine learning, we are also using natural language processing, document and image analysis.
Shift Technologys Force system uses AI to help travel insurance fraud specialists better detect behaviour that is indicative of fraud. It sifts through documents and also applies analysis of the metadata associated with images. For example, the ability to recognise that a photograph of damaged luggage was taken before the damage was reported to have happened is a red flag that can alert the claims team to investigate further.
Parametric technology needs customer adoption
Automating claims has fundamentally changed the way claims are submitted and also how customers are paid out, and parametric insurance solutions like automatic flight delay payments are a fine example of this.
These solutions are very likely to happen, says James Page. But before it does, these solutions will need to be more widely embraced by the customer. Based on the examples weve seen so far, there hasnt yet been sufficient data to suggest that the benefits we could give parametrically are necessarily of value to the customer at the time of the event.
Currently, the majority of our claims are related to trip cancellation and trip interruption, which arent as easy to address through parametric solutions. These solutions will continue to evolve; we just need to determine where the value to the customer and the insurer come together, to warrant the necessary investment by the insurer.
Lost luggage is the bane of many travellers, and not a good start or end to a holiday or business trip. Smart Luggage has harnessed one of the latest uses of parametric technology to offer real-time technology for airline passengers who cannot locate their checked luggage upon arrival or departure. Its the brainchild of Just Travel Cover, which partnered with CPP Group UK to create the product. Customers upload a picture of their delayed luggage receipt and Smart Luggage starts a check for the missing checked luggage.
French-based travel insurance company Koala, a digital-first insurance company that creates white-label and embedded insurance solutions, has developed a delayed flight product. This parametric insurance coverage has fully digitalised the customer experience. In the event of a delay, the customer is proactively contacted and automatically compensated with a predefined lump sum.
Tracking all journeys in real-time (monitoring over 100,000 flights per day), Koala instantly informs passengers as disruption occurs and issues cash compensation on the spot, whatever the cause of the delay might be, says Ugo Weyl, CEO at Koala. Mostly what we do is build tailor-made insurance products based on what those clients tell us they need, Weyl adds. We then find underwriters for those policies, [which] we sell through the travel players.
Other variations the company has offered include reimbursing customers more and more money as a flight delay drags on. For instance, a 45-minute delay could mean a $45 reimbursement, while a 10-hour delay would qualify the consumer for a $600 payout. Koala is also working on specific insurance products for the unusual circumstances that travellers face in the pandemic era. For example, policies could protect those barred from boarding a flight because they fail a temperature screening.
The advantage of Covid is the survival of the fittest. Also, some travel insurance companies were more open to working with us, suggests Weyl. We were having conversations with them, having workshops with them and brainstorming solutions it made people consider other options.
Fast moving, agile, reactive not always words that have traditionally been associated with the travel insurance sector. Its all changed now though, and what we need is for customers to embrace this change and trust that the industry has invested sufficiently in their processes to allow for a smooth online claims process that will go some way to restoring faith in the value of travel insurance as a product.
Keeping standards high and services safe
Companies making use of these digital solutions must ensure compliance with standards and regulations around the world, which is no simple task. For consumers to have confidence in sharing their data, though, it is essential. Medical records and bank details shared online need to be safe. Spears from Global Excel spoke to this point: Operating within an increasingly digital economy, achieving independently verified ISO and SOC accreditations confirms that back-end systems meet the most rigorous international standards for administration, processing and security. This creates a base line from which we can offer fast, efficient online services, supported by human team members, whose experience serves to close any possible gaps during the assistance experience, as well as adding a touch of warmth.
As ever, while customers appreciate the speed of response from a robot, it cant replace the need for real-life interaction with a human who can empathise with a customers situation and offer support when they need it most. Lost luggage and flight delays can be simple to deal with, but when it comes to a sick child in a remote country with limited or basic medical care, then speaking to an experienced assistance coordinator is invaluable.
Smith concluded: We must remember that technology needs to be balanced by niche human skills, to ensure that claims are managed effectively, interventions are made at the right time and customers individual needs are met. And traditional skill management and knowledge transfer are critical in this respect.
Other automated processes, such as bespoke telephony and multi-currency payment technology, digital document signing and workflow management aids are also integral to effective claims management. But this provision needs to be constantly developed to drive further efficiencies in seamless communication, effective supplier management, global network integration, cost containment, information gathering and more.
ITIJ 253 | February 2022
Fiona Keating is a freelance journalist specialising in the travel and financial sectors.
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Artificial intelligence and claims automation for travel insurers - ITIJ