The Future of Claims  

Written by Julie Rodriguez Aldort, Partner, Butler Rubin Saltarelli & Boyd LLP   
[email protected]


Jake Acosta of EY presented insights on the future of claims.  Acosta explained that, in early 2016, EY conducted research to understand where claims operations are headed.  EY’s research included interviews with executives at commercial insurers, industry analysts, and FinTech leaders.  EY’s research revealed six key drivers of change in the industry. 


1.  Decreasing Claims Volumes


Acosta stated that, while claims frequency will continue to decrease in some lines, severity may increase in others.  Claims frequency is expected to decrease in part due to increased use of sensors for monitoring homes and businesses.  Auto claims frequency and severity are expected to continue declining as a result of improved driver training and vehicle safety, including driver assistance technology.  EY’s study suggested increased volatility of claims and a likely increase in severity in some product areas. 


2.  Severe Weather


Severe weather is expected to drive an increased frequency and localization of weather-related claims.  Acosta noted that there are not enough third-party vendors to outsource weather claims. Consequently, insurers are building specialized teams to quickly respond to major events, such as fire and hurricanes.  These teams are expected to provide better service and a faster response.  Technology is expected to assist with preparation for such events to reduce impact of the events and to more quickly respond.


3.  Sensor Revolution


Acosta explained that the increasing use of sensors in businesses and homes will reduce claims frequency and severity.  Sensors can be used to monitor for fire and flooding, permitting faster responses.  In cars, sensors could be used to auto report accidents to an insurer and record information about the accident. 


4.  Digital Disruption


The EY study showed that the insurance industry is being impacted by forces outside the industry, where customers are becoming accustomed to self-service.  Acosta noted that customers will be increasingly willing and able to allow the handling of less-complex claims through completely digital channels.  Acosta noted that insurers will be able to mine significant data to assist in evaluating risk. 


5.  Better Risk Management


Acosta explained that large businesses have become more proactive with improved risk management capabilities, with a greater focus on return from capital, including insurance arrangements.  Businesses are tracking claims incidents and have clearer insights into the costs of risks.  Acosta explained this is likely to drive a decrease in claims from these types of policyholders.


6. Modernized Technology


The EY research showed that robotic process automation (RPA) or programmable software is expected to handle simple claims, which will more often be settled automatically.  Acosta explained that technology will allow claims to be filtered for complexity and assigned accordingly.  For example, a claim for less than a certain threshold (e.g., $1,000), might be fully automated.  Future claims operations will be leaner and will consist of smaller, more specialized work forces. As simple claims become automated, only complex claims will be handled by humans.  Claims professionals of the future are expected to be more analytical, data driven, and collaborative.  Claims are expected to be handled by teams of people, with a reduction in the number of hand-offs between staff and departments.


Julie Rodriguez Aldort, [email protected]