Making claims management more sustainable
Sustainability is a business imperative for insurers. With the global non-life insurance industry totalling $3.9trn in premiums in 2021, insurers are well positioned to play a leading role in driving the transition of economies to Net Zero. Major insurers have incorporated sustainability into their overall strategies, primarily focusing on green operations and sustainable investments. However, insurers can go a step further by focusing on claims management.
There are numerous opportunities for sustainability across claims management, an area of the insurance value chain that is less frequently explored.
Sustainable claims enable an insurer to progress its sustainability goals and enhance its reputation and brand with investors, customers, and broader stakeholders. These sustainable claims demonstrate an insurer’s commitment to stewardship.
So, just how much impact can insurers deliver through sustainable claims?
Consider the global property and motor insurance market across personal and commercial lines. They account for ~$1.3trn in premiums. Insurers manage an extensive supply chain of repair houses, component providers and servicing companies across multiple sectors that support claims resolution. In this way, insurers can directly influence and drive sustainability across the claims value chain.
Three ways to unlock opportunity across the insurance claims value chain
Use intelligent segmentation and decisioning during First Notification of Loss (FNOL)
Triaging and segmentation of claims during FNOL determine the end-to-end claims journey, customer experience, and settlement duration. Decisions made at this stage will govern how sustainable a claim can be.
Insurers can screen and identify claims such as property and specific motor vehicle claims for which there are sustainable solutions available. Intelligent segmentation can triage claims for repair and settlement using drones or image recognition from photos to view and document damage remotely, limiting the need for travel. Once this is done, loss adjusters can identify repair centres and suppliers who use more sustainable solutions. The process saves time and energy for loss adjusters and better enables them to direct help to high-impact areas in the case of a storm or other regional crisis.
Another opportunity for intelligent decisioning makes use of fraud detection rules and analytics. This can prevent unnecessary investigations, pay-outs, and non-value activities, saving further resources. By reducing investigations into fraudulent claims, insurance companies further reduce travel and related energy consumption.
Incorporate sustainable solutions during the reinstatement stage
During the reinstatement stage, insurers reimburse customers or repair damages that have occurred to a property, vehicle or other asset covered by their insurance policy. Multiple parties, including claims handlers, surveyors, and engineers, are involved, especially if the claim is large or complex.
At this stage, insurers can adopt greener and more sustainable options such as remote inspection and settlement,and using sustainable materials and solutions. Aviva is an insurance company in Ireland that provides motor vehicle insurance customers access to local garages that deliver sustainable products and services. Insurers can also evaluate if an asset can be repaired rather than replaced. Where replacement is unavoidable, are options such as ‘green parts,’ eco-friendly appliances or ‘salvaged undamaged’ components available for use?
For claims where claimants decide to replace damaged property independently, insurers can support them in finding sustainable alternatives. Insurers can incentivise customers with schemes such as policy discounts and financial assistance or loans to help customers adopt green alternatives during this stage. However, insurers will need to consider the implications on the claims handling costs.
Identify and embed sustainability post-claims settlement
Opportunities to make claims sustainable beyond settlement include salvaging undamaged components from property for reuse and recycling, remediation of sites and disposal of hazardous wastes and vehicles as per environmental standards, and educating and supporting customers’ transition to more sustainable alternatives. Allianz UK work with recycling company SYNETIQ to source green parts from damaged vehicles to be used for subsequent vehicle repairs.
Insurers can also incorporate technologies such as telematics in vehicles and connected devices to help customers monitor their property, thus preventing potential future damage and claims events.
After claims settlement, claims data and intelligence can be used to refine future product development, underwriting and claims segmentation.
Making sustainable claims a reality
A claim is a ‘moment of truth’ for insurance customers. Speed and quality of resolution, and customer experience significantly impact customer retention and lifetime value. While incorporating sustainability, insurers must balance initiatives to support customer experience while limiting additional costs.
To support sustainable claims and boost adoption, insurers can:
- make sustainability an integral part of the claims strategy and align to the broader organisational sustainability vision
- review the claims value chain to identify sustainability opportunities. Specifically, get visibility into the claims supply chain. Support the network with sustainability initiatives and adopt a standards-based approach for using contractors and suppliers
- digitalise the claims management journey to enable virtual claims settlement and streamline processes to comply with sustainability standards
- invest in data and analytics to support claims segmentation and triaging, inform underwriting and product development, and develop Environmental, Social and Governance (ESG) reporting (e.g., the proportion of claims managed sustainably, reduction in carbon footprint, etc.) to track progress
Embedding sustainability across the claims value chain is no easy task, but the need for this shift continues to grow as customers and regulators alike call for action. The insurers that make a start now and invest in sustainable solutions stand to enhance their brand and drive distinctiveness in the market.