Insurtech 2.0: Reinventing Claims & Payouts

The past decade has taught us that digitization in the insurance industry isn’t optional but critical for customer retention and growth. While insurtech pioneers have pushed the needle forward, insurtech 2.0 will need to harness the full potential of artificial intelligence (AI) and automation to ensure a claims experience like never before – seamless, fully end-to-end and in line with the digital age. Insurtech 2.0 allows for automated underwriting, pricing, claims, refunds and even the format and content of the terms and conditions. Essentially, it will be integral to better interaction and digital transformation success.

Claims assessments: before and after

Meet Joe. He uses his car to go to work and pick up his kids from school. One morning after dropping his children off, he has a collision with another car. Joe’s car will need to go to the garage, and he’ll require a claims review and insurance authorization for the substantial repairs.

In the past, Joe would’ve needed to fill in a paper claim form and send it back to his motor insurance provider via email or post. Next, he would’ve had to wait until the assessor came out to see the damage and provide their full report. Then there is a further internal review of the report by his provider and only then would he be given the go-ahead to book his car in for repairs. It’s a lengthy and manual process that could take anything from days to weeks.

Insurtech 2.0 revolutionizes this entire experience. By using an AI driven fully automated claims assessment and telematics, the motor insurance provider can track the driver’s activity, as well as the speed and location at the time of impact. This information could be used to assess the damage and trigger the claim process. Joe would provide photos of the damage via his preferred communications channel where AI then scrapes data and image recognition before assessing the claim. If his claim is approved, Joe would receive an instant payout and for added value, he could even be recommended to the nearest garage that’s already been pre-approved for the repairs of his car.

The power of insurtech 2.0 for traditional insurers

It’s easy to see which option a customer like Joe would prefer in this scenario. In fact, a recent Companjon pan-European consumer survey discovered that 63% of consumers view the ease of receiving automated and instant compensation as a compelling feature.

Parametric solutions are the building blocks of insurtech 2.0. Yet, many providers even beyond insurance, will still require a partnership with a disruptor who fully understands how to digitally transform processes and platforms. A partner like Companjon has all the technical capabilities to integrate, scale and digitize businesses, but it also has three differentiating factors that make it stand out:

1. Instant access to the ecosystem. With Companjon’s offering of embedded add-on, flexible, insurance, it’s possible to help drive conversion for a platform’s own products and fuel it’s ecosystem. For example, an entertainment company may own a theme park and a music streaming service. A family buys tickets for the theme park with add-on insurance, but bad weather results in the park being shut down for the day. The family is given the option of a refund or subscription to the streaming service as compensation. Considering it’s estimated that approximately 30% of global revenue pools will be generated via ecosystems by 2025, this allows businesses to unlock powerful cross-selling and upselling potential and in turn, positively impacts a company’s conversion and helps grow its top line. By incorporating a fully digital ecosystem, a company will significantly reduce or eliminate admin costs. This is especially true if a company minimizes relationship management costs by selecting an insurtech partner that represents a one-stop- shop that covers all their customers’ needs, benefiting the entire ecosystem.

2. Instant payouts. While digitization allows for automation and the elimination of manual processes, it also creates services that are designed around the customer. This means instant payouts—not three to seven working days, but immediate. Your customers are not left waiting, wondering if the claim is being processed or not. In some instances, depending on the add-on purchased, the customer will not even have to lodge a claim to receive their payout as it will be fully automated or 'touchless'­. For example, a family buys tickets for a music event with add-on insurance. The event is canceled due to unforeseen circumstances. The family will be refunded as soon as the event is canceled, without the need for further intervention or even a claim being submitted.

3. Increased customer interactions. The insurance industry has notoriously struggled to keep customers engaged. After a policy is purchased, both the customer and insurer have little reason to interact until a claim happens. When it happens, the claims experience is typically cumbersome, slow, and not built for strong interaction thus justifying customers’ lack of loyalty and positive experience toward insurance companies. Insurtech 2.0 drives up interactions by enhancing the claims experience for customers that is gamified, all digital and fully automated. This brings an opportunity for businesses to significantly increase much needed customer interaction and retention, and in a claims’ setting, increase the frequency as the products on offer will be designed digitally and for this purpose.

The value to the customer

Make no mistake about it, insurance is often seen as a grudge purchase for customers. However, insurtech products hold an advantage over traditional insurance to change this perception. Namely, due to these key factors:

  • Flexibility and value to the customer. Due to the specific types of coverage and the option of on-demand services that allow the customer to have full control, the customer finally feels as if they’re receiving real value for money and not a one-size-fits-all solution.
  • Speed of resolution. Claiming from insurance normally occurs after a stressful event. A customer doesn’t want to get lost in the internal bureaucracy shuffle when they most need you. Through digitization, they’re assured of faster resolution to their claims than ever before.
  • An increase in positive experiences. By integrating a fully digital end-to-end solution that completely cuts out the paper-based effort and long wait time for claims review, and where compensation is paid out instantly, the chances are greater that a customer will have a more positive experience with the business. Unlike before, the customer will be looking to engage and stick with businesses that not only commit to these benefits but can adapt to modern day digital behaviors and expectations. In turn this leads to brand loyalty and trust—something that seemed foreign in the insurance space for many decades.

The disruptors who entrench themselves into insurtech 2.0 from tapping into Internet of Things (IoT), AI, automated claims, and full product design for end-to-end digitization, will emerge to dominate the landscape, while the rest will unfortunately be left behind. Ensure that your business is on the right side of history because your customers will thank you for it.