Reinventing Insurance Claims with Customer-centricity, Analytics, and Supply Chain Excellence

A major insurance company was underperforming its peers, particularly in its claims departments. Across its motor and property claims portfolio, InsuranceCo* had net loss ratios higher than market averages. High claims costs also dogged its personal injury division. Unsatisfied customers often cited poor communication and slow processes, among other complaints.

But we helped InsuranceCo completely reverse these trends within a year, using Agile methodologies to transform its claims organization. The changes simplified digital experiences for customers, gave managers more visibility and control, and empowered frontline workers with new tools and purpose. Automation, analytics, AI, and design thinking replaced the manual processes and legacy systems that had been holding InsuranceCo back.

The transformation allowed InsuranceCo to greatly reduce its indemnity costs by gaining better control over its supply chain—the partners that enable the repairs and other forms of insurance claim fulfillment. Today the company’s improved management of its partner relationships helps it continuously secure the best possible rates (a valuable asset in an inflationary economy).

With its new system in place, InsuranceCo immediately reduced its claims handling expenses and indemnity costs, with run-rate savings of roughly 4% in the second year of the transformation, rising to an expected 7% reduction in in the third year. Customer satisfaction climbed by an average of 20 Net Promoter Score℠ points across claims episodes, and employee engagement soared as well.

Planning phase: Focus on bold ambitions and customer centricity

The first phase of InsuranceCo’s claims transformation was to determine its full potential and build a roadmap for reaching it. From the outset, we encouraged InsuranceCo set a bold ambition, identifying the largest areas of value and a building a plan to capture them. This involved a top-down sizing of the opportunity, based on benchmarks and best practices, along with a bottom-up exploration of the initiatives that were possible for InsuranceCo’s claims practice.

We asked leaders of the company’s claims units to imagine a future in which new technology and practices helped InsuranceCo better serve its customers’ unmet needs. Workshops and data analysis helped to develop a detailed map of customer journeys, identifying the differing goals of various customer types and the obstacles each encountered in the claims process. We asked business-unit leaders to envision an ideal customer experience and to describe the back-end requirements that could support that vision.

These exercises created a unified understanding of the most important value levers across the life cycle of each claim, as well as the tools, teams, and practices required. This new clarity allowed InsuranceCo’s leaders to develop a set of 12 customer-centric transformation missions, and a series of Agile-inspired change initiatives to fulfill them.

In our experience, this kind of meticulous planning is critical to any transformation, ensuring that leaders have maximum buy-in, with clear goals and responsibilities for people.

Execution phase: coordinating an ambitious transformation

Armed with an inspiring customer vision, new ways of working, and clearly defined work structures, InsuranceCo was able to rapidly transform its claims operations, launching a series of coordinated initiatives prioritized according to their value potential.

Early initiatives delivered major short-term benefits that would self-fund the transformation, as well as significantly improve InsuranceCo’s claims performance over a three-year period. High-impact initiatives included:

• significantly increasing the proportion of claims filed online;
• segmenting and specializing claims advisors, improving claimant experience, employee engagement, and overall claims outcome;
• implementing automation, AI, and other digital solutions (a claims triaging decision engine, straight-through processing for simple claims, machine learning to improve estimation accuracy and process efficiency, etc.);
• implementing an automatic provider-allocation engine, to reward top-performing partner organizations;
• using detailed supply chain data to secure the best rates through a continuous and comprehensive portfolio review, and ensuring the right scope is defined and right rates are applied at a claims level; and
• nurturing a performance culture, creating tangible connections between working teams and InsuranceCo’s overall purpose, and aligning incentives to key drivers of performance for each role.

As each initiative took shape, success was defined in terms of outcomes. This relentless focus on value creation ensured transparency and accountability for every element of the transformation. The full alignment of the leadership at every level guaranteed there would be companywide support for the changes being implemented.

Results delivered

InsuranceCo’s transformation led to a significant reduction in its claims-handling expenses and indemnity costs. It also prepared the company for looming regulatory shifts that would soon require more rigor and control across its claims operations.

In addition to the run-rate savings and the improvements in customer satisfaction and employee engagement, the transformation contributed directly to three consecutive half-years in which InsuranceCo exceeded its earnings guidance and boosted its share price, opening a $4 billion valuation gap with its most direct competitor.