As part of InsureTech Connect 2022, the world’s largest gathering of insurance leaders and innovators, EvolutionIQ convened a panel of industry experts to discuss the ROI that claims guidance software delivers.
Adam Fisher, Chief Data Officer, Sedgwick, underscored the impact that claims guidance can have even in firms such as his that have long been leaders in investing in new technologies and driving efficiencies in claims management.
- “By focusing ourselves on claims adjudication for over 50 years, I think we’ve built pure operational capacity to handle claims extremely well and to look out for the cost and the duration of those claims,” Adam told the audience assembled in Las Vegas. “Essentially, we’re paying those claims with our clients’ money – so it takes a considerable amount of trust. So we’ve expanded those operational efficiencies – I like to think as much as we can. It’s certainly never done, but I think that claims guidance and AI – those are bigger opportunities to be able to continue to impact the outcomes. For us, we have two stakeholders. Our primary stakeholders are our clients and of course we want to reduce the cost of claims and we look very closely at the duration of claims because there’s a direct relationship between how long a claim is open and how much it will ultimately cost. But our biggest constituent is the claimant themselves. We want to offer the best care, the best outcome, and having a guidance system to tell us where a claim is going to go, it actually solves two problems. It helps figure out how to get the right care at the right time at the right price for that claimant and then it also reduces the duration and the cost of the claim.”
- Adam added that you want to “be able to tell as early as you possibly can, ‘Where could this claim go? What evidence within this growing and emerging file indicates that it could go in these specific directions?’ And then it’s about orchestration. We [now] have all of the ancillary [claim] services that are available in a kind of package approach, but they are not as powerful until you can properly line them up and really feel confident about how you send claims in one direction – or even hand them back and forth [between adjusters teams]. Today, that process is certainly not as automated as it could be and that’s where I see guidance … constantly monitoring the claim. Every little note that happens. Every piece of mail that shows up could change the trajectory of that claim and is a new opportunity for orchestration.”
John Kim, former President and Chief Investment Officer, New York Life and currently CEO & Founder, Brewer Lane Ventures, threw a spotlight on how claims guidance is sparking a widespread transformation.
- “We are at the inflection point where 10 years from now we will not recognize our industry,” John told the attendees. “With big data and AI-enabled analytics, 10 years from now – whether it’s an underwriting function or within the claims function – if you do not adopt the capabilities of the EvolutionIQ’s and others here [at ITC] it will potentially be an existential threat. I believe that at the core. The next 10 years is a road that needs to be walked – and perhaps run – by the entire insurance industry.”
- He noted that, “probably as an industry, we’ve spent more time than we should have on underwriting” and that “claims is arguably the largest, sort of ‘final domain’ if you will, of value creation.” Claims guidance, he said, will be an “absolute necessity” for all insurance organizations across all major product lines. “If you can actually show your ability to manage your loss ratio for your book, guess what? You’ve got a book that, depending on the duration of that particular product, is 7x to 10x [ROI]. If you can convince your chief actuary and your chief financial officer of the fact that you can extract 3 or 4 percentage points of value on your current year loss ratio, you can essentially take down the reserve over time, which is an amazingly powerful value creation that you can literally drop to the bottom line… Reliance Standard is one of the first EvolutionIQ customers and when I saw the ROI that Reliance has enjoyed over a fairly short period of time, I was just blown away.”
Roger Arnemann, CPO & COO of P&C software leader Guidewire Analytics, observed how insurance leaders are not only seeing claims as a new opportunity for advanced technology, but they are changing their mindset in terms of how they ultimately adopt new technologies in general.
- “The last decade has been hugely focused on innovation in insurtechs around the underwriting side,” Roger said. “And you almost have a bit of overcrowding going on there. And so people are starting to turn around and say, ‘wait a second. There are four companies trying to solve Problem X on the underwriting side, but if you actually look at where we can move the needle the most, the claims side is a huge opportunity.’ And so I think there’s an evolution to understanding how you move beyond just expense. How do you move to fundamentally impact the claim itself? That’s a huge opportunity and so we’re really excited to be working with our customers who are trying to do things like that and to support you guys [EvolutionIQ] in doing the same thing.”
- He added: “I think the technology and what’s possible has evolved much more than the decision making paradigm and the orientation. So a lot of times, for very good reasons, in insurance there is a lot of conservatism, saying, ‘Am I 100 percent sure that this tool or this application is going to work, and if I’m not then I shouldn’t purchase it.’ Back in the time when it took two years to implement a tool and all kinds of effort to make it work, that was probably a reasonable decision. But one of the things that I think is creating much more optionality now – and the opportunity to change that orientation – is now you can get up and running faster….The people who are going to really break out from the pack, particularly on the claims side, are the ones that change their orientation.”
Watch the full presentation followed by the panel discussion
Read more about EvolutionIQ at ITC 2022 in our other articles