Building the 2023 InsureTech Roadmap – Five Things to Consider in Claims
For most insurance companies, the start of the new year mandates building a roadmap (strategic plan) exploring new technology that can solve problems or streamline their claims process and achieve financial goals in the coming year. It is an exciting time to be in the insurance industry in that there is a sense of urgency conveyed by executives about artificial intelligence (A.I.), machine learning (M.L.), and natural language processing (N.L.P.) When you assemble your strategic planning team, there are five things to consider where A.I. can significantly lead to successful outcomes.
1. The rising severity of personal and commercial vehicle claims.
The National Highway Traffic Safety Administration (NHTSA) recently released its comprehensive report for 2019. The costs of motor vehicle accidents are rising and cost $340 billion. Approximately 36,500 people were killed, 4.5 million were injured, and 23 million vehicles were damaged.[1] During the Pandemic, the number of cars on our highways decreased, but the severity of accidents increased (mainly due to speed). In addition, supply chain issues complicated the repairs of vehicles, and healthcare costs increased.
2. The rising number of claims litigated and runaway or nuclear verdicts.
A study from the American Transportation Research Institute published on June 23, 2020, revealed a 1,000% increase in jury verdicts involving truck crashes. The average verdict award for a lawsuit above $1 million involving a truck in an accident increased from $2.3 million to $22.3 million over nine years.[2] Three key trends were identified as the rise in costs:
- Shifting jury attitudes on how companies need to take all precautions no matter how practical or the cost
- Increased attorney representation
- Increasingly aggressive plaintiff’s bar tactics (analytics)
3. Climate change and the rising severity of natural disaster claims.
$100 billion yearly is the new norm in the property and casualty (P&C) industry for weather-related claims. In 2022, weather-related disaster claims exceeded $120 billion. The cost of earthquakes, dust storms, droughts, and hurricanes worldwide exceeded $270 billion.[3] 2023 is off to a quick start with flooding and mudslides in California due to heavy rains. Our changing weather patterns have caused turmoil in the P&C industry because the hurricanes are more severe; flooding has occurred in non-designated flood zones, extreme drought conditions in the Western United States, and the never-ending wildfire danger.
4. The skills and knowledge gap in the claim profession.
Insurance executives are starting to worry about the institutional knowledge in their claim teams as older workers retire. The new and younger claim workforce may be temporary, as it is a struggle to recruit and retain people to enter the insurance profession for a career. The Pandemic spawned the “Great Resignation.” The remote workforce is here to stay, but insurance executives must develop better ways to fill the gaps between the new claim examiner and the experienced veteran.
5. The multi-line claim.
Since people have started working from home, workers’ compensation carriers are now dealing with a new scenario of work-related injuries. What happens if your employee trips or slips on a staircase in their home while walking into their workspace? How will you handle the complex commercial vehicle claim that also involves a workers’ compensation or disability claim? Do not forget the cyber security breaches, mainly if your worker utilizes unsecured networks in public places or at home.
Incorporate Machine Learning and Natural Language Processing in Your 2023 Roadmap
The Rule of Three is a simple and concise guide for preparing the 2023 Roadmap.
- State the Problem.
- Explore the Possibilities.
- Execute.
Machine learning with N.L.P. can quickly help you bridge the institutional knowledge gap and reduce and control claim severity. Predictive analytics can reveal insights into your claims allowing the claim examiner to control the severity and provide positive outcomes for your insured and third-party clients. For example, imagine receiving alerts that a claim will likely fall into litigation before an attorney is involved and files a lawsuit. These outcomes driven by artificial intelligence can quickly be realized with a proper Roadmap.
