While insurance carriers are warming to the idea of automating the claims process—and even possibly touchless claims handling—auto insurance policyholders are still wary of do-it-yourself approaches that don’t give them access to empathetic humans.

Those customers who have filed claims recently, however, worry less about automated processing, according to survey results recently published by LexisNexis Risk Solutions in a February report titled, “2019 Future of Claims Study.”

The findings, which also point to differences in comfort levels by age of customer, illustrate why carriers need to “tailor this messaging” as the promote the benefits of automated process, wrote the report’s authors, Bill Brower, Vice President, Product Management, Claims for LexisNexis and Todd Fannin, Senior Director, Auto Insurance, Claims.

LexisNexis separately surveyed 24 senior-level auto insurance executives from the top 50 auto insurance carriers, and 1,755 auto insurance purchasers between the ages of 25 and 65.

The results all point to a careful balance between claims automation and empathy.

On the customer side, more than half of customers with no recent claims said they worried that they might do something wrong during an automated claims process (57 percent) or that system glitches could negatively impact their claim payout (55 percent). For those who had claims, the percentage of claimants who feared doing something wrong or that the automated system would mess things up for them dipped below 50 percent; 48 percent worried about their own mistakes and 46 percent worried about the technology.

Both groups also listed “the absence of someone to guide them” and “absence of human oversight to check for process accuracy” among their top four concerns. But again, less than half of those who had recently had claims had these concerns while more than half of claimless insureds were worried about these issues.

Analyzing the satisfaction levels of insureds with claims, the survey found that customer perceptions about the amount of empathy coming from the carrier had the greatest impact on satisfaction. While 88 percent of those who sensed “a lot of empathy” were “very satisfied” with the claims process, only 31 percent who sensed “a little” empathy, and 10 percent who felt no compassion were similarly satisfied.

Other factors that had at least 80 percent of customers “very satisfied” with claim handling were experiencing a one-day claims process, having only one conversation with the carrier and talking to only one carrier representative. Add a second person on the carrier side and only two-thirds are “very satisfied.” Four or more and the percentage drops down to 38 percent.

LexisNexis also found that while most consumers said they are “fairly comfortable” with the idea automated claims processing, only 17 are “very comfortable.” Even millennials, who have higher comfort levels, are turned off by the large number of questions that carriers ask at first notice of loss.

Analyzing generational differences in consumer attitudes toward self-service options, LexisNexis found that only 36 percent of millennials and 33 percent of Gen Xers said they prefer self-service FNOL submission options, according to survey findings. For other claim activities—submitting photos and documents, for example—preference for self-service moves up over 40 percent. For all claim activities, Baby Boomers are the least likely to say they prefer self-service, with only 23 percent preferring to submit FNOLs on their own and 31 percent preferring to submit photos and documents with self-service options.

All generations are most comfortable with checking claim and payment status through self-service options.

Efficiencies, Lower Costs Convince Carriers

On the carrier side, the report distinguishes between four levels of automation ranging from traditional adjuster processing to touchless claims, in which no insurance carrier employee is involved in the claims process at all.

In the touchless scenario, “technology is used to report the claim, capture damage or invoices, run a system audit and communicate with the customer electronically. If the claim meets approved criteria, the claim is automatically paid without human intervention.”

Of the 24 carriers surveyed by LexisNexis, all still used traditional claims handling and none use touchless. But 19 carriers, or 79 percent of those surveyed, are “open to” or “considering” touchless approaches—up from 10 carriers, or 42 percent, two years ago.

Asked about a slightly lower level of automation—virtual claims handling—16 carriers, or 66 percent, are already using the approach. Seven other carriers said they are considering it. Only one carrier, in fact, responded that virtual is not a consideration, meaning that 95 percent of the carriers are warming up to or using virtual.

LexisNexis defines virtual claims handling as “a process or workflow in which either a customer or vendor captures damage photos or streaming video that allow a claims adjuster to conduct the damage assessment remotely.” In other words, there is no insurance carrier employee involved in conducting a physical, in-person inspection of the vehicle or property.

Carriers that are already using some form of claims automation report clear cost reduction and efficiency benefits, including:

• Between one and four manual touches removed from the claims process.
• Reduced processing times ranging from one day to two weeks.
• Up to 50 percent reduction in processing cost.
• Somewhere between three-times and 10-times more cases processed per adjuster.

Separate LexisNexis research (the 2018 LexisNexis Risk Solutions Claims Trends Internal Study) reveals that carriers using a data prefill solution at FNOL have seen a 14 percent improvement in days-to-pay for bodily injury claims, a 10 percent reduction in severity as compared to the industry, and a 15 percent improvement in their shopping-rate ratio as compared to the industry.

Putting The Consumer and Carrier Results Together

“While automation is improving the claims experience for customers in many respects, they’re not yet clamoring for further digitization in significant numbers,” the report concludes. But as the population of customers shifts to more in the younger generations, a greater percentage of customers will want automated options for some aspects of the claims process.

As they move forward, “it is imperative that carriers balance automation with the desire for human interaction,” the reports’ authors advise. “Automation can even be used to help carriers deliver this empathy by freeing representatives to be available when a customer needs personal attention, and by providing the information needed to help representatives customize their interaction and personalize the claims process.”

In a statement about the report, Brower said that as carriers seek this automation-human balance, they must also “ensure that the claims process is simple, and that the customer is not sending the same information multiple times.”

“Carriers need to find ways to have a human touch” when customers want that, but the ability to “interact with a representative when they want and need it, while maintaining customer retention as an important metric in their evaluation of automation effectiveness moving forward,” Brower continued.

The report recommends that carriers offer access a live representative or chat at the right time in the process and that responses be tailored and directed to easing consumer fears and promoting the customer benefits of automated processing.