Inefficient claims handling processes could put $170B at risk, Accenture
Claim handling dissatisfaction could put $170 billion of global insurance premiums at risk in the next five years, according to Accenture’s Why AI in Insurance Claims and Underwriting?
The report is based on surveys from about 6,700 policyholders in 25 different countries, 120 claims executives in 12 countries and more than 900 underwriters who are based in the U.S. It includes information on how the industry is responding to market dynamics and pressures, as well as underwriting challenges and the integration of AI technologies.
About one-third, 31%, of claimants were not fully satisfied with their home and auto insurance claims-handling experiences over the last two years, and of those policyholders who were unsatisfied, 60% said settlement speed issues were a concern and 45% said issues with the closing process, according to the report. Additionally, nearly one-third, 30%, of claimants said they switched carriers in the past two years, and 47% said they were considering it. The policyholders who reported not being satisfied could represent up to $34 billion in premiums annually, or up to $170 billion over the next five years.
AI technologies are highlighted as something that could benefit the claims process and increase consumer satisfaction.
“AI is no longer a technology of the future, but an established capability that many insurance innovators are already putting to work to deliver better customer experiences and empower their workforce,” said Kenneth Saldanha, who leads Accenture’s Insurance industry group globally, in the press release.
About 80% of the claims executives surveyed said they think automation, AI and data analytics based on machine learning are valuable for flagging fraudulent claims, damage assessments and loss estimations, reserving, adjusting, processing optimization, and subrogation, according to the report.
While the potential benefits of AI in claims are clear, the adoption of the technologies is slow. Only about one-third, 35%, of claims executives said their organizations are using advanced technologies. However, nearly two-thirds, 65%, of insurance companies plan to invest $10 million or more in these technologies over the next three years, according to the claims executives surveyed.
“As humans and AI collaborate ever more closely in insurance, companies will be able to reshape how they operate, becoming more efficient, fluid and adaptive. Those that are already moving to leverage AI will be able to create sustained competitive advantage,” said Saldanha.
Additional findings to note include:
Nearly 40% of an underwriter’s time is spent on administrative and non-core, an annual efficiency loss of between $17 billion and $32 billion.60% of underwriters surveyed said that improvements could be made to the quality of their organizations’ processes.
Process inefficiencies in underwriting could potentially cost the industry another $160 billion by 2027.
