Why automating FNOL may retain insurance customers

A single bad transaction or interaction can cost a business dearly in terms of the ability to retain customers. With precious few opportunities to interact directly with customers or policyholders (think premium or claims payments), insurance companies are especially susceptible to this fact. And, in an industry where net new customers are like the proverbial white whale, creating happy, loyal customers is critically important.

Speaking of claims payments, manual first notice of loss (FNOL) processes continue to result in inaccurate data, slow turnaround times, and customer churn. Ensuring claims are captured, processed, and settled quickly and efficiently is key to holding on to customers who might otherwise be enticed by more agile providers.  

Insurers today face competition from every corner, not just the nimble, innovative-looking insurtechs. In fact, recent Accenture research shows that 27% of consumers are just as likely to buy insurance from big tech companies, like Amazon and Google, and 24% from big retailers, as from actual risk-bearing insurers. Traditional insurers wanting to stay competitive must look to boost efficiencies, and this means moving away from the manual process-heavy ways of the past.  

Getting it right

Claims, and FNOL in particular, are typically the first interaction initiated by an insured party after a policy is bound, and it holds the key to how customers view the insurer. However, for today’s insurers, manual FNOL processes are wildly problematic in a digital-first world.  

One of the biggest challenges created by manual FNOL processes rooted in legacy systems is an inability to handle unstructured and variable data. Each claim, for example, has elements unique to the event. Even standardized documentation – which remains depressingly uncommon in the industry – has elements which require at least a small amount of manual/human interpretation, and this can lead to slower processing and inevitable mistakes.  

Further, and even more so than other industries, insurance remains at the mercy of an increasingly unpredictable world. A rapidly shifting climate and unstable socio-political environment have led to spikes in claim volumes and placed stress on the entire claim lifecycle. While unavoidable, the increase in claim volumes results in slower response times, which is not optimal for customers depending on claim payments and service providers to get back on the road, have a roof replaced, or other damage repaired. What’s more, as high-value claims increase, under-resourced claim departments can’t always pay enough attention to high-volume, low-value claims, creating an environment ripe for fraudulent submissions.

The implications of reliance on manual FNOL processes go far beyond just fraud losses. Inaccurate data at the start of the claim process also impacts reporting and can hurt how insurers provide for reserve requirements. More importantly, the back and forth necessary to correct bad data can significantly slow the resolution of claims or even result in claims being erroneously denied, leaving customers frustrated at best, and ready to search for a new insurer at worst.  

Humans are fallible

Automating the intake of unstructured data results in big improvements in efficiency. By automating the capture and extraction of information related to the FNOL, insurers can increase straight-thru-processing (STP) rates for claims. Automation also reduces the time required to review and input information – often into multiple systems – and, by moving away from manual processes, claims can increasingly be managed without adjuster involvement.  

It is important to remember that while other pieces of the claims ecosystem, such as third-party adjusters, special investigative units (SIUs), and managed service providers, may not be completely automated, a move toward more digital processes and an increase in process automation will allow the entire end-to-end claims process to move faster. By digitizing the information, insurers can automate the triage, assignment, and coverage checks in the claims process, which have all been historical bottlenecks in the overall claims process.

Time and again, properly automated FNOL speeds up overall claims processes resulting in a better experience for the customer, often with more favorable outcomes as a result of accurate data. And while there is no doubt that what happens at the beginning of the FNOL process sets the tone for the entire claims process, there can be no mistake that today’s consumers are much more interested in claims being settled quickly and painlessly above any other consideration, with the possible exception of actual policy or premium pricing.  

Improving the claim process by automating FNOL creates an environment conducive to rapid settlement, which is what customers want.