Insurers are quickly entering a new era of claims management—one supported by rapid technological advancements, increased connectivity and mobility, and growing availability of data. These new developments provide visibility into the claims process, the changing preferences of customers, and the expectations of a new generation of employees who demand a more digital experience while preserving a human touch where it matters.
McKinsey spoke to Elixabete “Eli” Larrea, a partner in the Boston office, about these trends and what insurers can do to stay on top of them.
McKinsey: What influences are inspiring the revolution of the claims process?
Eli Larrea: Our recent article “Claims 2030: Embracing the future” discusses how technology and changing customer preferences have spurred this shift in claims. By 2030, every touchpoint in the claims journey, starting even before an incident occurs, will be supported by a mix of technology and human touch that seamlessly interacts to expedite the process and deliver a better experience across the board.
But progressing toward this 2030 vision is even more imperative amid inflation and broader macroeconomic uncertainty, supply chain challenges, rising social inflation in the United States, and persistent talent pressures. While insurers have advanced their adoption of next-generation capabilities in digital engagement, automation, AI, and advanced analytics, acceleration will be critical to effectively navigate trends in the broader environment. Many cultural and structural barriers, which previously impeded innovation, have been broken, creating an opportunity for carriers to rethink their holistic claims operations and develop the claims workforce of the future. Interestingly, the claims revolution is not solely about a fully automated journey: it is about placing human interaction where it matters and supporting claims handlers to become more efficient and effective. Redesigning the process to give choice to customers and deliver a truly distinctive human interaction enabled by the latest technologies is the revolution.
McKinsey: How should carriers use technology to support this revolution?
Eli Larrea: To prepare for a claims future, insurers should concentrate on four areas.
First, we expect people to remain essential to the claims process and, thanks to the use of digital enablers and AI, work more productively and effectively. Leading carriers will master the art of digitally enabled human touch, which will partner AI with claims handlers to help orchestrate and provide technical adjudication or decision support based on the complexity of the claim.
Second, preventing claims before they occur will fundamentally change the relationship between insurers and customers from one focused on accidents or losses to one with a shared interest in loss prevention. This shift also positions insurers to transition from a risk transfer model to a risk mitigation model with AI-enabled loss prevention. For example, cars could be automatically rerouted to avoid an icy bridge in wintertime.
Third, consumer expectations are rising across the board as companies apart from the insurance industry offer better, faster, and more-customized experiences as part of their standard offerings. Leading insurers will redefine the claims experience to seamlessly anticipate and meet customers’ needs and create a personalized claims experience. For example, they could offer customizable and real-time claim status tracking and progress.
Finally, the number of traditional claims roles will decrease, and the skills required for the role will evolve. The claims handler position could split into two: the digitally enabled customer adviser for simple claims and the digitally enabled complex-claim handler for claims that automation cannot yet handle. Insurers could also introduce new roles, such as a claims technology product owner and a claims-prevention specialist. This will require reimagining claims organizations as we know them now.
Additionally, the pace of innovation will be critical. Take, for example, the new opportunities that generative AI is opening up for the claims experience. While this technology is not yet mature and there are important risks to consider, there is one undeniable fact: these technologies are here and are shaping our day to day already. Claims leaders must explore these tools in partnership with cross-functional leaders in their organizations and proactively consider opportunities to use the technology thoughtfully.
McKinsey: What can companies do internally to ensure that their workforce can deliver on their claims goals?
Eli Larrea: Introducing a multifunctional claims innovation and improvement team can help insurance carriers maintain focus and prioritization on aspirational efforts in parallel with business-as-usual activities. This team can also focus on the evolution of claims as technologies and customer expectations change.
Additionally, given the headwinds we are facing in the claims industry, this is no longer just a CCO [chief claims officer] problem. If we truly want to shift from evolutionary to revolutionary thinking, we will need a claims aspiration linked directly to delivering on the enterprise strategic goals; investment in the right resources and at the right pace; support and partnership from technology, legal, underwriting, and products; and talent organizations within each carrier to work across silos and deliver the best possible solution to our customers. Revolution also means internal collaboration.
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Elixabete Larrea is a partner in McKinsey’s Boston office.
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