This article appears in the June 2022 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.
Carriers are investing billions into technology, but more work could be done to digitize life insurance claims.
“The insurance industry is still lagging behind [others] from a service standpoint in terms of how they deliver services digitally, particularly on the claims side,” said David Mamane, partner and financial services senior analyst with RSM Canada LLP in Toronto.
Digitizing the claims process “is a major area of investment” for both large and mid-tier life and health insurers, said David Kerr, partner, industry solutions, with Deloitte Consulting LLP in Kitchener, Ont.
“There are still improvements to be made in what I call ‘higher-touch’ claims, like disability, travel medical and true life insurance,” Kerr said. “[But] in terms of once-and-done payments, for things like prescription drugs or a simple medical treatment or a dentist’s visit, [digitized claims are] pretty much standard now.”
Carriers receive far fewer “pure life” claims than other types of claims, Kerr said, so there is “less of a business case” to digitize life insurance claims than with other types of insurance products.
Some lifecos may not have a digital process at all for pure life claims. Instead, the claim is often made initially through a telephone call, Mamane said, “and then passed to a variety of different parties inside the carrier to validate that death and the various details to arrange payment.”
Mamane added that clients may have questions as they encounter those different parties, and “there’s often a lack of services around that,” he said. For example, some beneficiaries may have questions regarding the tax implications of a death benefit payment.
“The insurance carriers aren’t always providing that type of financial advisory support and that can absolutely be provided and augmented through a digital experience,” Mamane said.
For example, lifecos could advise beneficiaries on what they should do after filing a death benefit claim and what type of advice they should be seeking.
Insurers also could use more self-service capabilities that allow claimants to easily get answers to basic questions, wrote Mark Breading, partner with Boston-based Strategy Meets Action, in a 2017 blog post called The life insurance claims experience: room for improvement.
“These self-service capabilities should have click-to-chat and click-to-call options so the individual can get more help if needed,” Breading wrote. He advised life insurers to move their claims process to “a more omni-channel environment, so that information and conversations can be easily transferred [among] channels, eliminating the need for people to repeat information or start the process all over again every time they talk to someone new.”
The death claims process “is still not as streamlined as or augmented through digital as it could be,” Mamane said.
A spokesperson with Manulife Financial Corp. said the insurer has invested more than $850 million since 2018 in digital enhancements. Today, 63% of Manulife’s technology applications are cloud-based and the insurer’s rate of straight-through claims processing (i.e., requiring no manual intervention) is 82%.
“The gold standard for [straight-through processing] is to have every claim process completely digitized without manual labour or intervention, leading to a shorter claim and settlement process for the customer and a much better experience,” the spokesperson said.
A spokesperson for Canada Life Assurance Co. said the insurer “believe[s] in increased automation and digital solutions, which are essential to future growth to help ensure the financial well-being of millions of Canadians,” but did not elaborate on their progress in this area.
Regarding digitization, insurers should “take inspiration from other industries,” Kerr advised. Amazon and Netflix are just two examples of vendors outside insurance that provide good user experiences. “They are learning about your wants and needs and preferences as you go along,” Kerr said.