The forced evolution to future-proof the disability insurance industry

With the necessary shifts in organizational willingness to implement and adopt the right advanced technologies, carriers can achieve unprecedented levels of customer experience and business performance.

The forced evolution to future-proof the disability insurance industry

Advanced technology and automation enables companies to improve business performance and the customer experience

The COVID-19 pandemic has been particularly challenging for the insurance industry, with profits falling 15% in 2020 from 2019. Moreover, the experience revealed significant inadequacies in traditional disability insurance claims processes and core technology systems in responding to consumer demand for digital processes and a sudden surge in volume. While the pandemic has been challenging, the silver lining is that it has also helped carriers identify exactly where they need to strengthen processes to meet the needs and wants of the modern market. With the necessary shifts in organizational willingness to implement and adopt the right advanced technologies, carriers can achieve unprecedented levels of customer experience and business performance.

The impact of the pandemic on insurance carriers

During the first months of the COVID-19 pandemic in 2020, 22 million Americans lost their jobs. This equated to more than double the entire job losses during the Great Recession of 2007-09. Two-thirds of these job losses lasted for more than two months. This extraordinary event led to millions of households across the United States receiving unemployment insurance benefits. For certain insurance organizations, long-term disability claims skyrocketed during this period due to COVID-19. The Integrated Benefits Institute found that these type of claims increased 30% in 2020.

The sudden surge in claims stretched insurance providers beyond what they were capable of processing within normal turnaround times, as they did not have the workforce to meet such a massive spike in demand. Adding new employees was difficult for many insurers whose legacy systems were difficult and time consuming to learn, especially when new and existing employees were working remotely. To compound this staffing limitation, as the market recovered insurance providers had to deal with significant, unpredictable employee absences because of COVID-related illnesses among their own workforce, while simultaneously recruiting new employees in a fiercely competitive marketplace.

Receiving an enormous number of claims on a daily basis, many carriers had to act quickly to change to a remote office setting. Moving to virtual offices amid lockdowns and restrictions also meant a quick adjustment to a new way of working, with adaptations to how staff used technology off-site, ensuring that they remained productive and compliant with regulations. These developments resulted in customers facing frustrating wait times for their claims to be processed. Additionally, some carriers lacked the digital tools to improve employee productivity to handle the increased workload.

Other carriers could not go fully remote due to legacy systems. These companies were presented with their own unique challenges such as complying with changing safety regulations. Additional issues also arose as employees or vendors located in parts of the world experiencing shutdowns became unavailable. Each of these issues impacted the customer experience due to longer times for customer queries to get resolved or claims to be processed.

Receiving an enormous number of claims on a daily basis, many carriers had to act quickly to change to a remote office setting.

As a result, they can reduce the dollar cost of claims to customers, while enhancing customer health by helping claimants more quickly regain well-being and return to work faster.

These experiences revealed the need for a complete transformation of the customer experience, presenting an opportunity for carriers to future-proof operations against market changes and other events that could generate a sudden shift in the production demand.

The evolving nature of workplace absence

During the pandemic, what initially began as a rise in standard employee absences of less than five working days snowballed into short-term employees out of work of up to four weeks. In turn, these short-term absences swelled in number into long-term time periods due to the lingering effects of COVID-19 on some people. Insurers had limited responses to these developments due to the speed and scale at which they spread across their customer bases. As a result, insurers took on unusually high levels of claims payments, which—with the right liability control strategy in place— could have been significantly less while improving customer health and well-being.

Reducing liability with a stronger, proactive management approach

By focusing on returning people to health and work using a strategic approach to liability control, disability insurance carriers can get straight to the root of the problem before it grows beyond the initial employee absences from work. By effectively addressing the issues at the source— before an absence becomes a short-term disability claim, and in turn, before short term turns into long term--organizations can drastically reduce their period of liability. As a result, they can reduce the dollar cost of claims to customers, while enhancing customer health by helping claimants more quickly regain well-being and return to work faster. By integrating the right liability control strategy, carriers also can support their workforce by better managing individual customer cases and minimizing the likelihood of demand surges that overwhelm their operational structure and create a claims backlog.

Claims transformation starts with the quality of the application. Accordingly, better proactive management to reduce claims liability requires a marked improvement in insurance agent quality management, as well as providing the right technology-led workflow and training. This approach positions carriers to better understand the efficiency and effectiveness of their claims process and identify how, by using the right technology and collaborating across departments, they can generate faster, more precise outcomes. Such a quality management program—led by automating processes wherever possible—would reduce friction for customers and carriers at all stages of the claims process by relying on datadriven documentation processes and leveraging technology to automate as much of the customer journey as possible.

Intelligent document processing solutions can play a significant role in achieving these goals by ensuring that incoming data from applications, loss control inspections (P&C) or an attending physician statement (Life), and other sources is properly captured and turned into structured data. Using solutions such as Amazon Textract, Comprehend, Indico Data, Friendly Health Technologies or Capgemini’s Cognitive Document Processing allows an insurer to not only capture documents electronically, but to transform manual processes into automated processes to enable better, data-driven outcomes long before the claims process even starts.

If the claims process is done correctly, the outcome can be that claimants feel empowered with a platform that is user friendly and has all the information they need readily accessible. At the same time, carrier employees are better enabled to manage their workflow thanks to the automation of time-consuming steps such as documentation processing, follow ups, and correspondence. This allows them to focus on higher-value aspects of their roles, improving the customer experience and generating greater overall performance—and often greater employee satisfaction. At the same time, technologies such as machine learning, data analytics, and automation can significantly reduce instances of human error during the claims process. For instance, using technology in the documentation gathering, review, and indexing process can assist with identifying possible cases of suspicious behavior and other anti-fraud measures.

Transforming the customer experience for optimal carrier performance

The pandemic changed how customers expect to interact with almost every company in almost every industry, including insurance. People now want to engage with their insurer using the digital channel of their choosing in a way that is seamless, personalized, and simple. A report from Deloitte found that over two-thirds of insurers were planning on digitally transforming to become more efficient and improve customer satisfaction. Insurance organizations must create a clear path forward for implementing the technologies and processes to plug gaps and transform their claims procedures to meet the demands of a modern and changing marketplace by rethinking customer journeys and drive performance through an advanced multi-channel model.

Rethinking the customer journey

Traditionally, carriers have two primary periods of communication with their customer: when they purchase their policy and when they need to make a claim. Carriers cannot afford for either of these touchpoints to create a negative customer experience. The top reason customers switch insurers is because they feel underappreciated or have a poor experience, according to a report from Vonage. This is why carriers must prevent their customers from facing inordinately long wait times such as those that arose during the pandemic, as they created frustration, stress, and a negative impression. By training agents to better manage individual claimant cases in a more personalized manner, carriers can improve the customer experience and help get people back to work sooner, which is good for all stakeholders involved: employers, claimants, and the carriers.

Driving performance with an advanced, multi-channel, technology-led model

To achieve a better customer experience, carriers should use a multi-channel approach augmented by the integration of the right technologies in artificial intelligence, advanced machine learning, deep data analytics, efficient data management, and intelligent documentation processing. This process allows carriers to truly understand their customers and anticipate their needs, make better strategic decisions, and improve the customer experience in a granular, hyper-personalized manner.

Analyzing customer data with AI and machine learning can identify customer preferences, helping carriers understand the right channel, time, and message that different individuals prefer. This information can be used to enable personalization at scale for customer communications. Intelligent document processing significantly decreases the time required for intaking various types of paperwork and makes data quickly available, leading to faster claim processing times and happier customers.

Executed correctly, these technology integrations can displace time-consuming, onerous, and expensive manual processes while implementing the ability to scale to meet a sudden surge in claim volumes. To digitally transform operations to futureproof against a repeat of the impact of the pandemic, insurance carriers should: improve the customer experience by integrating more low- and no-touch processes; use data to monitor workforce performance; and do away with disparate systems and data siloes, as well as outdated methods that no longer fit in a modern and changing marketplace.

Another issue for insurance organizations is talent, specifically a carrier’s ability to retain and attract employees.

In this highly competitive marketplace for talent, carriers should approach the continued dearth in talent by automating as much of their operations as possible. This is especially true for insurance underwriters who are reaching retirement age. There is a lack of suitable replacements joining the workforce, not only in the United States but globally. By using the right advanced technologies in cloud, AI, data science, and hyper automation, carriers can mitigate the impact of these employee recruitment and retention challenges.

With a focus on customer centricity at scale across the customer base, carriers can truly transform their operational model. This can act as a powerful differentiator in the marketplace, helping organizations gain a competitive edge over both traditional and digitally native insurtech providers. However, making such changes successfully requires a culture reset and a willingness to embrace and enact change.

This openness to change may not come easily to an industry that has traditionally been cautious about veering from familiar processes that have served them well for years or even decades. However, it is essential for carriers to enable the right technology and processing strategies to flourish. The alternative is to allow competitors to seize the technology-driven initiative, forcing a change-averse carrier to play catch-up when it is already too late.

In order to succeed, insurers must fully embrace the lessons taught by the COVID-19 pandemic. They must use innovative technology to enable their workforce to adapt to spikes or declines in demand. They must take a proactive approach to liability by leveraging data and automation, and they must provide a seamless digital experience for their customers. By integrating these learnings into their strategy, insurers will not only increase their resilience in the face of the next unexpected event, but will be well positioned to grow their business.

Written by:

Lawrence Krasner
Vice President and Client Executive