By 2025, through telemetrics, 25 percent of cars involved in collisions will be carrying the information needed to establish negligence for the accident, and half the time insurers will receive first notice of the loss when the accident occurs.
These were among the many predictions made by Timothy D. Christ, MBA, who presented a one-hour webinar on March 24 for the Insurance Council of Texas. Christ has more than 20 years of experience with claims and is a noted speaker and author. He has served as an advisor to several insurers and technology companies and has a track record of investigating complex losses on behalf of insurers. Currently, Christ serves as managing partner of San Antonio-based LeadFire Business Consulting. Christ’s topic was the IoT (Internet of Things) and the Future of Claims.
Christ’s predictions were based on the Future of Claims study completed by Lexis-Nexis in 2021. Other predictions: 80 percent of all auto claims will be processed virtually; 60 percent of claims will be triaged by automation; total loss processing will go from weeks to days, and more than 80 percent of claims payments will be made digitally.
Telemetrics aboard vehicles will tell the insurer what a car was doing right before an accident. Because cars are getting more expensive to repair, said Christ, reducing processing time and associated costs becomes important.
Early intervention by the insurer can also reduce the potential for litigation. Nowadays, first notice of loss after a vehicle collision often comes from an attorney, said Christ. IoT can offer insurers the opportunity to get to the third party claimant first, he said.
Data and notification systems are significant in homeowners losses as well. Christ cited the example of a homeowner getting notice from his water service provider of a water leak. A homeowner can mitigate the loss by responding quickly to the leak. The sooner the insured gets the information, the lower the loss is likely to be. Christ speculated that insurers could and should reduce premium for clients who can prove real time monitoring of their water consumption. “Notification from systems will increase prevention of losses,” said Christ.
The Internet of Things provides the means for insurers to monitor their insureds’ behaviors. No equipment should be run to failure, Christ said. The insurer of the equipment can learn through IoT interconnectivity whether the equipment is being properly maintained. “Premiums can be adjusted on the fly,” said Christ. Policyholders who fail to maintain the equipment create a higher likelihood of loss, he said. Knowing that his insurer is monitoring maintenance behavior can trigger a policyholder to engage in proactive maintenance, said Christ.
This information can lead not only to loss prevention but also improve underwriting. “How an insured takes care of stuff can influence underwriting and setting premium,” said Christ. Insurers who price a risk more accurately build a less volatile book, he said.
Already there are programs on the market that automate a great deal of the claims process, relieving the insured and the claims adjuster of several of the steps. This relief benefits the policyholder who is already going through a traumatic event and provides efficiency for the adjuster who is likely to be handling as many as 200 claim files at the same time.
For the claimant, automation can remove the insured’s need to get quotes; it can make payments, reduce contacts with agent and carrier, schedule inspections, and eliminate the frustration of phone trees and waiting on hold.
For the adjuster, automation reduces the number of unanswered contact attempts, generates a claim file diary, establishes estimates, and creates other efficiencies. These efficiencies give the adjuster more time to help the policyholder through his issue. “The human touch is useful in managing claim events,” said Christ. Automation gives the adjuster more time to provide the human touch, he said.
During Covid, the industry lost lots of adjusters, said Christ. During the lull in claims through 2020’s pandemic influenced inactivity, many experienced adjusters took retirement. Turnover among adjusters went from 10 percent to nearly twice that, said Christ. Now that new claims are back up to pre-Covid levels, there are fewer trained people.
The situation has caused some insurers to rethink their claims strategy. By studying data for the last 10 or 15 years, one insurer determined that there is overhead cost for every hour a claim is open. On a pilot basis, the insurer gave some of the work (taking pictures, etc.) of resolving the claim to the insured, then overpaid every claim by about six percent. The company found bottom line savings and shortcut litigation potential.
Attracting millennials into adjusting claims is tough, said Christ. In the past, it took years to achieve process excellence in adjusting claims, he said. “Millennials want to be competent in 60 days,” said Christ. Automated systems can help make this generation competent more quickly.
Christ foresees many areas where the Internet of Things will bring changes to the insurance industry. He recommended that participants in the webinar view a video produced by Forensic Architecture to see how available sources of information can be combined to identify the cause of a disaster.
The 12-minute video uses camera footage and animation to identify the cause of the August 2020 explosion at the port of Beirut, Lebanon, which killed more than 200 people, injured more than 6,500 and leveled a large part of the city. Because the explosion occurred in a government owned facility and the government prohibited access, adjusters had real obstacles to investigating the claim on behalf of insured tenants. According to Christ, there are fascinating technology tools that can be used to investigate claims. View the video at https://forensic-architecture.org/investigation/beirut-port-explosion.