Radical changes are coming our way in restoration. It is time to start a dialog about not only the changes that companies can make, but also next-generation characteristics a successful restoration company.
This requires looking not only into insurance and restoration trends, but also advances in the areas of business and technology. Many dynamic elements are at work, with an endpoint that is unknown. What is known, however, is the fact that things are going to look different than they do today. Throughout the course of this series I will explore some of the root causes of the challenges, as well as the resulting impacts and considerations for excelling in an uncertain environment.
Claims management has become quite confusing with such ongoing issues that need to addressed as internally managed vendor programs, third-party administrators, working with the restoration franchises, specialty vendors, full service restoration contractors and more. The challenge comes with undertaking the challenge of trying to unwrap the contributing factors to these challenges and then set a coarse to succeed in this ever-changing world. Making predictions about claims management will be difficult given the fact that the insurance world appears to be unclear on their own direction.
Setting the table for uncertainty, as well as a need for insurance companies to adapt their strategy. One of the biggest changes to insurance is the development of new technology. Things like mobile communication, artificial intelligence, predictive analytics, and cloud computing may seem futuristic, but are actually playing a role in insurance and claims management today. When we understand how these issues impact and drive the claims settlement, we can then be more aware of how we can support this process.
The insurance world of yesterday was fairly simple. Property owners would drive to their corner agent and purchase needed coverage from the same company that had been writing their policies for years—and perhaps, for that matter, even had their parent’s coverage prior. Today, people can sit at their computer or smart phone and pull up quotes from dozens of companies instantaneously. Analytics allow these companies to quickly determine if this is a desired client for the company and offer a competitive or expensive policy, thus speeding the underwriting process. Most every mainline insurance company allows policy holders to purchase through agents or direct through their website or ‘apps.’ A new wave of virtual insurance companies is hitting the market using analytics to screen clients, A.I. (artificially intelligence) computers to fill the sales channels and even the claims adjusting process. These new companies will offer a different insurance price point and also service level. Many of today’s younger clients are more comfortable communicating with and through computers, which will help facilitate this process of automation.
The claims side of technology is nearly dramatic as the sales side. Insurance companies realize that there are substantial cost savings through utilizing technology. The first thing to understand is that nearly 80% of an insurance company’s costs are associated with claims fulfillment. When these companies need to make financial adjustments to their business, it is natural to start reviewing settlement costs from first notice of loss through conclusion. Technology will have a huge impact in all areas of this process. Companies realize they need to take action to speed cycle time, reduce fraud, improve service, eliminate redundant processes and cut claims administrative time. These adjustments will have direct impacts on profitability in their business.
The future of claims relies on tying the communication systems, starting with first notice of loss. The customer could conceivably connect with the insurance company on their smart phone, showing impacted areas and verifying actual damage. This limits fraud and also starts the documentation process. This process will improve the subrogation success as well due to more timely and detailed documentation. The in-house adjuster or even artificial intelligence systems are able to properly dispatch services, adjusters or even administer payments.
Rather than drawing any conclusions, the intention instead is to lay the groundwork for influences in the insurance world that will impact restoration. I hope that you are starting to see trends that are developing that will be pushed through to contractors. In future columns, I will explore such topics as labor issues, program expectations and contractor impacts.