Understanding customer pain points has driven loads of innovation across the globe and across industries. Insurance should not be an exception. Insurance companies do, in fact, go out of their way to acquire customers and help them purchase policies to cover their risks. When it comes to claims however, the perception is that the customer is assumed to be committing fraud and they are made to jump through hoops to prove themselves innocent and get their due claim benefit. If insurance is to truly grow to cover a multitude of risks for the huge segment of the uninsured population that perception has to change.
In India, we see millennials entering the job markets who simply do not have the time or patience to fill out multiple reports, forms, stand in lines, wait in line or on the phone at long customer service queues. The insurance industry is going to have to change its image. Insurance should be a place for a customer to address their risks and lower their hassles, not the other way around.
We have talked to customers and heard horror stories. A claim that was rejected for the most trivial reasons, a benefit that was paid nine months after the claim was filed. This lapse of customer-centric service is taken for granted, everyone assumes that this is the way things have got to be. A pain point that isn’t even recognized is then the very best opportunity to make a huge difference.
A new generation of insurtech firms are using the latest in technology to make claims as painless as, say, returning shoes on Amazon. We begin with the assumption that almost all customers are making honest claims, and we strive to treat them in that way. If a cycle is stolen, for example, we simply ask for a Police Intimation Report (filed online) and a photo of the customer’s Aadhar card. That’s it. Claims can thus be approved and money sent within a few days.
Of course, there are still going to be cases of fraud. The question that is being addressed by new insurtech firms is: How to reduce fraud while meting out zero pain to the vast majority of honest customers?
Access to behavioural research has given us several insights. Take the example of Lemonade, a US-based startup that sells home insurance. Before filing of each claim, customers are asked to sign a “honesty pledge” and then asked to upload a video describing the incident. The theory is that this pledge will prime a customer towards greater honesty and reduce the tendency to inflate a claim amount. They also set the stage for reciprocal tit-for-tat honesty with their famous “Why I tied my hands” blog by their CEO Daniel Schreiber. By removing the possibility of profiting by rejecting more claims, he has invited customers to reciprocate with more trust and consequently, more honesty.
We can also reduce fraud, utilising cutting edge technology - harnessing artificial intelligence to detect unusual or irregular patterns in incoming claims. Customer data (given with their consent), facial recognition, credit score, consistency on social media, loan data can be used to weed out the fraudulent claims. Vast amounts of information, processed and vetted, is now available that can help pinpoint fraud. All this can be done behind the scenes, an interaction between insurance companies and actual fraudsters. There is no need at all for a normal customer to feel like she is under any scanner or suspicion. Filing for a claim should be a straightforward transaction, taking no more than a few minutes for a simple claim.
Technology and science can thus take the claims process, previously a source of frustration for customers, and make it remarkably convenient. As perceptions on the claims process change, that in turn will bring more customers to purchase insurance and cover their risks. A win-win for the industry as well as for the huge population segment that is financially vulnerable to all kinds of unfortunate incidents, big and small.
The author is the CoFounder and CEO, Toffee Insurance