Centuries-old claims management processes are undergoing rapid transformation, as dozens of startup insurance technology firms drum up a resounding variety of process enhancements to reduce carrier costs, improve insurer-client relations, and generate higher customer satisfaction and retention.
“People expect instant service,” said Robert Hartwig, an associate professor of finance at the University of South Carolina’s Darla Moore School of Business. “Carriers that fail to heed or fall behind their competitors in improving claims management are at risk of losing their customers to those insurers that do.”
Fortunately, U.S. carriers have an expanding array of digital technologies to choose from in transforming claims management, giving them the opportunity to reduce overall loss adjusting costs, which reached $61 billion in 2016, according to a recent report by Willis Towers Watson (WTW) and CB Insights on the InsurTech claims market (“Quarterly InsurTech Briefing Q2 2017,” July 2017, using SNL data). Globally, the figure is about $177 billion, WTW and CB Insights estimate, applying the U.S. LAE ratio of 12 percent to global premiums ($1.5 trillion, according to research from Munich Re).
Novel solutions are being developed at a breakneck pace, given the financial value of first-mover status—a good-sized share of the global property and casualty claims management market. Crawford estimates the outsourced P/C claims market to be roughly $16 billion globally, or only 9 percent of global LAE, the report notes.
“The claims experience represents a customer’s most meaningful interaction with their insurer and demonstrates the true value of the underlying insurance product,” the report says. “Historically, this hasn’t always been a positive experience.”
The startups are aimed at altering the status quo. We interviewed a half-dozen of the firms, each with an innovative (yet different) product designed to improve claims management. Here are their stories:
360Globalnet: Focusing on Policyholder Self-Service
360Globalnet began with a goal of overcoming the frustrations inherent in filing a claim. As many consumers and owners of small businesses will attest, the process is time-consuming and complicated, with far too many back-and-forth interactions.
In examining these issues, 360Globalnet decided to build its product with the customer in mind. “We enable self-service claims management capabilities for policyholders,” said Andrew Peet, the firm’s head of operations for the Americas.
Instead of a claimant picking up the phone and going through the traditional first notice of loss to the carrier, the firm emails or texts a link to the policyholder’s device of choice, which opens up a browser. “Using our app, they fill in a series of simple boxes instead of scrolling through endless screens,” Peet said.
As the claimant ticks off the boxes, this data is sent live over the Internet in a single stream to the claims adjuster, insurance carrier and agent. The app also guides the policyholder to photograph the damage and upload these images to the same parties. “On average, we’re able to reduce the time it takes to report the first notice of loss by two-thirds,” Peet said.
Once the loss is reported, the app routes the information to third-party contractors in specific ZIP codes, who compete in a reverse auction to take on the work of repairing the damaged house, car or business premises. “Once the claimant picks the contractor, the claim is filed, settled and paid within an average of 87 minutes,” Peet said.
360Globalnet’s solution is sold on an SaaS (Software as a Service) cloud subscription basis. The volume of processed claims determines the overall cost. The firm processes traditional personal lines and small commercial claims, as well as travel insurance and pet insurance claims. Its market runs the gamut from carriers and brokers to independent claims adjusters and reinsurers.
Schedule It: Making Work Easier for Adjusters
The inspiration for Schedule It struck in the aftermath of Superstorm Sandy. Rebecca Wheeling, an independent claims adjuster, was working at the time in Staten Island, which was hit hard by the disaster. She had been in the New York City borough for four months determining how much insurers should compensate claimants for their damaged homes.
“I was the fourth adjuster at this particular house,” she recalled. “The owner, a woman, was in a hotel room with her husband, two kids under the age of three and three dogs. They were physically, financially and emotionally drained.”
The previous claims adjusters had left the family in the lurch. “The first took photos but didn’t do the paperwork, the second said an engineer needed to inspect the house, and the third said the loss needed to go through the carrier’s staff adjuster,” said Wheeling. “I was there working cleanup.”
Wheeling wrapped up the claim in 30 minutes. The house had shifted off its foundation and was a total loss. “I told my husband, who is also an adjuster, we had to do something to make the process better,” she said.
That something was Schedule It. The couple developed a web-based tool that integrates the caseload sent to an independent adjuster by insurance carriers and then schedules each of the appointments on a Google or Outlook calendar. “In a catastrophe, the logistics and sheer volume of cases are overwhelming for adjusters,” said Wheeling, CEO and co-founder of Schedule It.
The solution schedules the adjuster’s appointments based on claim type and location, average inspection time, overall case volume, when the person starts the day, and when they need to be back in the office to do the paperwork. Among its other benefits, the tool is making a big dent in the time it takes for an adjuster assigned a claim to contact the policyholder.
“The average time right now is 56 hours; imagine the stress of someone enduring the worst day of their lives having to wait that long for the adjuster’s call,” Wheeling said. “Our ‘receive to contact’ time is 11 hours, on average.”
More than 180 carriers and 117 independent adjusting firms are customers of Schedule It, which launched in 2014. “We’re making the difference we had hoped to make,” Wheeling said.
Betterview: Seeing Is Believing
Dave Tobias grew up in the insurance business, working for his dad’s commercial loss inspection company since he was a teenager. Today, 45-year-old Research Specialists Inc. (RSI) employs more than 600 claim inspectors to assess the physical condition of commercial buildings. Three years ago, Tobias, who runs the business today, had an epiphany.
“The carriers kept coming to us wanting better information on commercial rooftops for underwriting and claims assessment,” he said. “We’d tried everything, including deploying painting poles with camera attachments, but we’d get maybe one or two blurry shots. We tried to get the inspectors to use ladders, but that’s dangerous, and in cities like Phoenix where it can be 120 degrees, it’s just not worth their time to climb up.”
Since insurers purchase the inspection reports, overlooking a pre-existing condition was not in the best interests of customers. That’s when the light bulb went off. “I’d heard about carriers testing drones for underwriting,” said Tobias. “I thought, ‘Why don’t we do the flying?’”
In 2014, he launched Betterview to do just that. The firm has assembled more than 4,000 drone pilots in its network to survey the rooftops of commercial buildings. “The carrier provides the address; we send the pilot, the drone and the software to do their thing; and then we provide the report for a fee,” Tobias said.
Alternatively, the carrier can license Betterview’s drones and software on a subscription basis. The software is integrated into drones from DJI Drones, which manufactures a wide variety of unmanned aerial vehicles, from mini-drones to much larger and more sophisticated drones that can travel to roofs in sub-zero temperatures. “The more they innovate, the better for us,” Tobias said.
Each drone takes two sets of images—at 150 feet to create an orthomosaic map (a grouping of overlapping images of a defined area that come together as a true-scale map) and at 5-8 feet to zero in on potential damage. The different heights also allow for enhanced 3-D visualization. “We’re able to capture on a very granular level every square inch of a roof,” Tobias said.
Betterview’s website states that its drones have inspected nearly 300 million square feet of rooftops. “We’ve got hundreds of drones right now surveying the damage caused by Hurricanes Harvey and Irma,” said Tobias. “We’re giving carriers better data to make better decisions, speeding up the claims process and reducing claims fraud.”
ViewSpection: App Snap Inspections
ViewSpection is another InsurTech startup with a unique value proposition, in its case putting the policyholder in the shoes of the home inspector. Such carrier-employed and third-party inspectors are tasked with assessing the integrity of a property prior to binding the insurance.
What’s wrong with this traditional procedure? “You’ve got some stranger walking around your home asking all sorts of questions, requiring that you take time off from work to give them a tour,” replied Jim Gardner, co-founder and CEO of ViewSpection. “Why do that when you don’t have to?”
Using the company’s app, a homeowner or businessowner snaps interior and exterior pictures while responding to a series of simple multiple-choice questions that “capture 80 percent of the 20 percent of issues that result in 80 percent of insured losses,” Gardner said. “The images and answers are then uploaded into a report that looks like something a professional inspector put together.”
“When a business or residential property is damaged, the adjuster now has a deeper set of data to analyze,” he said.
Insurance companies are the primary market. “Typically, a carrier would offer the tool to their agents, who would offer it to policyholders, who would upload the data to the claims adjuster,” said Gardner, a second-generation loss control specialist who designed the app, retaining a software development firm to build it.
ViewSpection was launched in early 2017 and funded by the Global Insurance Accelerator, an organization composed of insurance carriers that provide seed money, mentorship and other support to innovative InsurTech startups. “We’re in the contract phase right now with several carriers of all sizes across the country,” Gardner said.
In the meantime, the firm is developing a second-generation app embedded with artificial intelligence and image recognition. The app will instantly identify pre-existing defects in the images sent by policyholders for underwriting purposes and actual damage for claims purposes, removing the need for people to assess these issues.
Snapsheet: Making Car Repair Estimates a Snap
Brad Weisberg was in a pretty bad auto accident in Los Angeles in 2010. Fortunately, no one was injured. He took the damaged vehicle from one body shop to another, collecting various estimates to get the best price. Unfortunately, the estimates differed widely on what needed to be fixed and what it would cost. “There’s got to be a better way to do this,” Weisberg thought.
The contemplation led to the development of Bodyshop Bids, a consumer-focused app that collects estimates from repair shops based on photographic evidence of the damage. Business did not take off as Weisberg had hoped. “Brad realized pretty quickly that consumers weren’t a great market, since insurance carriers managed the repair process for 90 percent of damaged autos,” said Andy Cohen, chief operating officer of Snapsheet.
Weisberg rebranded the Bodyshop Bids business as Snapsheet, which markets the app to auto insurers, which in turn provide the app to policyholders. The app guides the claimant to take specific pictures of the damaged vehicle that are uploaded to Snapsheet’s platform, which appraises the damages. If the policyholder elects to have the car repaired, the data is sent to an assortment of local repair facilities that are members of Snapsheet’s network of 35,000 licensed shops.
What’s unique is that the shops don’t estimate the damage. Snapsheet’s more than 200 licensed appraisers do it, instead. “Policyholders simply pick the one they prefer to work with,” Cohen said.
More than 400,000 appraisals for more than 50 different insurance carriers have been conducted in the past year, resulting in more efficient customer service, he said. “Adjusters that used to drive around appraising more than 30 cars a day can stay at their homes and review the case files online,” he added. “We’re taking the friction out of what used to be a pretty miserable experience.”
Tractable: Sifting Through Outrageous Estimates
Like Snapsheet, Tractable is focused on car repairs, albeit with a different value proposition. Launched by a team of machine learning researchers in 2015, Tractable applies artificial intelligence and image recognition to photos of damaged vehicles to check the accuracy of repair estimates. “With the right algorithms and data, computers can perform these tasks better than a human,” commented Alex Dalyac, co-founder and CEO of Tractable.
Up until recent times, people visually determined the damage to a physical asset—the case with a mechanic surveying a smashed car. Using image recognition software and sophisticated algorithms, the damage can be assessed without human involvement. “Based on the pictorial data, the algorithms can estimate the cost of parts and labor, resulting in more accurate and faster repair estimates,” Dalyac said.
Tractable owns the world’s largest dataset of images of damaged cars along with their repair estimates, he maintained. Each year, this data increases by billions of images, which are uploaded by appraisers, adjusters and body shops to an insurer’s claims management system. “Our carrier customers send the repair estimates to us in the cloud,” said Dalyac. “It takes just a second for an insurer to have a pair of ‘expert eyes’ on every single claim.”
Up next is consumer self-service, whereby the owner of a damaged vehicle takes photos based on a web link sent by Tractable, thus eliminating the repair shop from the estimating process. Said Dalyac, “We’re in a proof-of-concept stage right now.”
Tip of the Iceberg
As these various technology solutions illustrate, much excitement surrounds the opportunity to improve the life cycle of claims management functions. Dozens of other InsurTech startups are similarly targeting process enhancements that reduce carrier costs and increase administrative efficiency. Best of all, policyholders can expect a future in which the claims check arrives on time.