What are Low-complexity Claims? And Why Carriers Must Find the Best Way to Handle Them.
Not all claims are created equal. Adjusters will be the first to tell you that some claims will be opened and closed within a matter of days, whereas other claims will linger and develop complex hiccups over the course of weeks or even months. Because of the wide variety of claims that exist, insurance carriers should work to divide these claims into categories and adjust their approach to each respective claim category to maximize handler efficiency. But what criteria should be used to define different types of claims?
We can look to claims leaders to see what methods are on the cutting edge. In 2012, Lloyd’s of London partnered with DOCOsoft to create different classifications of property claims; together they found that Lloyd’s had “three principal categories: complex, standard, and volume”. The concept is relatively straight-forward; claims with involved coverage investigations and high repair costs qualify as complex claims, and they would require an experienced adjuster to handle the file. Meanwhile, claims with no significant coverage issues and a lower repair cost were considered volume claims, and could be passed off to a third-party claims handling solution. While exact dollar thresholds will vary depending on the carrier and market, Wes Jones, COO of HOMEE offers that most property insurance carriers in the U.S. would consider claims costing less than $25,000 to be eligible to be classified as low-complexity claims.
Lloyd’s new categorization system enabled them to seek a new type of claims partner: a Volume Claims Service, or VCS. Partnering with a VCS meant that Lloyd’s could relieve their adjusters of the burden of dealing with a high volume of simple claims, while also increasing their customers’ satisfaction as the VCS handled the volume claims faster than Lloyd’s own adjusters did.
Of course, despite its prodigious size and legacy as a premium insurance carrier, Lloyd’s is not the only insurance company to come to this conclusion.
Some firms are trying to get ahead of the next innovation impacting low-complexity claims handling. It’s been posed that AI and machine learning could be used to further cut out the need for adjusters by fully automating the claims process. Alice Underwood with WTW outlined the different forms of claims automation, explaining that process automation could streamline certain aspects of the claims handling workflow, while smart automation could have AI recommending relevant case law and similar recently closed claims to assist adjusters in making better, faster decisions.
Over time, the sentiment surrounding low-complexity claims has swelled as the consensus by industry professionals solidified; even if full automation isn’t in the immediate future for everyone, solutions for low-complexity claims are needed for carriers to stay agile and competitive in the growing insurance space. Per Tim Thomas at Genpact, “adjusters should never handle low-complexity claims”. According to Thomas, enhancing the FNOL process can allow policyholders to self-report claims, while also uploading photos to the insurer. At the end of the process, payment can be made automatically as well, and this streamlined approach to claims can result in lower cycle times and increased customer satisfaction.
The solutions described above might not fit for every carrier. Just as all claims are unique, so are carriers, and thus, their needs differ. However, in the same way that claims can be classified and handled in broader categories, so too can carrier needs be categorized and handled in different ways to guarantee success.
Some carriers do not have software in place that could allow them to review policyholder photos and convert them into estimates in an automated fashion. Other carriers may not have a preferred network of professionals who can complete the repairs needed in a timely manner, thus delaying claim closures. Even more carriers may have the capacity to deal with low-volume claims in-house, but their capacity is tested whenever a CAT event occurs. It is the duty of the carrier to evaluate itself, and the needs of its insureds, so it can devise the best solution possible for its position in the market.
If you represent a carrier with a high volume of low-complexity claims and are seeking a tech-enabled direct repair solution to assist in digitizing the claims handling process, HOMEE may be the solution that’s best for you.