Bad claims experiences could jeopardize up to $170 billion in global insurance premiums by 2027, according to new research from Accenture

Bad claims experiences could jeopardize up to $170 billion in global insurance premiums by 2027, according to new research from Accenture


Artificial intelligence technologies such as machine learning and data analytics can transform the claims value chain and improve customer outcomes

NEW YORK, LONDON and HONG KONG; Aug 3, 2022 – Up to $170 billion in insurance premiums could be at risk over the next five years due to poor claims experience, with underwriting inefficiencies potentially costing the industry an additional $160 billion over the same period, according to a new report from Accenture (NYSE: ACN).

The report, Why AI in insurance claims and underwriting?”, is based on surveys of more than 6,700 policyholders in 25 countries; more than 120 claim managers in 12 countries; and more than 900 US-based insurers. It examines how the insurance industry is responding to the latest market dynamics, pressure from new competitors, challenges insurers face and the growing demand for seamless customer experiences – and how artificial intelligence (AI) technologies can be applied to satisfy and retain customers and transform the acceptance function.

The report found that over the past two years, a third (31%) of claimants were not completely satisfied with their claims handling experiences for home and auto insurance. Of this 31%, six in 10 (60%) mentioned settlement speed problems and 45% mentioned closing process problems.

Dissatisfaction with the claims experience is a major reason for customers to switch insurers. Nearly a third (30%) of disgruntled claimants said they had switched providers in the past two years, and a further 47% said they would consider doing so. Overall, the consumers who reported not being completely satisfied could represent up to $34 billion in premiums annually, or up to $170 billion over the next five years.

The report states that AI technologies can improve the claims process. For example, four in five (79%) of claim managers surveyed said they believe that automation, AI and data analytics powered by machine learning can deliver value across the entire claims value chain – from flagging fraudulent claims to damage assessment and loss estimation. , customization, processing optimization and subrogation. However, adoption of these technologies has been slow to date, with only about a third (35%) of claim managers reporting that their organizations are advanced in using these technologies. However, this could change as nearly two-thirds (65%) of insurance companies plan to invest $10 million or more in these technologies over the next three years, prioritizing AI-based applications and automation technologies, the company said. surveyed claim managers.

The report also found that insurers could reduce insurance operating costs by adopting AI technologies, which could deliver up to $160 billion in efficiency gains by 2027. As insurers currently struggle with outdated systems and inefficient processes, the study found that up to 40% of their time is spent on non-core and administrative activities — an annual efficiency loss of between $17 billion and $32 billion. More than half (60%) of insurers surveyed believe there is room for improvement in the quality of their organization’s processes and tools.

“AI is no longer a technology of the future, but an established skill that many insurance innovators are already putting to work to deliver better customer experiences and empower their workforce,” said Kenneth Saldanha, who leads Accenture’s global insurance group. “As humans and AI work more closely together in insurance, companies will be able to reshape the way they work, becoming more efficient, flexible and adaptive. Those who are already adopting AI will be able to create sustainable competitive advantage.”

Read the full report, “Why AI in insurance claims and underwriting??” to understand how to power AI at scale in insurance.

Methodology

The report is based on four insurance claims and underwriting studies, analyzing the experiences of both customers and employees and how insurers are responding:

  • A survey of 6,754 policyholders in 25 countries about their most recent experience filing claims for auto and property insurance;
  • A survey of 128 insurance claims directors in 12 countries about the strategies of their claims organizations;
  • A survey of 434 US-based property and casualty insurance insurers conducted in conjunction with The Institutes, an insurance education provider; and
  • A survey of 500 US-based life insurance companies regarding technology adoption.

To arrive at the $170 billion premium-at-risk figure, Accenture used modeling combined with research data from 6,700 insurance claims, analyzing the global personal auto and property insurance market to determine the annual premium volume and percentage of people who claim to be calculated annually. This was used in conjunction with consumer survey data on the percentage of people who said they were not completely satisfied with their claim experience and those who said they changed carriers as a result of their dissatisfaction or changed carriers over the course of the journey. time will do. next five years. Accenture used a similar approach to calculate the $160 billion efficiency gain in the insurance figure — taking into account personal, commercial and annual premium volumes and costs spent insuring employees to determine an insurance expense ratio. Efficiency gains were calculated at 0.5-1 percentage point of the expense ratio, which equates to between $9 billion and $15 billion worldwide per year.

About Accenture

Accenture is a global professional services company with industry-leading capabilities in digital, cloud and security. Combining unparalleled experience and specialized skills across more than 40 industries, we provide Strategy and Consulting, Technology and Operations services and Accenture Song – all powered by the world’s largest network of Advanced Technology and Intelligent Operations centers. Every day, our 710,000 people deliver on the promise of technology and human ingenuity, serving customers in more than 120 countries. We embrace the power of change to create value and shared success for our customers, people, shareholders, partners and communities. Visit us at accenture.com.

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Victoria Ancell
Accenture
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