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Perspectives

For Insurance Claims: Proof of Concept for Digital

2016-06-14


Claims organizations can use rapid prototyping to assess whether modern digital solutions deliver the desired benefits.

Claims organizations can use rapid prototyping to assess whether modern digital solutions deliver the desired benefits.


To get their share of limited innovation dollars, insurance claims organizations take a number and get in line – along with distribution, underwriting and policy services. 

Digital lets claims jump the queue. Cloud and “as-a-service” technologies offer claims organizations the opportunity for rapid deployment of new processes and solutions. 

The advantage is not only a low-risk path for sidestepping long lead times but also the chance to use low-cost proof of concepts to prove business benefits – and foster a culture of innovation and improvement that insurers need to thrive. 

Proof of Concept: An Opportunity to Test-Drive Digital Solutions

The opportunity starts with the preconfigured components that form the heart of digital claims solutions. The components can be set up and modified quickly and then rolled out as proofs of concept (PoC). Rather than risking significant investment in conventional, years-long initiatives with hoped-for benefits, claims organizations spend limited resources on solutions and determine with confidence whether they deliver the intended benefits. 

The term PoC is often used interchangeably with pilots, but they have very different uses, and the distinction is an important one for claims organizations. 

Pilot programs are a dry run for solutions that are well known to address the task at hand but will likely require some tweaking before full deployment. PoCs are more akin to a test drive. They explore whether new and emerging ideas deliver the intended business benefits. PoCs validate business value. 

For claims executives, PoCs represent opportunities to evaluate the business value of digital in a low-cost, controlled way using live data. The programs typically extend for as few as two months, or as many as six months or more. PoCs suit insurers’ risk-averse nature yet still provide an opportunity to drive change.  (Learn more about our approach to digital solution building by reading about our Cognizant Digital WorksTM Accelerator Methodology.)

Click or tap on figure 1 to explore Cognizant’s PoC framework.

Figure 1

How It Works

Take the example of an auto insurer interested in a customer self-service app for claims notification. The app holds great promise: It accepts customers’ uploaded photos and videos, freeing the organization to write estimates with no site visit by adjusters. 

A PoC lets the insurer determine whether the app’s potential pans out in real-world conditions. By conducting the PoC in one office location with a statistically valid sample size, the insurer can determine whether estimates written through use of the app match the accuracy of field inspections. Key questions can be answered: Did the app simplify the process for the customer while improving claim outcomes? What process changes will be needed if the app is rolled out across the company? 

Technologies that once seemed far off are now finding use by growing numbers of claims organizations. For example, advanced data assimilation technologies are setting up claims by extracting data from ACORD forms, the insurance industry’s standard means of exchanging information. Artificial intelligence is being used to write claim trend reports. Robotics is gathering missing policy data. Even the “sharing economy” has relevance for P&C insurers. (For a deeper dive, read our white paper The Sharing Economy: Implications for Property & Casualty Insurers.”)

The advances are here, but many claims executives are hesitant to move forward. It’s the classic Catch-22: claims teams need quantifiable benefits in order to implement the technology, but they can’t prove the value until the technology is in place. 

Looking Ahead: Commit to Trying New Ideas 

Because rapid prototyping and PoCs prove business value and foster a culture of innovation for claims organizations, they’re vital to insurers’ long-term success. It’s reasonable for insurers to have as many as four PoCs under way at any time. 

The efforts are most successful, however, when they occur as part of a larger effort to create business value by driving innovation through formalized processes, roles and responsibilities. Many claims organizations are already taking steps to formalize innovation. Some have appointed chief innovation officers.

The effort requires commitment to experimentation and allocation of resources.

For more insights, read about our Rapid Claims Innovation solution, and visit Cognizant’s Rapid Claims Innovation page. For more information, visit our Insurance business unit or contact ClaimsInnovation@Cognizant.com.

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For Insurance Claims: Proof of Concept for Digital