Why Automation Alone Won’t Restore Claims’ Reputation

In the wake of mounting pressure on the insurance industry, a recent poll has shed light on the growing demand for change within the sector. Insurance professionals have voiced their concerns, calling for increased transparency and automation in claims processes.

This push for transformation comes amidst rising claims costs, persistent inefficiencies in existing systems, and a surge in customer complaints. However, these findings merely scratch the surface of a deeply entrenched problem.

"These issues have long stifled insurance. So why hasn't the industry responded? Surely we are running out of excuses? The reality is the root causes of these problems run very deep, and automation alone won't overcome them," says Rory Yates.

"There are numerous reasons why the industry has consistently failed to address the issues, no matter how much money it throws at the problem. From underinvestment in claims transformations, treating claims as an isolated function, to patch fixes atop of legacy systems—there’s been little appetite to engage in the root-and-branch review that’s needed," he continues.

There's a significant missed opportunity for insurers. By adopting the right approach, they can resolve existing challenges and unlock substantial untapped value within their claims capabilities.

"First and foremost, claims should not operate in a vacuum. It's a symbiotic relationship with the overall customer experience. It impacts policy creation and general adaptability as claims always need to keep pace with other changes across the insurance lifecycle.

"Second, claims success and its efficiencies also impact pricing and supply chain management, which are all critical to overall transformation success.

"Third, and most importantly, claims isn’t just the moment of truth for insurance. Its systems, processes, and business function design are all emblematic of how the wider organisation operates."

A customer-centric model

nsurance is all about being there for customers when life takes an unexpected turn. It’s in these critical moments that trust is either built or lost completely. The key to building and maintaining that trust lies in deeply understanding the customer - their unique circumstances, communication preferences, and behaviours. By connecting with their needs, we can provide the support they rely on when it matters most.

"Built over the relationship cycle and using systems of intelligence, this knowledge helps guide a successful claims journey. It relies on having all the options needed to support the customer, from mobile (app) experiences to ensuring someone calls us when this will result in the best outcome."

"Combine all of this with a vastly increased ability to address future proposition opportunities in risk mitigation, policy updates that keep pace with changing lives and risks, as well as the ability to expand ecosystems that support areas like fraud detection or repair network management. These are all critical to the future success of insurance, and claims sit at the heart of it all."

This illustrates an important point: If you can’t effectively manage claims or adapt the claims experience to tackle challenges head-on, delivering new propositions becomes nearly impossible. 

"No claims management function is an island, or at least it shouldn’t be. Yet all too often when I visit processing centers, the function tends to sit in isolation. And you know what? It obviously still feels that way to the customer.

"The automation trap in insurance is no different. The first problem is that we always risk fixing something that shouldn’t exist in the first place. When you try to fix a bad behaviour, you just end up creating more complexity. Far better to eliminate the bad behaviour and build a process that actually works."

For example, if today you're extracting data into an XML format from one system and manually entering it into another, true automation isn't just about having the new "receiving" system ingest the XML. Real success comes when the entire process flows seamlessly from machine to machine, with no manual intervention required.

This level of automation represents a quantum leap in efficiency and accuracy, dramatically reducing the potential for human error and freeing up valuable human resources for more strategic tasks. It enables real-time data processing and analysis, allowing insurers to make more informed decisions at unprecedented speeds. The power of effective automation lies not just in its ability to streamline individual tasks, but in its capacity to transform entire business processes, creating a more agile and responsive organisation.

The "swivel chair"

"Nigel Walsh, Google Cloud's head of global insurance and friend of mine has aptly coined the term "swivel chair problem" to describe the inefficient process where insurance professionals must navigate multiple systems to complete a single task."

"Where he sees people having to swivel their chair to operate between ten or more multiple systems to fulfil individual tasks in insurance. When the entire process is automated, you free up all the human capital to focus on getting to the outcome of applying that data in the first place. Usually, you’re doing it to enhance claims processes through available data, making claims handling, customer experience and successful outcomes better in the process.

"This is where the focus should be. When applied more holistically this also makes real-time data alignment in claims processes far more likely. That’s when people in claims functions start thinking about things like - “now I have a real-time view of repair quotes and costs I can more easily and proactively guide customers towards the right outcome.”

This relationship orchestration focus is all about increasing your customer knowledge and ability to act on it. And it’s the critical missing component.
A UK client provides a good example of the power of insurance claims built around a customer core that’s data fluid and able to adapt to any channel and circumstance.

"Since re-engineering the business around the customer and expanding the partner ecosystem, the percentage of customer contact via Live Chat increased from 12% in January 2023 to 53% in June 2024, with telephony reducing from 88% to 47%. This is indicative of far more “digital” channel engagement."

"They’ve also seen a reduction in average handling times for customers using live chat for both operations and claims through their industry-leading use of GenAI. This is another example of getting the building blocks right, which has in turn enabled them to harness the power of new AI capabilities and truly apply this to customer experiences."

The overall streamlining of these processes has then allowed their agents to support customers more quickly and with greater understanding in more complex cases, prioritising human-to-human experiences when it matters most.

"This paradox is important. We used to apply technology transformation to reduce costs or, in the advent of “digital,” to maximize the distribution of the insurance product—new channels and aggregators being primary to this movement. However, this often meant we forgot to ask ourselves how we can create new value, form more meaningful relationships with customers, and generate new propositions to meet new needs."

"What we are proving is that you can, in fact, have both. What’s more, making customer experiences better is often the key to unlocking cost reduction in claims."

Automating the claims experience empowers customers to stay informed, make better decisions about their claims, and easily navigate across multiple channels, all while ensuring they can access human support when needed. This benefits both customer and insurer.

However, achieving this level of automation requires a fundamental shift in the way many large insurers operate today. The key lies in transforming the underlying technology that supports claims services. Specifically, it’s about moving to an enterprise design where the operational data model is customer-centric.

In this model, updates to policies, circumstances, and interactions are seamlessly integrated in real-time within the claims management process. This shift enables insurers to rapidly develop solutions using a rules-based approach, ensuring the entire process is dynamic and responsive to customer needs.

Such a transformation doesn’t just enhance internal efficiencies; it improves overall ecosystem management, accelerates claims resolution, and delivers more accurate outcomes—leading to happier, more informed, and ultimately more loyal customers.

"This claims tipping point is happening slowly, but pace is picking up. The alternative is that the legacy trap continues to grow, with insurers adding AI patches, integrations through secondary layers, or still operating behind mainframes—adding complexity and reducing adaptability rather than freeing creativity."

"I have no doubt we are awash with claims professionals who all want the very best for their customers and the insurers they work for. My experiences certainly back this up, and the good news is that we can now turn this around fast—and for good."