The insurance industry is changing at hyper speed, driven by technology, shifting customer expectations, and our recent disruptive pandemic. Now more than ever, organizations need fast, insightful feedback and are discovering, or rediscovering, the front-line guidance that claims can provide to the business. 

A perfect illustration is the COVID pandemic when we needed to quickly understand the business impact of the sudden disruption. In our organization, the claims team distributed a report whose complexity and relevance grew every day. This real-time data, coupled with insights based on deep knowledge, was a crucial source of guidance in the absence of the usual models and experience studies. 

This scenario plays out all of the time. That is why life and disability insurance organizations need to rely on the hands-on expertise of claims professionals, particularly in the areas of accelerated underwriting programs, new products, legislation and regulation, and automation. Claims professionals are first to see impacts and can (and should) play a conductor role on the speeding train of change. 

Accelerated underwriting   

Accelerated underwriting (AUW) is now a decade old and continues to rapidly evolve according to Munich Re’s biennial surveys of U.S. individual life carriers. AUW programs have gone well beyond simply making do with less evidence or substituting one piece of evidence for another. Behavioral science is now used to optimize application disclosures, and proprietary data models are providing deeper insights on pricing discounts, mortality protection, and coverage increases. 

In this evolving area, claim professionals can help identify the impact of AUW programs on claims. They can spot disconnects between the Applicant and Insurer such as nondisclosure, partial disclosure, or outright misrepresentation. Claims might also be the first to discover possible mortality slippage by target market or distribution channel long before an experience study could. 

Because of this, claims personnel should be a critical part of AUW steering committees. A practice as simple as tracking undefendable misrepresentations could prove valuable to steering committees and result in stronger fraud language in applications or improved pre-issue analytics.  

New products

Paid family medical leave   

Paid family medical leave (PFML) barely existed five years ago and has now grown across several states with more to follow. PFML follows a cultural shift around leave and will result in changes in claimant behavior that claims professionals will spot first. 

Claim organization partnerships with legal and compliance/regulatory resources are increasingly important due to the rise of paid family leave laws. Challenges include variances in plan structure, funding, benefit duration, and income calculation, leading to potential operational issues such as payment accuracy and determining the first payer. 

Understanding how PFML is impacting business is a perfect example of how claims should be at the forefront. Claims knows how the products are being used, how different state variations impact claims, and how the product’s benefits interact with other products. That is valuable knowledge, and learnings from PFML could suggest a model for other products where there are such interactions (e.g., long-term care combo products). 

Electronic health records (EHRs)

First available in 2009, the use of electronic health records (EHRs) is expanding rapidly, with over 90% of U.S. individual life carriers using or evaluating this data source.1 While they are not yet a perfect solution, EHR vendors such as Munich Re’s Clareto have come a long way in improving hit rates and the usability of EHRs in insurance. 

For disability claims adjudication, EHRs offer speed and formatting advantages over a traditional attending physician statement (APS). When EHRs are used in claims review, claims professionals can provide feedback on availability, data gaps, and data quality. Claims can advise on what information is relevant and how to optimize the use of EHRs.  

Carriers should continue to monitor the development of EHRs to determine how they could benefit their organizations. In addition, claim teams should be involved in planning and rule development in any workflow automation projects using digital health data.

Legislation and regulation

While not as fast-paced as the development of accelerated underwriting and electronic health records, claims also sees the early impact of regulatory change on the business, from state-based coverage mandates to ballot initiatives that require insurers to spend a minimum percentage of premiums on patient care. 

Insurers are experiencing increased costs due to regulatory compliance and litigation. Claims can provide immediate reporting to pricing and underwriting on claims that were unable to be rejected due to state regulations versus insurance law. Claims can also provide an annual review of the impact of litigation or new regulation.

Automation and digital partnerships

The claims function itself is in the midst of rapid technological change. New solutions are improving efficiency and decision quality by automating manual tasks that allow the staff to focus on more value-added activities. This need is particularly acute considering programs like AUW have the potential to increase claims volume.

Digital partnerships with insurtechs can deliver speed and modern solutions for a range of claims functions, including fraud detection, return-to-work readiness, claim processing, beneficiary payments, and client service. Claims can play a critical role in the digital partnership process by evaluating innovative solutions from a staffing and decision perspective. 

Given today’s resource challenges, this is easier said than done and outside expertise may be required. For example, Munich Re evaluated over 100 insurtechs in 2022 alone and created partnerships with those bringing proven strategies to the market. Our busy clients appreciate the guidance, and this work also supports innovation within the industry.  

Claims as conductor

Insurance products are developed with expectations about how they will be bought and used. However, it is at the time of claim when carriers first see how insureds are using their benefits. As first responders, claims professionals can provide much-needed guidance based on their extensive understanding of claimant behavior and policy provisions. 

Covid demonstrated the importance of claims’ voice in the business. Armed with data and know-how – and given a mechanism to share insights – claims professionals are not simply spectators, but conductors to help steer the business to success.