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Insurance Innovation Award-Munich Re

The Digital Insurer
The Digital Insurer

Munich Re has developed a new claims management solution called Claims ARC that uses a rules-based questionnaire and data analytics to improve the claims process. Claims ARC allows insurers to classify claim risks early, engage rehabilitation providers quickly, and standardize assessments, reducing claim durations and costs. It also improves transparency and the customer experience. Initial results show shorter lead times, enhanced risk understanding, better customer management, and opportunities for cost savings through shortened claims. Claims ARC has the potential to significantly benefit customers, insurers, and the life insurance industry overall through more efficient claims handling and improved customer retention.

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Rewriting the rules Munich Re Claims Automated Risk Classification a paradigm shift in risk management
1Munich Re Rewriting the rules Reducing lifes complexities Fierce competition and a dynamically evolving market present the life insurance industry with a complex set of challenges. The result is often a compromised claims experience, increasing lapses and churning, reputational damage and decreasing profitability. Munich Re Australias Research & Development team has responded with an innovation that reduces complexity and adds value for customers and insurers. Claims ARC (Automated Risk Classification) uses a 1015 minute online questionnaire that yields key data for the entire life insurance lifecycle and enables insurers to reconnect with customers in a meaningful way. Populations are aging, new consumer behaviours and workplaces are emerging, economic conditions are evolving. Many life insurers have struggled with these and other changes, leading to diluted product definitions, loosened underwriting standards, archaic and non- integrated legacy systems. W ith the aim of pioneering a change in this unfavourable state of affairs and paving the way for sustainable, profitable and customer-focused industry practices, the R&D team of Munich Re in Australia has leveraged its unique expertise and vision in the claims space to develop a new approach. The resulting solution, Claims ARC, systematically addresses the needs of life insurance companies. Life insurers needs Improved claims risk management to address deteriorating experience Means of addressing a shortage of skilled claims personnel More efficient claims processes to minimise the time taken for claimants to receive an outcome Higher degree of consistency and transparency in claims assessments Improved communication with claimants Improved quality of claims data to enable portfolio level management and to inform improvements in claims management Claims ARCs response An improved customer experience A decrease in processing times An increase in process efficiencies Better use of skilled claims resources Consistency in risk assessment Good communication flows between the insurer and the customer Increased visibility over the risk portfolio through increased data capture and integrity Increased claims savings
2 Munich Re Rewriting the rules A new way of handling claims Munich Res claims and risk management solution, the first of its kind to date, comprises three dimensions. It incorporates a claims rules engine, data manage- ment and analytics capability as well as operational best practice and consulting services. Claims Rules Engine (CRE) The CRE provides a standardised, consistent and structured risk assessment that helps insurers manage claims better and set the customers expectations from the very beginning. A questionnaire is completed by the claims assessor or customer service officer over the phone with the claimant at the point of notification. This questionnaire is made up of rules-based questions with an associated risk classifi- cation depending on the answer provided, making it possible to influence the duration of the claim. The questions cover a number of aspects of risk including financial position, medical condition, occupation and employment duties, policy information and eligibility. Claims ARC Process Data management and analytics Claims ARC collects a comprehensive dataset on the risk profile of a customer, opening up opportunities for good-quality data capture. The 50+ data points per claimant span many fields including biopsychosocial metrics. This data, alongside the individuals risk assessment, provide insight into the different risks and dura- tion drivers within the portfolio.
3Munich Re Rewriting the rules The new claims management paradigm Operational best practice and technical consulting Fundamental components of Claims ARC are our defined best practices and con- sulting. These serve to combine the outcomes of the rules engine with Munich Res wealth of claims expertise and leverage the data analytics insights as actionable evolutionary developments. Principle Process up to now Process with Claims ARC Make it easier for the customer to interact with the insurer A claimant or advisor notifies the insurance company of the intention to lodge a claim. The insurer sends out claim forms which can take up to 30 days for the claimant to receive. The claimant must then return the forms for the claim to be assessed. Claimants can expect to wait around 3+ months for an assessment to be made on the claim. First assessment is made at the point of notification. The insurer calls the claimant within 4 hours of notification and conducts a 1015 minute interview as guided by the Claims Rules Engine. Set customer expectations right from the start A long, paper-based claims process makes it difficult for claimants to envisage a final outcome. The pro- cess involves much back and forth between the insurer and the claimant as further information is requested. The process can be tedious, frustrat- ing and discouraging for claimants. The immediate risk classification of the claim allows the claims handler to communicate what else might be needed from the customer to progress the claim from Day 1. The claimants expectations are set at the time of first call. Leverage reliable, consistent and comprehensive data Historically, data availability and quality has been poor. Insurers have been unable to drive business deci- sions backed by data and analytical insights. Automation facilitates the collection of comprehensive data, allowing analysis of trends and opportunities to help drive business decisions. Focus on faster early intervention for a quicker return to health Early intervention commenced upon the receipt of claim forms. This would take, on average, approxi- mately 30 days from the time of assessment. Early intervention can commence from Day 1, at the point of notification, making it likely the customer will return to health sooner. Standardise the process across claims teams Non-standard claims assessment methods lead to inconsistent prac- tises and outcomes. A rules-based system, enables a standardised, repeatable process, plus visibility over outcomes. Focus on risk Claims handlers as assessors of risk. Claims handlers as managers of risk, responsible for the manner in which different risks are managed.
4 Munich Re Rewriting the rules Mr. Y, the 50 year old Pharmacist Mr. X, the 46 year old Builder Name: Mr. Y Age: 50 Occupation: Pharmacist, Self employed and Business owner Cause of Claim: Ankle Injury Name: Mr. X Age: 46 Occupation: Builder, Self Employed Cause of Claim: Infection after surgery for a fractured clavicle WITHOUT Claims ARC WITH Claims ARC WITHOUT Claims ARC WITH Claims ARC Claims ARC Tele-Interview and first assessment on Day 1 Claim identified as High Risk Await advice from GP with regards to a return to work plan expected at least Rehab provider engaged within 3 weeks 56 month Rehab provider discussions with treating specialist and GP lead to an agreed return to work plan of less than 3 month Claim Paid and Finalised Longer claim duration expected Claims ARC Tele-Interview and first assessment on Day 1 Claim identified as High Risk Rehab provider engaged on Day 1 Rehab provider discussions with treating specialist and GP lead to an agreed return to work plan Assessor negotiates to finalise claim within 3 month First assessment when claim forms returned (up to 4 weeks) Further evidence requested Rehab engaged if return to work not proceeding in 56 month First assessment when claim forms returned (up to 4 weeks) Await advice from GP with regards to a return to work plan Further evidence requested (e.g. treating specialist report) Rehab engaged later if return to work not occuring No defined claim period Claims ARC in action: Managing risk more efficiently and with great customer outcomes
5Munich Re Rewriting the rules Results that speak for themselves Claims ARC has proven to be a win-win-win solution for the customer, insurance companies and the industry, delivering quick yet sustainable benefits. The customer Lead times from date of claim notification to assessment are decreased, meaning customers receive the outcome of their claim more quickly Increased transparency and awareness of the claims process from the outset Access to the insurer from the outset for support on his/ her path to health The insurer Increased visibility and enhanced understanding of the risk at a portfolio level Ability to engage with customers from the outset and manage expectations while decreasing the lead time for claim resolution Extensive data capture possibilities, access to analytics capabilities and consult- ing on the interpretation of insights Better positioning to offer early intervention to help customers on their path to health, actively influencing the claim duration Consistent, standardised, objective rules-based assessment using a number of risk variables which impact claim duration Opportunity for significant cost savings as average claim durations are shortened and termination rates improved Industry Better engagement with customers in a market dominated by negative press where insurance practices are questioned and customer scepticism prevails Increased visibility over the industry, helping to address problem areas and/or identify opportunities and practises worth praising The future of claims management begins now W ith the many benefits of the approach offered by Claims ARC, including oppor- tunities for more sophisticated business decision- making, the solution has the potential to give its users a key competitive advantage. Above all, by setting the stage for a new level of customer dialogue and efficient service, its long-term effects could have a huge positive impact on customer retention.

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Insurance Innovation Award-Munich Re

  • 1. Rewriting the rules Munich Re Claims Automated Risk Classification a paradigm shift in risk management
  • 2. 1Munich Re Rewriting the rules Reducing lifes complexities Fierce competition and a dynamically evolving market present the life insurance industry with a complex set of challenges. The result is often a compromised claims experience, increasing lapses and churning, reputational damage and decreasing profitability. Munich Re Australias Research & Development team has responded with an innovation that reduces complexity and adds value for customers and insurers. Claims ARC (Automated Risk Classification) uses a 1015 minute online questionnaire that yields key data for the entire life insurance lifecycle and enables insurers to reconnect with customers in a meaningful way. Populations are aging, new consumer behaviours and workplaces are emerging, economic conditions are evolving. Many life insurers have struggled with these and other changes, leading to diluted product definitions, loosened underwriting standards, archaic and non- integrated legacy systems. W ith the aim of pioneering a change in this unfavourable state of affairs and paving the way for sustainable, profitable and customer-focused industry practices, the R&D team of Munich Re in Australia has leveraged its unique expertise and vision in the claims space to develop a new approach. The resulting solution, Claims ARC, systematically addresses the needs of life insurance companies. Life insurers needs Improved claims risk management to address deteriorating experience Means of addressing a shortage of skilled claims personnel More efficient claims processes to minimise the time taken for claimants to receive an outcome Higher degree of consistency and transparency in claims assessments Improved communication with claimants Improved quality of claims data to enable portfolio level management and to inform improvements in claims management Claims ARCs response An improved customer experience A decrease in processing times An increase in process efficiencies Better use of skilled claims resources Consistency in risk assessment Good communication flows between the insurer and the customer Increased visibility over the risk portfolio through increased data capture and integrity Increased claims savings
  • 3. 2 Munich Re Rewriting the rules A new way of handling claims Munich Res claims and risk management solution, the first of its kind to date, comprises three dimensions. It incorporates a claims rules engine, data manage- ment and analytics capability as well as operational best practice and consulting services. Claims Rules Engine (CRE) The CRE provides a standardised, consistent and structured risk assessment that helps insurers manage claims better and set the customers expectations from the very beginning. A questionnaire is completed by the claims assessor or customer service officer over the phone with the claimant at the point of notification. This questionnaire is made up of rules-based questions with an associated risk classifi- cation depending on the answer provided, making it possible to influence the duration of the claim. The questions cover a number of aspects of risk including financial position, medical condition, occupation and employment duties, policy information and eligibility. Claims ARC Process Data management and analytics Claims ARC collects a comprehensive dataset on the risk profile of a customer, opening up opportunities for good-quality data capture. The 50+ data points per claimant span many fields including biopsychosocial metrics. This data, alongside the individuals risk assessment, provide insight into the different risks and dura- tion drivers within the portfolio.
  • 4. 3Munich Re Rewriting the rules The new claims management paradigm Operational best practice and technical consulting Fundamental components of Claims ARC are our defined best practices and con- sulting. These serve to combine the outcomes of the rules engine with Munich Res wealth of claims expertise and leverage the data analytics insights as actionable evolutionary developments. Principle Process up to now Process with Claims ARC Make it easier for the customer to interact with the insurer A claimant or advisor notifies the insurance company of the intention to lodge a claim. The insurer sends out claim forms which can take up to 30 days for the claimant to receive. The claimant must then return the forms for the claim to be assessed. Claimants can expect to wait around 3+ months for an assessment to be made on the claim. First assessment is made at the point of notification. The insurer calls the claimant within 4 hours of notification and conducts a 1015 minute interview as guided by the Claims Rules Engine. Set customer expectations right from the start A long, paper-based claims process makes it difficult for claimants to envisage a final outcome. The pro- cess involves much back and forth between the insurer and the claimant as further information is requested. The process can be tedious, frustrat- ing and discouraging for claimants. The immediate risk classification of the claim allows the claims handler to communicate what else might be needed from the customer to progress the claim from Day 1. The claimants expectations are set at the time of first call. Leverage reliable, consistent and comprehensive data Historically, data availability and quality has been poor. Insurers have been unable to drive business deci- sions backed by data and analytical insights. Automation facilitates the collection of comprehensive data, allowing analysis of trends and opportunities to help drive business decisions. Focus on faster early intervention for a quicker return to health Early intervention commenced upon the receipt of claim forms. This would take, on average, approxi- mately 30 days from the time of assessment. Early intervention can commence from Day 1, at the point of notification, making it likely the customer will return to health sooner. Standardise the process across claims teams Non-standard claims assessment methods lead to inconsistent prac- tises and outcomes. A rules-based system, enables a standardised, repeatable process, plus visibility over outcomes. Focus on risk Claims handlers as assessors of risk. Claims handlers as managers of risk, responsible for the manner in which different risks are managed.
  • 5. 4 Munich Re Rewriting the rules Mr. Y, the 50 year old Pharmacist Mr. X, the 46 year old Builder Name: Mr. Y Age: 50 Occupation: Pharmacist, Self employed and Business owner Cause of Claim: Ankle Injury Name: Mr. X Age: 46 Occupation: Builder, Self Employed Cause of Claim: Infection after surgery for a fractured clavicle WITHOUT Claims ARC WITH Claims ARC WITHOUT Claims ARC WITH Claims ARC Claims ARC Tele-Interview and first assessment on Day 1 Claim identified as High Risk Await advice from GP with regards to a return to work plan expected at least Rehab provider engaged within 3 weeks 56 month Rehab provider discussions with treating specialist and GP lead to an agreed return to work plan of less than 3 month Claim Paid and Finalised Longer claim duration expected Claims ARC Tele-Interview and first assessment on Day 1 Claim identified as High Risk Rehab provider engaged on Day 1 Rehab provider discussions with treating specialist and GP lead to an agreed return to work plan Assessor negotiates to finalise claim within 3 month First assessment when claim forms returned (up to 4 weeks) Further evidence requested Rehab engaged if return to work not proceeding in 56 month First assessment when claim forms returned (up to 4 weeks) Await advice from GP with regards to a return to work plan Further evidence requested (e.g. treating specialist report) Rehab engaged later if return to work not occuring No defined claim period Claims ARC in action: Managing risk more efficiently and with great customer outcomes
  • 6. 5Munich Re Rewriting the rules Results that speak for themselves Claims ARC has proven to be a win-win-win solution for the customer, insurance companies and the industry, delivering quick yet sustainable benefits. The customer Lead times from date of claim notification to assessment are decreased, meaning customers receive the outcome of their claim more quickly Increased transparency and awareness of the claims process from the outset Access to the insurer from the outset for support on his/ her path to health The insurer Increased visibility and enhanced understanding of the risk at a portfolio level Ability to engage with customers from the outset and manage expectations while decreasing the lead time for claim resolution Extensive data capture possibilities, access to analytics capabilities and consult- ing on the interpretation of insights Better positioning to offer early intervention to help customers on their path to health, actively influencing the claim duration Consistent, standardised, objective rules-based assessment using a number of risk variables which impact claim duration Opportunity for significant cost savings as average claim durations are shortened and termination rates improved Industry Better engagement with customers in a market dominated by negative press where insurance practices are questioned and customer scepticism prevails Increased visibility over the industry, helping to address problem areas and/or identify opportunities and practises worth praising The future of claims management begins now W ith the many benefits of the approach offered by Claims ARC, including oppor- tunities for more sophisticated business decision- making, the solution has the potential to give its users a key competitive advantage. Above all, by setting the stage for a new level of customer dialogue and efficient service, its long-term effects could have a huge positive impact on customer retention.