The specific circumstances of the occurrence, complex local, state, and federal laws, new technology, shifting consumer demands, and the type of insurance coverage itself are just a few of the numerous factors that affect any particular claim.
Lack of instruments to holistically coordinate an equally vast range of parties engaged in every claim has hindered insurance carriers’ long-standing goal of distilling a wide range of claims variables into a streamlined process.
It can be difficult to coordinate correspondence, information exchange, and negotiations between policyholders, insurers, third-party claimants, repair shops, medical professionals, attorneys, and others, particularly when dealing with complicated or expensive claims.
When you combine it with the growing amount of data that is accessible via IoT devices and connected autos, the degree of complexity, difficulty, and specialization increases. The effect may entail:
Delayed claim settlements: Policyholders who are waiting for coverage or reimbursement for their claims may find it frustrating as more complexity usually translates into slower and lengthier processing timeframes.
Higher administrative expenses: Overseeing intricate procedures frequently calls for additional staff and resources. To properly manage these complexities, insurance companies might need to make investments in more personnel, infrastructure, and technology; these greater administrative expenses could result in higher policyholder rates.
Increased risk of mistakes: Inaccurate settlements or claim denials may be from human error, misreading policy language, or inaccurate documentation.
Increased fraud risk: It can be more difficult for insurers to identify and stop fraudulent activity when bad actors submit inflated or fraudulent claims and take advantage of the complexity of claims. Insurance firms may suffer financial losses as a result, and policyholders may pay higher premiums.
Negative customer experience: The already difficult and tedious claims process can be made even more so by drawn-out, complicated procedures, imprecise instructions, and a lack of communication channels. Policyholder discontent, harm to one’s reputation, and even customer attrition may result from this.