Efficient claims management benefits customers and insurers
Insurers are operating in an extremely difficult environment. Weak economic growth, inflation and natural disasters are resulting in high cost pressure. In addition, there is a growing shortage of skilled workers. All of this is causing a headache for non-life insurers. But there are ways to reduce costs while improving customer service.
Challenging conditions and high cost pressure
The weak economic environment and the effects of high inflation in recent years continue to make it difficult for the insurance industry in Germany. Due to the high rate of inflation, repair costs have risen significantly in recent years. This is one of the main reasons for the high losses in motor insurance, as the German Insurance Association (GDV) emphasised in September 2024. According to the industry association’s estimates, motor insurers recorded a loss of around two billion euros in 2024, following a loss of around three billion euros in 2023.
In addition, severe weather events are increasingly occurring, leading to high claims costs and backlogs for some insurers, which are exacerbated by the shortage of skilled workers. Moreover, the industry must also implement regulatory requirements in the area of sustainability. The challenging conditions are forcing non-life insurers to make extensive adjustments. Claims management costs have to be lowered.
‘Moment of truth’ is the difference between delight and frustration
But how can costs be reduced in claims management without compromising customer service? After all, claims processing is one of the most important points of contact between insurer and customer. In the event of a claim, customers can see the quality and added value of their chosen insurer. The claim is the ‘moment of truth’ and thus also the moment in which it is decided whether a customer is delighted or disappointed.
In Germany, more than a third of insurance customers are dissatisfied with claims management. This is the result of a survey conducted by consulting firm BearingPoint in tandem with market research institute YouGov in July 2024. In particular, the length of time needed for settlement is a source of frustration. This is not without consequences for insurers, as dissatisfaction with claims management is one of the main reasons for switching insurance: according to the survey, around 40 per cent of respondents would change their insurance policies due to unsatisfactory experiences.
Whether a customer is satisfied with their insurer therefore depends on the speed of settlement, but also on other factors such as availability of the insurer, transparency in claims processing, simplicity of processes, communication and interaction.
Increased efficiency with state-of-the-art IT solutions
As the ‘Claims Management 2025’ study by msg and Versicherungsforen Leipzig identified, 93 per cent of the insurers surveyed want to speed up the settlement process with the help of automation. A high degree of automation enables insurers to organise claims management efficiently and counteract high cost pressure. Customer service does not fall by the wayside – quite the contrary. A state-of-the-art IT solution that consistently relies on AI technologies (see also the second blog post – link) can significantly speed up and optimise claims processing. In addition to a high degree of automation, interface capabilities, service provider connectivity and AI technologies play a key role.
Strong interface capability
A high level of API capability is essential for efficient claims management, as rapid claims processing requires seamless collaboration and communication with other divisions, external service providers and non-industry providers. IT systems must be able to be connected quickly, robustly and easily via a mix of open and standardised interfaces in order to integrate internal and external services (workshops, repair shops, experts, etc.) directly into the IT solution and to create barrier-free access for the respective case handlers. This enables real-time data sharing, improved interaction and faster decision-making.
Rapid claims settlement with intelligently networked processes
Claims management can be significantly accelerated if specialised service providers are seamlessly integrated into the process. Modern insurers use a variety of external services to assess claims more efficiently and detect fraud more quickly. These include AI-supported image analyses, virtual appraisals via video and automated plausibility checks.
New opportunities are also opening up in the area of loss prevention: household contents insurers can integrate smart IoT sensors into their services. For example, a networked water detector could automatically send an alarm signal in the event of a burst pipe and notify the insurer at the same time. It can send an emergency message to the customer in real time and directly commission a tradesperson from the partner network. In this way, damage can be minimised before major follow-up costs are incurred.
With the help of intelligently networked processes, claims can not only be settled more quickly, but also actively prevented – a win–win situation for insurers and customers alike.
Revolutionising claims management with AI
Artificial intelligence is fundamentally transforming claims management. Through the use of state-of-the-art technologies, processes from claims notification to settlement can be accelerated, costs reduced and customer satisfaction increased. AI not only optimises customer communication and document analysis, but also improves fraud detection by intelligently connecting external services.
In another article, we will examine in more detail how insurers can strategically use AI technologies to make claims processes even more efficient and customer-friendly.
