Decoding digital trust: Spotlight on claims administration

Digital platforms are becoming increasingly important in the (re)insurance journey. They complement, and in many cases replace the traditional agent-and-broker driven model. Claims is the most sensitive part of the digital value chain. Customers expect empathy, responsiveness, quick turn arounds, reliability, security, and reassurance that the claim put forward will be paid seamlessly. An engaged and customer centric claims process is key to building trust in a (re)insurance company.

Rich digital (re)insurance interfaces may initially impress consumers – especially first-time buyers. However, speed and convenience may leave the same consumers with insufficient coverage. This protection gap will only come to light downstream when claims are filed. Claims made digitally (or otherwise) are often emotionally charged interactions. This makes digital trust paramount – not just at the point of purchase, but in delivering potentially unexpected or unpleasant news. Digitised claim administration needs to be trustworthy along the entire value chain, including reinsurance.

The concept of digital trust is amorphous, subjective, mutable, and difficult to measure. We thus first need a means of conceptualizing and understanding what trust means in a digital claims administration context. Swiss Re Institute has developed a nine-step methodology as a means of better understanding the concept and as a lens through which to approach digital trust (Figure 1).

Figure 1: Digital trust pyramid

The digital trust pyramid is constructed of nine building blocks within three zones. We look at the implications of each zone, in the context of digitised claims administration.

The first of these zones is reliability – does the digital process deliver at a practical level? Insurance is one of the more complex products most consumers will encounter. Clever interface design is required to explain the scope and coverage of particular products. At the claims stage, rejections in particular have to be communicated both clearly and with empathy – and in a journey requiring a minimum of clicks. Insurers will have to consider different user groups and cultural contexts of their consumer base. Previous research from Swiss Re Institute shows that behavioral design that is layered with empathy is crucial at claims settlement.

The second zone is that of security – will my data or my finances be handled securely and competently, and used only for the purpose I intend them to be? (Re)insurers need to build secure channels for all sensitive transactions and sufficient protection to guard against external hackers. Standards of ethics and – in the case of claims particularly – confidentiality will further engender digital trust. (Re)insurers need to demonstrate to consumers (or clients) they adhere to relevant legislation. Additionally, they may seek third party recognition, such as the Swiss Digital Trust label.

Lastly, we reach the zone of reassurance. Perhaps most importantly, consumers need the emotional reassurance that the technology will do the right thing. The envelope of reassurance is being pushed ever outwards in the digital realm. Empathetic artificial intelligence is making progress but remains a high investment commitment. In an area as sensitive as claims, human interaction will provide a further level of reassurance. This is the reason why many Chief Claims Officers (CCOs) of P&C (re)insurers feel the need to optimize the balance between automating claims and maintaining a human touch with policyholders.¹

Swiss Re Institute's digital trust pyramid is mainly relevant in a business-to-consumer context. However, the concept of digital trust is equally important in a business-to-business context. In B2B, data exchanges and claims settlement processes have evolved tremendously over recent years. An example is the Ruschlikon Initiative - an international forum that brings together leading global players around reinsurance and large commercial insurance to adopt common standards around advanced processes. The community was established in 2008, in close collaboration with the now 50-year-old insurance industry Association for Cooperative Operations Research and Development (ACORD). Ruschlikon Initiative's vision is to reduce back office frictional costs by digitizing the P&C reinsurance administration. Since the beginning, the group is focusing on fast, secure, and accurate data exchange by applying global data and process standards. 

A majority of the industry players participating in the ACORD and the Ruschlikon effort are already driving positive digitization and lasting automation. Standardizing electronic messaging along the (re)insurance value chain can help to bolster digital trust by offering a single source of truth, error-free communication, and undisputable computation. Over 75% of Swiss Re's claims and technical accounting submissions received are handled in an ACORD-based digital format. This enables automatic capturing, validating, and processing of submissions with limited manual intervention, realizing efficiencies of up to 70%.

There is no clear playbook into incorporating digital trust into the (re)insurance value chain. Industry partners should create constant feedback and response loops across potential silos to holistically view their digital customer journeys. In the context of claims handling, digital trust depends on numerous factors, including: the speed and efficiency in payouts; digital transparency and empathy; simplified digital messaging; and common standards. Claims is probably the hardest piece of the (re)insurance digital journey to get right. (Re)insurers should continually seek to achieve the sweet spot between increasing levels of digitization on one hand, and the need for human-to-human interaction on the other. This will be critical to maintain and even improve consumer satisfaction and trust.  

 ¹ Preserving the human touch in insurance claims transformations, Deloitte, October 2021.