ARTIFICIAL INTELLIGENCE & TECHNOLOGY
Home claims and Artificial Intelligence: why is it necessary?
18 September 2023 · By Ruth Puente
In the world of homeowners insurance, home claims management is a key challenge. With 72% of households insuring their primary homes, speed and efficiency in resolving problems become essential priorities. In this article, we explore how artificial intelligence is transforming this process, providing faster and more effective solutions for both insurers and policyholders. Find out how technology is paving the way to more agile and successful home claims management.
If you want to know how Bdeo can speed up your home and property claims management, do not hesitate to request more information.
Home insurance today
The average level of homeowners' insurance in Spain is 72%. In other words, three quarters of Spanish families insure their main home, according to the National Statistics Institute (INE) and its Household Budget Survey (Encuesta de Presupuestos Familiares, EPF). Through this volume of insurance policies, 815 incidents in homes are handled in Spain every hour, according to data from the Spanish Union of Insurance and Reinsurance Companies.
On the other hand, the time required to handle a home insurance claim is regulated by Law 50/180 on Insurance Contracts, obliging the insured to report a claim within 7 days of its occurrence (although the legal statute of limitations does not expire until after 2 years), and the insurer to compensate at least part of the claim within 40 days in the case of claims covered by the policy, and in the case of claims not covered by the policy, to notify the insured of this fact in less than 7 days.
Home insurance, in search of efficiency
The high volume of claims to be managed and the strict deadlines for the resolution of the process means that achieving maximum efficiency in the initial management of a home insurance claim is key to guaranteeing the economic viability of the insurer and the satisfaction of the end client, understanding initial management as a series of chained activities that involve numerous agents, such as the process of registration, validation of information, prioritization, triage, discarding of non-covered claims and initiation of the resolution of covered claims.
There are also particular situations in which the speed of resolution of a home insurance claim becomes even more important: weather events that cause claims peaks or claims in which the cause remains active and the time until resolution worsens the claim and therefore increases the cost of repair.
However, despite the criticality for insurance companies of the initial process of resolving a home loss, the initial creation and management of claims is currently slow, inefficient and presents a considerable number of problems for both policyholders and insurers.
The home claims process as we know it
It is estimated that a home claim takes an average of 29 days to be resolved. This is therefore a key process for insurance companies that can be drastically streamlined today thanks to technology.
To understand the opportunity for improvement in this process, we must explain the usual formula that triggers it, known in the industry as FNOL or first notification of damage.
When an insured suffers a loss, the steps to set in motion the resolution process are, in general terms, the following:
eliminate or at least minimize the cause of the loss to prevent further damage,
notify your insurer of the mishap suffered through one of the different channels provided by the insurer: by telephone (with "contact centers"), in person (with a network of its own offices or those of third parties) or digitally (through applications, web services, or others).
and provide the information requested by the insurer regarding: the policy contracted and the damage suffered by the insured property and/or affected third parties.
The insurer, for its part, then usually:
validate that the information is correct, true and sufficient to initiate the resolution,
understand the cause of the damage to know if it is covered or not by the policy,
assess the damage through an expert appraiser and/or the most appropriate professional,
and initiate the repair or compensable claim.
In this process, it is essential to provide quality images of the loss and of the affected asset(s) not only to assess the damage but also to understand the cause of the loss and its context.
Just as in a motor claim the cause and the context are not important for its resolution (it matters little if we rub against a pillar in a garage or against the wall of a narrow street), in a home claim this information is vital because the cost of repairing the same damage, for example a damp wall, is very different depending on the cause: if it was caused by a broken gutter or by a leak in a pipe, and the context, for example if the affected wall is shared or not with another owner.
Some of the most frequent problems of the claims process for the insurer are:
loss, insufficiency, or lack of correctness of the information necessary to initiate the resolution,
difficulty in identifying the cause of the problem, which in turn causes difficulty in understanding which is the most appropriate professional to make the first visit to the property,
Coordinating the first survey visit to assess the damage is an inefficient process,
and difficulty in properly prioritizing claims caused by weather events.
All these problems cause more resources to be consumed than necessary and unjustifiably lengthen the resolution time, leading to customer dissatisfaction and thus increasing the risk of abandoning the company. It is not in vain that 90% of policyholders think of changing insurance company after having suffered a claim.
Artificial Intelligence: speeding up the home claims management process
The criticality of the start of the home claims process for both insurers and policyholders is evident, as is the lack of digitization of this process today. The opportunity for improvement provided by technology to streamline the resolution of household claims at an early stage, and in particular the opportunity provided by artificial intelligence applied to the images of the claim to help companies make better decisions and do so more quickly in the first hours after notification of a claim is enormous.
Thus arises what we at Bdeo know as Smart Flow, which is nothing more than the use of artificial intelligence capabilities in image analysis to digitize the initial process of resolving a home loss, i.e. the process of digitizing the first notification of the damage by the insured when he suffers a loss and the first decisions for the resolution of the same by the insurance company.
The first Smart Flow was developed at Bdeo from the end of 2021 to the end of 2022. In 2023 we started the evolution project of our initial Smart Flow, thanks to the financial support of CAM.
If you would like to learn more about how Bdeo can streamline your home and property claims management, do not hesitate to request more information.
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