The cloud-based insurance claim

In 2019, prior to the pandemic, gross non-life insurance claims worldwide amounted to $1.66 trillion. Since the pandemic began, widespread economic and lifestyle restrictions have disrupted much of what insurers long held true about the business of claims. Suddenly, business interruption claims rose; automotive claims fell; and insurers scrambled to ensure staff, processes, and systems could still handle claims and assist policyholders remotely.

Emerging concepts and advancing technologies, such as complex algorithms and clever artificial intelligence (AI) capabilities powered by cloud computing, are transforming each link in the insurance industry value chain. Data rich and evidence dependent, the claims function is especially well suited to these new concepts and technologies, which we see manifesting in a range of places—from lower-touch processing, to the easy retrieval of evidence from obscure places, to digital dialogues with customers in real time.

With cloud computing capabilities, insurers can readily utilize data and AI to implement technologies that help process claims.

To benefit, carriers need to strike a balance between data, technology, and expertise so they can shift their attention away from intensive paperwork and toward customer interactions. Those insurers that have traded a legacy of on-premises computing for modern cloud-enabled environments are showing their customers, and the rest of the industry, that they are equipping themselves for the future. With cloud-enabled technology, they can take claims to the next level.

How cloud computing streamlines insurance claims

Cloud is proving itself as a platform for data and AI to fundamentally change the way insurers operate. Most insurers have either partially or entirely moved their claims management systems onto cloud infrastructure in pursuit of smoother claims throughput and a better customer experience. These insurers get to draw on centralized capabilities, such as computing power and storage, that support flexibility, scalability, and interoperability.

In our research, we found that 81% of insurers are using cloud-based technology for their claims management systems, with over one quarter using cloud exclusively. By augmenting claims processes with machine learning and other forms of AI that can manipulate and reason with large volumes of data, insurers can reduce manual handling, lower error rates, and do more straight-through processing. At the heart of this lies an ability to gather, store, retrieve, and analyze data—at speed and to scale.

More claims from cloud exclusives’ customers are processed without the need for human intervention.

Cloud computing has changed the way that insurers can interact with data. Compared to legacy computing, cloud computing is a cheaper, more convenient, and more flexible approach to information technology. Speed and scale get delivered via as-a-service models that enable insurers to deploy technologies more quickly than they could with their legacy in-house systems.

So, how is the use of cloud technology for claims workflows influencing how well claims are handled, from the perspectives of both insurers and customers?

Our previous IBM Institute for Business Value (IBV) research found that insurers were taking a holistic approach to their customer experience and not focusing more or differently on intensive touchpoints such as claims. We wanted to dive deeper to determine whether cloud computing is visibly improving claims handling in terms of cost, speed, and effectiveness. For answers, we surveyed nearly 1,000 insurance executives about their property and casualty claims activities.

34% more insurers exclusively using cloud-based technology for claims use AI to help detect fraudulent claims than those using entirely on-premise technology.

To compare the opposite ends of the cloud computing spectrum, we describe those insurers entirely using cloud as “cloud exclusives” and those still operating entirely on premise as “on-premise exclusives.” Cloud exclusives are likely to call their comparatively early decisions to commit entirely to cloud for claims a strategic business decision first and foremost, instead of a technology decision, simply because of how it has improved their business performance.

Stronger claims handling with cloud: Cloud exclusives outperform insurers operating entirely on premise.

Download the report to learn how cloud computing can help insurance companies automate claims management, reduce costs, and empower employees to deliver a superior customer experience.