A revolution is ongoing in the insurance industry: Numerous InsurTech start-ups offer apps with simple contract management, comparison portals or so-called “embedded insurance” – the latter refers to the sale of insurance in a package with other products. But the digitalisation and automation of processes themselves is also part of the digital revolution. One provider of such digital process optimisation is the start-up www.claimsforce.com (foundation in 2018).
The young company has already received the accolade of “100 fastest growing Startups in Germany” from GlassDollar. Claimsforce offers software that enables insurance companies to process claims efficiently (in part even fully automated): Namely, from the assignment to a claims handler to the assessment and valuation. The gain in efficiency results from the data-driven approach (incl. AI/ML): Most claims are automatically scheduled (=assigned). The claims handlers, in turn, are supported in calculation and reporting; in doing so, the software ensures seamless coordination between policyholders, intermediaries and other third parties. Customers in particular are kept continuously informed about the processing status.
I’m talking about the dynamics of change, challenges along the journey and an outlook into the future of the InsurTech industry with Bastian Ebel (Check LinkedIn ), founder of Claimsforce.
I conducted the interview in German. The following is a translation, which was largely done with deepl.
Bytes4Business: Hello Bastian, you are an insurance specialist and have made a career with one of the oldest and largest claims service providers, the Schweitzer Group. You know the industry inside-out. When did you first have the idea to start your own company, and what happened next? Bastian: That’s right. Before founding claimsforce, I had already been operationally active in claims settlement for more than 10 years, during which time I settled several thousand property and liability claims myself. In addition, I was responsible for the entire claims settlement business at one of the oldest and largest expert organisations in Germany for several years. During this time, I was able to get to know the claims settlement of almost all property insurers operating in Germany from very different perspectives.
Early on, I saw how fragmented and intransparent the entire claims settlement process is for everyone involved. And also how the expectations of insurance customers have changed due to influences like amazon, google & Co; and the change happens much faster than insurers can keep up with. As a result, customer satisfaction has become much more of a focus. Over time, I have observed how many industries have quickly approached digitalisation and transformed themselves. The insurance industry, however, has unfortunately been very slow – until today. So in 2018, the opportunity arose to help shape the claims settlement of the future myself. That was the foundation stone for claimsforce.
Bytes4Business: Can you help us to get a better idea of claims settlement: What share does this area account for in terms of personnel and costs within an insurance company? To what extent does this area help to create a USP in competition? Bastian: The claims area is of course huge and, from my point of view, actually the heart of a non-life insurer. Long gone are the days when claims were seen as a pure “cost centre” and the focus was only on sales.
Today – and even more so in the future – claims areas have gained enormous importance due to terms like “customer acquisition costs”, “cross/up-selling”, importance of customer satisfaction and cost savings. In terms of figures, we are talking about more than 20 billion euros in benefits per year – in the property and liability lines alone – as well as combined ratios of more than 90%.
Bytes4Business: Can you quantify the efficiency gain when using your software? And in which process steps is this efficiency gain highest? Bastian: Sure. This is particularly important for us as a data-driven company. Our software modules have an impact on three very important parts of claims settlement. First: customer satisfaction, second: process costs and third: claims expenditure. We call it the “claims triangle”. Everything we do pays into this triangle.
Particularly noteworthy: Our disposition module, with which we enable insurers and settlement organisations to carry out efficient, transparent and, above all, largely automated control of settlement claims. Our algorithm controls more than 95% of all claims automatically. In addition, we reduce travel times are “idle times” – that is times in which claims are not processed due to manual process steps.
In addition, our so-called settlement module is enormously powerful. Here, all the activities of a claims adjuster/expert are combined in one software. The main focus here is on process efficiency: shorter processing times, elimination of media disruptions, etcetera.
Bytes4Business: One of the largest financial and insurance groups in China, Ping An, is massively automating claims management with the help of AI, chatbots, blockchain and data mining. Over 30,000 developers work here. The German start-up Omnius, on the other hand, is pursuing a similar approach under the motto “cognitive claims management”. Where do you see the dividing line today and in the future between fully automated claims processing and claims that require experts and surveyors? Bastian: I have a very clear opinion here: of course it always sounds particularly good when you talk about “dark processing” and full automation. Where it makes sense, we of course offer this, for example in scheduling. But let’s be honest:
In the case of a claim, which generates high process costs and claims expenditure, we are talking about extremely complex processes with diverse participants, lengthy and communication-intensive settlement cycles. Although about 70 to 80% of the claims are processed from the desk, these only account for about 20 to 30% of the claims expenditure, whereas the “smaller” share of 20 to 30% of complex claims account for an expenditure (= costs) of about 70 to 80%. This is why we started here with our software modules, as this is where the added value for all parties involved is greatest.
Bytes4Business: Assessing and calculating risks is part of the core business of insurers. In order to prevent an oligopolisation of the market, there is, as far as I know, an obligation for large insurers to share risk statistics with smaller insurers so that the latter have a data basis for developing their own insurance offers. I find this a remarkably far-sighted regulation. No data, no business. It is hardly surprising that Amazon sellers are demanding data sharing, for example on demand patterns and market data. Are there similar discussions around data sharing related to claims documentation, which is necessary for training self-learning systems? Bastian: Unfortunately not so far. However, the example you gave shows where we are heading as a society in terms of digitalisation and “big data”. We can only support this. In terms of claims documentation, however, this is unfortunately still a very long way to go. Due to their historically outdated data storage, insurers find it difficult to use existing data at all. This is where we provide support, for example, through our analytics module. There, our customers receive this missing transparency in order to learn from past claims and to use this intelligently for future claims.
Bytes4Business: What have been the biggest challenges in product and company development so far? Bastian: First of all, I would like to underline what our outstanding team has achieved in a really short time. We have developed a profound product with different modules in a very complex environment, which generates measurable added value.
From my point of view, the biggest challenge – at the beginning as well as today – is that, in addition to very user-friendly software, you also have to take along the people and users on the journey. After all, we are talking about a disruption, about “digital transformation”. And that means change for everyone. This is where our Customer Success Team does an excellent job, as we support our customers very closely already during onboarding, but also during the later, daily use of claimsforce – which is a real USP.
Bytes4Business: What is your strategic roadmap, what ideas do you have for the further development of your products, what will your geographical footprint look like in five years? Bastian: We are consistently developing towards our vision of using data-driven decisions to process claims more efficiently, fairly and with less effort in order to generate more customer satisfaction. In the future, all parties involved in the claim – including the entire insurance distribution (agents already use our agency module here), craftsmen, etcetera – will be able to work with our modules and experience smart claims settlement from the notification of the claim to the payment.
Bytes4Business: As an insider in the insurance industry, can you give us a glimpse into the future: What changes, maybe even disruptions, will the insurance industry go through by 2030? What are the most exciting trends? Bastian: 5 or even 10 years ago, I would have answered this question much more progressively. But you just have to recognise that the insurance industry is a very conventional industry with a long history. Computers and data have been used here since the mainframe age. As a result, this industry has to make the greatest possible effort to fundamentally develop into the digital age. Of course, the tech giants like Google & Co. have it much easier.
That’s why I think that competition outside the original insurance industry will increase significantly. For example, insurance is increasingly becoming a service that is booked when a car or house is purchased. Although there will still be a traditional insurer behind this, who will bear the risk and also be responsible for claims settlement, the pressure to transform will continue to increase as a result. With a focus on claims management, the importance of efficient claims settlement will continue to increase – triggered by this external pressure – as well as the customer satisfaction that can be massively influenced by it.
In any case, I don’t think that in 8 years the claims settlement related to a flooded house will be fully automated, you may think of robots or drones making an assessment of the damages. No. By the way, I’m referring to the flood disaster in the summer of 2021 in Germany. The “human factor” is still too important for that in this complex event. All the more reason for us to do everything we can to provide the best possible technological support for the people involved in claims settlement and to make their daily work easier. And in my view, that is where the real disruption will take place.
Bytes4Business: Dear Bastian, thank you very much for your time and this interview! It gave me a much better understanding of the processes of change in the insurance industry. Stay healthy and I keep my fingers crossed for the continuation of your success story!