Imagine walking into your favorite local diner, where the waitress greets you by name and asks about your family as she pours your coffee. Now picture that same place replaced with kiosks and robotic servers. Sure, the service might be faster—but you’d likely miss the warmth and familiarity that made the experience memorable.
This scenario mirrors a growing concern in the insurance industry. As insurers rapidly adopt AI and automation to streamline claims processes and improve efficiency, there’s a risk of losing the personal connection that customers value most. Amid this digital shift, protecting the brand and preserving that human touch remain critical—no insurer wants to jeopardize customer trust. Still, AI and automation are powerful, disruptive forces that can’t be ignored.
The key lies in striking the right balance: using technology to enhance—not replace—the personal interactions that define outstanding customer service.
The Investment Paradox: Big Spending, Lower Satisfaction
Over the past few years, insurers have invested more than $8 billion in digital transformation initiatives, aiming to modernize workflows and create seamless digital experiences. Yet, customer satisfaction with claims has dropped to a seven-year low, according to J.D. Power.
This decline highlights a paradox: while digital tools can streamline operations, they may fall short in delivering the empathetic, human support customers seek during times of stress and financial uncertainty.
Claims Management: The Largest Cost Burden
Claims processing is the single biggest cost for property and casualty insurers. In 2020, paid claims and associated investigation and settlement costs made up roughly 70% of premiums collected in the U.S.—a figure that hasn’t declined since. This reality places immense pressure on insurers to improve efficiency without compromising service quality.
The High Cost of Bad Data
Even experienced professionals can struggle when working with inaccurate data, leading to flawed decisions and significant financial losses. According to MIT Sloan Management Review, poor data quality can cost businesses 15% to 25% of their annual revenue. For an insurer generating $10 billion a year, that could mean losses of $1.5 to $2.5 billion annually.
These losses are often driven by inefficiencies, mistakes, and missed opportunities. Inaccurate data can lead to pricing errors—such as underestimating risk and setting premiums too low—which can hurt profitability. Additionally, inconsistent denial management practices further contribute to reporting errors and data discrepancies.
Ultimately, even the best claims teams are only as effective as the data they work with. That’s why technology and data integrity are foundational to any successful transformation effort.
Claims Experience Shapes Customer Perception
Today’s customers are more informed than ever. A Deloitte survey found that 44% of U.S. consumers research an insurer’s claims-handling reputation before choosing auto or home coverage. This underscores the importance of delivering not just fast service, but compassionate and reliable service as well.
Insurers that focus solely on digital efficiency, while neglecting the human side of claims, risk eroding their brand reputation and losing potential customers.
The Changing Role of Claims Professionals
As insurance companies adopt more digital tools, claims processing is becoming faster and more automated claims processing. This increased efficiency allows claims professionals to focus on higher-value work. But does this mean automation will replace human jobs? Not necessarily—it depends on how well professionals adapt and continue to bring value to the customer experience.
With access to advanced data and technology, the day-to-day work of claims professionals is evolving. Tasks like data entry, verification, and loss estimation are increasingly handled by AI. This shift frees up time for professionals to concentrate on complex cases and customer interactions, keeping the human element at the heart of the claims process.
While some fear that AI might eliminate jobs or reduce empathy in claims handling, the opposite can be true. Automation of repetitive tasks gives professionals more time to focus on situations that truly require human judgment and compassion. For example, while a claim for a broken phone can be settled quickly using AI, more serious incidents—like a house fire—demand a personal, empathetic approach.
Where Empathy Still Matters
Automation is here to stay, especially for routine tasks like paperwork and data gathering. But for these tools to be truly effective, claims professionals must become comfortable using them and be prepared to take on more complex and meaningful responsibilities.
What might that look like? Some professionals might shift toward advanced data analysis or managing risk across portfolios instead of handling one claim at a time. Others may specialize in fraud detection, policy interpretation, or resolving complex disputes. Claims teams could also partner more closely with underwriters, offering insights into how policies function in the real world.
Still, no matter how advanced technology becomes, the human touch remains essential. As one Chief Claims Officer put it, “automated claims processing can reduce time and costs, but it doesn’t replace the value of personal interaction—especially when problems arise.”
Why People Still Matter
Consider disaster response. When catastrophe hits, it’s critical to have real people on the ground offering support. That same Chief Claims Officer emphasized, “The last thing you should do is remove those field agents. Empathy is crucial when dealing with traumatized customers. Drones and bots can’t do it all.”
Here are a few examples where human involvement makes a real difference:
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Personal Injury Claims: Aviva uses a “double helix” model to balance automation and human interaction. In cases involving personal injury, they prioritize human contact, recognizing that empathy and personal communication are vital during sensitive situations.
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High-Net-Worth Clients: Criterion, part of Charles Taylor, manages complex claims for affluent clients. Managing Director Helena Evans explains that while technical skill is important, clear communication and managing expectations are just as vital. Their personalized approach ensures clients feel heard and supported.
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Avoiding Litigation: Patrick J. Sodoro, managing partner at Sodoro, Mooney, and Lenaghan, notes that a lack of human interaction can lead to miscommunication and missed context—two key factors that often escalate claims to litigation. Direct, human engagement helps resolve issues before they reach that stage.
The Bottom Line
automated claims processing is transforming the claims process for the better—improving efficiency, accuracy, and speed. But it can’t replace the empathy, understanding, and judgment that only humans can provide. By embracing technology and stepping into more specialized roles, claims professionals can deliver better service and maintain the human connection that customers need—especially when it matters most.
