Millions of homeowners in the U.S. file a claim for some sort of property damage each year. Meanwhile, as the warming climate progressively increases the frequency and severity of catastrophic weather events; and inflation and supply chain issues persist, giving way to rising repair and replacement costs — insurer claim costs have reached an all-time high and show no signs of slowing. In addition to raising premiums, carriers need alternative cost-controlling measures, and simultaneously — amid high claim volumes — utilize resources more efficiently to adjudicate routine property claims.
Leading-edge technology has emerged as a gamechanger in both respects. An industry-wide focus on emerging technological advancements and digital automation has begun enhancing and quickening the overall digital strategy of property claims handling. Insurers are seeking out ways to process routine property losses quicker and more cost-effectively, while claimants are consistently seeking a simpler process, an improved user experience and quicker settlements. Leveraging artificial intelligence (AI) and other emerging digital tools makes it possible.
The nature of routine property claims
Residential property claims can result from a variety of scenarios: catastrophic or non-catastrophic weather events that damage sheds, fencing, roofing, or other parts of the home’s exterior, or water damage to the interior of the home. Routine interior residential property damage claims, in particular, all largely bear similar characteristics and being largely non-complex, and commonplace, occur at high volumes and make up much of loss adjusters’ workloads.
Over the past seven years, the U.S. home insurance industry has seen an upward trend in both the frequency — the rate of claims filed per exposure — and severity — the average dollar amount paid out per claim, across all perils. Non-weather-related water perils — claims related to interior water damage from accidental water discharge, such as leaking pipes — have increased in average loss cost year-over-year, across all states, and severity increased 13.1%, from 2021 to 2022 alone.
Meanwhile, in recent years, each claim filed after a pipe leak would necessitate a loss adjuster traveling to the home, documenting the scene, creating an estimation report, etc. Now, with recent technology, the policyholder can simply upload a few photos of the damage, a digital intake platform will collect all relevant data, and through a combination of integrated AI, optical image analysis, robotic process automation, fraud detection mechanisms and human oversight, the claim can be settled automatically or in a single call with the adjuster once all information is provided.
What’s it like partnering with a third party administrator like Sedgwick? Let’s consider the following example: After a customer notifies their insurance company that a water leak damaged the floors and walls in two rooms in their home, the loss is reported, and the homeowner receives an email with a link to provide details such as floor type, wall finish and room size, and upload photos the homeowner takes with their cellphone showing the areas that were damaged.
Once the information is submitted, the repair costs are calculated, and an adjuster verifies the proposed settlement amount. In less than 24 hours, the policyholder receives a response with the claim settlement and a referral to Sedgwick’s repair solutions. The settlement is accepted, the payment is processed, and home repairs are scheduled.
Infusing technology into claims
For non-complex claims, technology can play a critical role in automating certain parts of the claim process — including eligibility verification, rules-based decisioning, documentation validation and value calculations — to speed up claim cycle times, keep costs down, reduce environmental harm by minimizing travel emissions, and free up capacity of highly skilled adjusters to focus on more complex claims and customer-facing tasks, where human problem-solving is absolutely necessary.
Automating routine claims and enabling self-service is equally beneficial for the homeowner: an easier, quicker process with greater flexibility, little to no time commitment or face-to-face appointments, less waiting around, less confusion, and expedient settlements.
At the end of the day, using technology to expand its effective use in claims may be critically important for one reason above all: to support personalized care for policyholders in their time of need — with a lighter touch.
Learn more > Explore Sedgwick’s global domestic + residential loss adjusting and claims administration solutions.
Tags: Claims, Property, Property claims, repair, residential, Residential claims, Restoring property, Technological advances, Technology