Claim Check

Online claims is quite a dog-and-pony show. Underneath it's a mess

First Published: Technology Decisions
Date Published: 1999
Copyright © 1999 by Kevin Savetz

Web sites that allow insurance customers to file claims online save everyone time and effort--a great use of technology, right? You would think so, but the reality is quite different. Besides the fact that relatively few insurance companies and agents allow clients to file claims online, the companies that have stepped into the arena have done it so timidly that they aren't reaping any real benefits.

A customer may perceive the ability to file claims online to be a convenience, and the process certainly seems high-tech-but as soon as she fills out the Web form and presses the "submit" button, this seemingly high-tech process grinds to a surprising halt.

You might imagine that claim information would be sent to the agent or insurer via an encrypted SSL connection, to be automatically whisked into the company's internal claims software. You might imagine the amount of work saved: less data entry for employees to slog through and fewer chances for clerical errors. You might imagine that dozens of early adopters are enjoying more efficient claims processing thanks to a well-integrated Web strategy.

Keep dreaming. In reality, the companies we talked to that offer online claims filing have implemented only the simplest of systems and fail to provide any of those benefits.

Smoke and Mirrors

What goes on behind the scenes of a Web-based claims form? Every company we investigated uses a simple CGI script that e-mails the information from the Web form to the company for processing. That's right: e-mails. Once someone checks the message, any number of low-tech things might happen-a clerk might reenter the data into claims software or fax it to an insurance company-virtually none of them automated.

At Gore Mutual Insurance Company, an operator actually copies the data from the e-mail message and pastes them into the company's internal system, converting it to the proper format. But the company plans to automate the system, and has set a year-end deadline to do so. Their goal is to create a process that automatically moves the data from the Web server to their RealTime-based internal system. The procedure will create a work-in-progress file and notify an adjuster he has received a claim. The company's claims department is working with an external provider to implement the improved system.

If You Build It...

Rushing to implement a Web claims system will not necessarily cause customers to beat a path to your door. At least that's according to Ken Hudspeth, president of the Auto Insurance Center (, His Web-based claim form hasn't been used since it was set up four months ago.

Why has the company's online claims function been ignored? "It may be that people like to talk to someone in person," Hudspeth said. A customer is more likely to use a cell phone to call his insurance agent from the scene of an accident than log in from home to file a claim later. In fact, the Auto Insurance Center encourages customers to use the Web form to report small things like windshield claims. "If there's a major claim, they need to talk to an adjuster right away," he said. For accidents that require the company's immediate attention, the Web site asks clients to use the telephone instead.

Hudspeth admits that the online process, when it is used, may be easier for the customer, but not for the company. "We're looking at it as a convenience for customers primarily-if they want to use it. But we don't want to force them in case they're afraid of the technology," he said.

Although Hudspeth's system is simple and, once again, low-tech (Web data is delivered as e-mail, then manually e-mailed or faxed to the relevant insurance company), the company is committed to online claims filing. "We want to be one of the first. We know it will pay off for us eventually. We are getting the [process] straightened out now, so when the technology does blossom, we will be ready. Hopefully, we'll be at the top of the heap."

The agency works with about 15 insurance companies, but it does not do electronic claims data exchange with any of them. "Our company is not ready and the agents aren't ready yet. It is not cost-efficient to develop such a system," he says. Still, electronic data exchange is "closer than when we might think. It's a matter of how many companies and how many different interfaces we're going to have to deal with."

Insurance24, a New Hampshire agency ( follows a similar recipe: digital data sent from the Web site doesn't stay digital for long. An agent reads e-mail, then faxes or phones the claim information to the insurer. "It is just a way to make it easier for the client to get in touch with us 24 hours a day," agency manager Carl Caporale said.

Travelers' Tale

The story is similar at Travelers Insurance ( The site uses simple claim forms (limited at this time to auto and homeowner's insurance) that deliver an e-mail message to the company, where it is handled in the same manner as a faxed claim: An operator re-enters the information into claims processing software.

"If there's a way to eliminate work along the process, we'll certainly explore that-but that's not the motivation. Our motivation now is customer focus, to add value rather than cut our work. If there is a way to do both, great," Dan Simmons, vice president of claims, said.

Director of claims Ron Calabrese added, "We're looking at new opportunities to streamline the process." The current setup is ideal, he said. "It's a simple way to give our customers more flexibility and see what the demand is for that type of service." Simmons added, "We're starting fairly simply and will follow wherever the customer leads us."

In the two months since the system was implemented, "the number of claims submitted via this medium is in the dozens," Simmons said. "So far the demand isn't there." As electronic commerce moves from early adoption to the mainstream, the company anticipates a growing demand for online claims filing and related technologies.

Slow Start

Online claims sites may be under-utilized for many reasons. For starters, customers simply don't know about them yet-the services are new and promotion has been nearly nonexistent. (Travelers even suggests that customers will get quicker service over the phone.) Once customers find Web claims forms, they may not take them seriously. Why should they, when it's clear Web claims aren't even taken seriously by companies that offer them? Most of the sites we investigated don't even use a secure server to keep information private.

Furthermore, online messages like Travelers' do little to assure even Web-savvy customers that their claims will be handled quickly. From both customers' and companies' perspectives, online claims may never become a completely automated process, even once Web sites are linked with internal claims software. Although it's possible for an online consumer to buy books, shoes, hardware, or securities online without talking to a human, it's probable that someone filing an insurance claim, even a simple one, will have to speak with an adjuster offline.

Simmons also notes that the longer the online claim form, the less likely the customer will fill it out completely. On the other hand, shorter forms mean more follow-up questions by phone or e-mail. For insurance companies and agents, one of the many challenges will be finding the right balance of information and brevity in Web-based claims.

Articles by Kevin Savetz