Inside USAA’s claims innovation team

Danni Santana contributed reporting.

In February, USAA launched a 21-member claims innovation team with the goal of gaining competitive advantage for the insurer by digitizing various aspects of its claims operations.

The nation’s eighth largest property and casualty insurer considers its claims strategy proprietary information, the details of which it is reluctant to share, says Luke Harris, USAA’s AVP for claims innovation. Yet the carrier also wants to ensure that its customers and other stakeholders are aware of the extent of its commitment to new, digitally driven business processes, which its executives recently outlined in a series of interviews with Digital Insurance.

Harris describes the undertaking as central to aligning the nation’s eighth largest P&C insurer’s claims process with its customers’ changing expectations, echoing a familiar view in the industry. These include the ability to use of mobile devices to swiftly and easily submit a claim, more rapid resolutions, including same-day payout, of those claims, and greater self-service reporting capabilities that don’t require the insured to interact with an adjuster.

From first notice of loss to pay out, Harris admits that USAA’s full claims cycle can still run 30 days or more for a simple fender-bender and upwards of a year or more for more serious auto accidents. A key goal for the innovation team, he says, is to shrink the cycle down to days—or even hours. Already, he says, for some low-severity incidents, USAA members can interact with the insurer digitally to request a service, and in many cases get back on the road in under half an hour without ever having to speak to a representative.

“We recognize that our members’ expectations are changing,” Harris says, “and that we really need to be where they are. In many cases, an entirely touchless digital channel, like text or chat, is what makes the most sense for our membership.”

This as a way for USAA to “future-proof” its business without sacrificing service levels, Harris adds: The insurer recognizes that especially among its younger customers, “not every member wants us to call them with information, when we could deliver it in real time, without them having to answer a phone.”

A diverse team
To innovate its claims process, USAA assembled a diverse group of military veterans, entrepreneurs, IT specialists and claims process experts, whose overarching goal is to create “a connected, empathetic and effortless claims experience as a kind of guiding star for what we want to deliver to our members,” explains Ramon Lopez, the vice president of claims innovation who heads the team. A key part of this, he adds, “is piloting new technologies to expedite and personalize the claims experience.”

Chief among those technologies are analytics and modeling techniques used in conjunction with artificial intelligence and machine learning to accelerate claims assessments and improve decision making; the use of imagery and video to deconstruct accidents and assess damages, and leveraging the Internet of Things to collect claims data and provide real-time incident alerts.

The insurer is also making extensive use of drones and aerial imagery to evaluate property damage and help settle home claims. For example, Harris cites USAA’s activity during the current epidemic of California wildfires, where it is using images from fixed-wing drones to settle many home loss claims the same day that they occur. Previously, in a wildfire situation, it might have taken weeks or even months before the insurer could safely send in a team to inspect a fire-damaged property and adjudicate the loss.

“We want to know the moment an incident takes place and be there for our members in real time,” says Lopez. And with access to more data and improved analytics, “The goal is to make better decisions without having to ask the insured for more information,” adds Harris.

These initiatives, Harris continues, will allow USAA to tailor the claims experience to each customer’s individual circumstances and preferences, rather than treating all of its members the same as its current claims process requires. And while the use of these technologies is primarily geared towards retaining customers by improving their experience, he notes that it is also aimed at making USAA’s employees lives easier in order to help the insurer attract and retain top talent.

Expanding on the innovation team’s priorities, Harris says they are aligned with what he characterizes as USAA’s four strategic pillars:

1. Maintaining and improving the company’s financial health.

2. Improving the customer experience and the service levels that the insurer provides.

3. Improving the employee experience and the quality of the insurer’s work environment.

4. Improving the quality and efficiency of USAA’s claims operations overall.

A subgroup of the claims innovation team is dedicated to tracking and evaluating new emerging technologies and the ways in which the insurer could make use of them to address various claims challenges. But the team’s work expands well beyond claims, and it is only one of several USAA units that have been set up to help the insurer embrace the digital revolution.

Stephen Young, for instance, is the director of innovation and leader of the insurer’s auto innovation team, which reports to the general manager of USAA’s auto line of business. In addition, there are innovation departments within each of the auto line’s functional areas, and Young also heads up a group called product development and innovation. All of these groups overlap to some degree and work closely with Lopez and Harris’ claims innovation team.

Both the auto and the claims innovation units, for example, are pursuing connected-car initiatives to generate data that can lead to better price-to-risk assessments for auto policy underwriting. And both groups are seeking ways to use that data to establish closer bonds with customers and offer them new products and services.

These latter, Young observes, don’t necessarily have to be insurance related. To illustrate his point, he describes a potential travel service that provides the insured with advice on the best way to reach a destination, the preferred route, the least expensive airline fares and so forth. Such a service, he adds, could also pave the way for additional insurance offerings, such as ride sharing coverage and trip cancellation protection.

With all these groupings, USAA might seem a little innovation slaphappy, but the companies track record appears to justify its strategy. It was an early user of fixed-wing drones, and one of the first insurers to give policy holders the option of submitting photos taken with their cell phone to submit claims and report vehicle damage.

Reflecting this his culture of innovation, Harris notes that the insurer “also has a very innovative employee and membership base.” Many of its employees, for instance, are patent holders, and its policy holders can volunteer to pilot new apps and services, as soon as they become available.