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6 Reasons Why Digital FNOL Projects Fail

Written by
Amrish Singh
digital FNOL

Insurers are in a digitization race, but some will stumble before reaching the finish line. According to McKinsey & Company, automation can reduce claims costs by up to 30%. Insurers that don’t use digital technology to improve efficiency could see their annual profits decline. Many insurance leaders are aware of the potential gains and are highly motivated to undergo a digital transformation. However, motivation doesn’t guarantee results. Six common obstacles can cause digital FNOL projects to fail. 

1. Lack of System Integration.

When building a digital ecosystem, integration is essential. Your systems have to talk to each other in real time, so that facts can be verified, financials can be updated, and trends can be analyzed – for starters.

If you add a solution without integrating it with other systems, it’s not a solution at all – it’s a workaround that creates more work in the end. 

On the other hand, if you take a rip-and-replace approach, doing away with their old system and switching to a completely new system that does everything, you’re dealing with a major project. Implementation can take years – years in which a lot of opportunity can be lost. Even if the new system finally lives up to expectations, technology will have evolved by the time it’s launched, meaning it will already be time to upgrade again.

To gain traction faster, the best approach is to layer your digital FNOL on top of existing systems while ensuring it is fully integrated.

2. Slapping on a Web Form and Calling It Digital FNOL.

Imagine an insurer only accepts first notices of loss via phone. This is clearly an outdated approach that will leave many policyholders unhappy, especially if they have to wait on hold for a long time or are passed from one representative to another. The insurer makes the smart decision to adopt a digital FNOL.

Or at least, that’s what the insurer thinks it’s doing. Unfortunately, its version of a digital FNOL is nothing more than a simple web form. That’s… technically digital? However, it’s not going to produce all the benefits of a comprehensive digital FNOL process. In fact, implementing a web form creates even more work because the completed form is emailed to an employee who then has to enter the information into your claims system. 

With a comprehensive digital FNOL process, you create a more satisfying and intuitive experience for policyholders, and you reduce work for your team with zero impact on their email inboxes

3. Not Asking the Right Questions.

Your FNOL forms are only as smart as you design them to be.

A digital FNOL process should reduce the amount of administrative work required, shorten claims cycles, improve policyholder satisfaction, provide data to support more accurate underwriting, and detect fraud. However, if you don’t ask the right questions, you won’t collect the information you need to bring all these possibilities to fruition. 

This mistake ties in with the second mistake. To make sure you don’t miss anything, you need reflexive forms or sophisticated AI-driven agent that can adjust its response to the flow of the conversation – intuitively and empathetically. As in human conversations, the next question should align with the last answer. One set of questions will not fit every scenario.

While old-school chatbots failed, new generative AI agents can achieve these goals.

4. Not Addressing Language Barriers.

Let’s say you implement an advanced digital FNOL that uses reflexive forms to collect all the information you need to power all your insurance processes, from claims to underwriting. It works perfectly – but only in English.

That will neglect a lot of policyholders. The U.S. Census Bureau says nearly 68 million people in the U.S. speak a language other than English at home. Although many of these individuals likely know some English, they may not be fluent enough to discuss technical insurance issues, especially when they’re distraught due to a car crash, a housefire, or another loss.

Your digital FNOL process should address language barriers by using AI to translate, summarize, and convert speech to text. If it doesn’t, it may be less effective than you expected.

5. Not Integrating with Smart Service Deployment.

Imagine you’re a policyholder and you contact your insurer because one of your pipes has burst and is currently flooding your house. You provide all the requested information using a chatbot that’s so convincing you keep forgetting it’s not human. The chatbot says it has everything it needs and assures you someone will be in touch soon. Then… nothing. You don’t hear anything for hours. In the meantime, the water damage in your house is becoming worse and you don’t know what to do. 

Several hours might not sound like a long time, but when you’re dealing with an emergency, it’s forever. A digital FNOL process should include smart triage to make sure that urgent claims – like homeowners insurance policyholders with burst pipes or auto insurance policyholders who are stranded in unsafe conditions – receive the immediate assistance they need. The FNOL program can even look for service providers in the area and automatically deploy them.

6. Failing to Manage Change

When you implement a comprehensive digital FNOL process, things will change for your policyholders, and they will also change for your team. It’s important to involve team members in the planning to get them invested in a positive outcome from the beginning. Show them how it will make their jobs better, and how it will make the company better – in turn, providing better opportunities for them. 

People will also be scared of change. They may even think that digitization will eliminate their jobs. People have the power to undermine the success of your digital FNOL. Therefore, in addition to getting the technology right, you must get your people engaged and ready to pivot.

In the coming years, insurers who successfully leverage digital FNOL will gain a major competitive advantage. With Liberate’s forward-thinking platform, this advantage can be yours. Learn more.