Most people don’t exactly obsess over their insurance. Realistically, the only times customers actively engage with their insurance providers are when they purchase a policy, renew their policy, file a claim, or cancel their policy. Of these, filing a claim is a highly impactful moment for customer experience, as this is inherently the point in time where the customer comes to collect on the product they’ve been paying for.
Unfortunately though, insureds are often left frustrated, with 68% of complaints from insurance customers having to do with claims. This dissatisfaction can lead to churn for carriers, with Accenture estimating that poor claims experiences could put up to $170bn of global premiums at risk by 2027.
While large carriers may use in-house claims teams for certain lines of business, TPAs (Third-Party Administrators) play a huge role in processing and settling claims for self-insureds and smaller carriers, more complex lines, or in periods of high claims volume. In the US alone, TPAs brought in more than $230bn in revenue in 2022. These organizations tend to run on highly manual processes, deliver pretty poor customer service, and are widely disliked by the industry at large. TPAs have been known to be unresponsive to claimants, leave claims unfinished, incorrectly deny claims, mistakenly settle claims without the authorization of their carriers, and far more. A quick search for public reviews of the largest TPAs results in an impressive number of scathing comments and one star reviews.
Further, these companies often run on tech that was built in-house and while it remains semi-functional, doesn’t actually enable adjusters to be more efficient. The physical process of claims adjudication requires individual adjusters to gather documents to upload to their central claims system, compare claims to policy data to confirm coverage, engage with and manage claimants, create and run their own reports, etc. Today, all of this is done manually, creating a tedious process with the potential for significant human error.
This active disdain for the status quo, coupled with an opportunity to significantly improve upon the unit economics of a TPA, is why we are thrilled to be a part of Reserv’s Series A. Reserv is building a digitally native TPA for the P&C insurance market. Given that a significant amount of the claims adjudication process deals with the intake, summation, and analysis of unstructured data, Reserv has built out unique AI-enabled workflow automations to help maximize adjuster productivity. This includes claims summaries to bring adjusters up to speed, automated bordereau reports, data anomaly detection, automated document retrieval and upload, and much more.
We’ve been incredibly impressed with the Reserv team’s speed of execution thus far and feel very fortunate to support them on their journey. Despite only having launched in November of last year, customers have seen significant reductions in cycle times (1.6x-2.6x improvements), and margins for a tech-enabled service are already quite impressive. With some very exciting stuff in the pipeline, we can’t wait to see what comes next!