PETALING JAYA: The insurance industry is experiencing some technologically-driven changes with the impending digitalisation of motor claims. This is in relation to the way claims are processed, making the process more efficient and convenient for both the insurer and takaful operators (ITOs) and policyholders.
Last year, Bank Negara called on general ITOs to improve customers’ claims experience and outcomes by going digital, in line with the aspirations set out in its Financial Sector Blueprint 2022-2026.
The push for digitalisation in motor insurance claims processes is driven by the industry’s numerous challenges, such as the presence of unsolicited parties pressuring accident victims, concerns regarding towing and repair practices from questionable providers, and the time-consuming nature of traditional claim processes.
The implementation of digital solutions, such as web and mobile apps, can address these issues by fostering connectivity among all stakeholders and providing consumers with a streamlined and efficient experience, says Lau Chin Ching, director of Bank Negara’s financial development and innovation department director.
However, Lau points out that the engagement and collaboration between all stakeholders, including government agencies, is crucial for the successful transformation towards digital motor claims.
“A ‘whole of nation’ approach is necessary due to the involvement of numerous stakeholders throughout the accident or emergency process.
“From contacting tow trucks, insurers, workshops and potentially making claims to involving the police for reporting, a collaborative effort is essential,” she tells StarBizWeek during an interview at Bank Negara’s inaugural Sasana Symposium 2023 forum.
She further explains that the digitalisation of motor claims will be implemented in phases, with the initial phase primarily concentrating on the introduction of digital roadside assistance (DRA), enabling customers to digitally choose workshops and track the location of tow trucks.
In subsequent phases, consumers can also look forward to the implementation of an online police reporting system for accidents and the adoption of digitisation and automation for the assessment of loss and damages, bringing added benefits and convenience to the claims process.
Lau, who says the entire journey is going to take five years as detailed in a roadmap by the central bank, acknowledges that the journey ahead will not be easy but maintains a steadfast confidence in the transformation.
When asked about the anticipated challenges in implementing this initiative, Lau points towards the need to bring all stakeholders together and raise awareness among the public as key factors to address.
“This is due to the presence of numerous stakeholders, including entities that fall outside the direct regulatory of Bank Negara,” she explains.
Meanwhile, Bank Negara assistant governor Suhaimi Ali believes the rollout of DRA is timely, as it has the potential to address the significant losses, estimated at about RM1bil annually, that the insurance industry suffers due to fraud, including exaggerated claims resulting from falsified details.
“We have observed encouraging participation from the ITOs with regard to implementation of the DRA. Almost all general insurance in Malaysia have committed to rolling out the DRA by end-2023,” he said during a panel discussion titled “Driving Insurance and Takaful Digitalisation: A Digital Motor Claims Journey” at the forum.
These players account for more than 95% of the insurance market share, according to him.
Suhaimi also points out that as at the first half of this year, seven out of the 23 licensed general ITOs already offer all the solutions expected under the DRA while others are rolling out in stages.
A chief executive officer of an ITO highlights that his team’s experience has been different, as they prefer to refer to it as a digital enabled claims journey, which starts with DRA and extends to various types of claims, including travel insurance and property damage claims.
Puneet Pasricha, chief executive officer of AMGeneral Insurance, however, believes the change of mindset among public, collective partnership across stakeholders, and the move away from legacy systems are among challenges that the industry would face when embarking on a digitalisation journey for claims.
Fintech Association of Malaysia (FAOM) president Wilson Beh adds, “The comprehensive digital claims initiative, beginning with motor insurance, has the potential to serve as a catalyst for the broader transformation of the insurance industry.”
Wilson points out that the general insurance market in Malaysia accounts for about RM20bil annually, where motor insurance accounts for almost half or about RM10bil.
“The average daily claim payout for motor insurance amounts to about RM13mil per day,” he highlights, adding that in 2022, the motor insurance industry accounted for a negative underwriting year with a net claim incurred ratio of over 60%.
Wilson notes that the introduction of digitalisation, along with the adoption of real-time data analytics, machine learning, and big data, holds significant promise in mitigating fraudulent claims.
Addressing the aspect of cybersecurity, Federation of Malaysian Consumers Associations (Fomca) CEO Saravanan Thambirajah expresses hope that the regulator will play its role in safeguarding data.
Saravanan reveals that Fomca receives about 50,000 complaints related to cyber breaches every year.
Meanwhile Bank Negara’s Suhaimi emphasises the importance of both implementing a framework to prevent cyber breaches and providing education and clear policies on acceptable practices.
He says that for DRA to effectively address consumer needs, it is crucial to raise awareness and educate consumers, to ensure they understand how to make the best use of DRA while following the necessary guidelines.
“What we want to see is efficiency gains all around within the ecosystem, in terms of timeliness of resolving claims processes, the transparency of the process and customers to have a transformative experience,” Suhaimi quips.
With the commitment of general ITOs to establish an end-to-end digital motor insurance and takaful claims settlement system by the end of 2026, the industry is poised for a transformative journey towards a seamless and technologically-driven claims ecosystem.
This transition will not only benefit insurers and policyholders but also contribute to the advancement of the insurance sector as a whole.
