State of Life Insurance Claims Processes

“When my mom passed away, I was aware she had a small life insurance policy.  When I started the claims process, I had to keep resubmitting documents and kept getting asked to complete more documents.  Finally, after four months of going back and forth, when the money was about to be reimbursed, I wanted the money transferred to my account as direct deposit, but my only option was a check.  I’m lucky I didn’t need the money right away for funeral expenses, or I wouldn’t know what would happen.”

Will you consider purchasing life insurance policy from them, I asked?  “Hell-No” was the answer.

I was giving presentation a few nights ago on Benekiva, and I heard this story from someone in the audience.  In fact, throughout my startup journey with Benekiva, I have been intrigued with the amount of stories I've heard about the claims processes and the nightmares that beneficiaries have faced. 

As a new parent and owner of a life insurance policy, ensuring the well-being of our family is so critical.  The thought of my daughter having to go through a hellish experience to get the money makes me furious and act now to fix this. 

In several years of researching and analyzing the life insurance claims processes, there are four main problems our Benekiva team has identified that has prevented life insurance companies to embrace digital transformation in their claims processes:

Outdated Processes:  The Life Insurance industry is a 258-year-old industry, and though claims may make it in the top 10 CIO list, the focus tends to be on revenue generating and new business focus and often, claims processes remain in the back-burner.  The staff overtime come up with various duct-tape systems filled with excel spreadsheets, access databases or multiple systems to keep limping on to balance the needs of the regulation, old organization processes (this is how we have always done), and beneficiaries.  Beneficiaries get the short-end of the stick by regurgitating the same information in multiple documents, sending the same documentation numerous times, and chasing down faxes or mail for next step communication. 

Legacy Systems:  On average, the claims staff touches 4 to 10 systems to process one claim.  The claims module is most likely is attached to policy administration systems in which modules don’t get updated often.  To innovate claims processes gives CIOs headaches because that is equal to ripping apart the monolithic and old systems which runs the entire business.  The mentality – “If it ain’t broke, don’t fix it” slowly creeps in….

Unclaimed Claims:  There is over 14 Billion dollars of unclaimed life insurance policies that keeps growing at a rate of 1 Billion dollars.  Why is that?  Ask yourself one simple question:  How many times have you been asked to update your beneficiaries?  Ask yourself another simple question:  Have you informed your beneficiaries about policies you have for them?  The answer alone will tell you why.  One of our co-founders could have been another drop in the bucket for unclaimed claims.  He was at his father’s funeral, and one of his father’s co-workers came to give Jason his condolence.  He pat Jason’s back and said, “If you need help with paperwork, please let me know.”  To that Jason said, “What paperwork?”  He came to learn that his dad had a life insurance policy.

Laws Changing:  Each state and country have their governing laws that need to be abided with when processing claims.  One state may require a death certificate while another state, may ask for additional documentation. 

How might claims department innovate in face of outdated processes, old legacy systems, clean-up of data, and keeping up with the regulation? 

There are three key recommendations:

Keep Learning – InsurTech is HOT!  Books are starting to appear, new conferences are popping up, and fresh faces (like me 😊) are appearing.    Keep reading, attending, and talking to learn what is happening in the space and how to navigate change. 

Keep Seeking – InsurTech is HOT!  Which means, startups are popping up to help solve complex problems.  Benekiva is my startup with three other founders, and we are on a mission to help bridge the gap between life insurance companies with their intended beneficiaries by beneficiary management and claims automation.  What is cool about us – we can work with legacy systems, so you don’t have to pour millions.  Other InsurTech startups are solving pain points.  What’s excellent about startups – they are small, nimble, and hungry which equals to They will do whatever you need them to do to a certain extent.  Most of them have attended accelerators which give them necessary frameworks to find the right problem and execute fast.  They work lean and to survive; startups understand that execution is critical or they will fail.  Partnering with startups can leapfrog your innovation efforts and their startup mentality may rub-off on your staff. 

Keep Trying – You eat an elephant one bite at a time.  I see claims processes as a big elephant, and the only way to improve is by “bitsizing.”  What is one area of claims that can be improved?  Identify that and try to find or partner up on a  solution.  Remember:  InsurTech is HOT!  I’ve seen organizations want to tackle the “elephant,” and unfortunately, those projects take up to 2 years, and longer and your strong talent is burned out at the end.  What you get at the end is an “old” system – 2 years is a long time in tech, and your best talent is on the verge of quitting. 

In summary, the state of life insurance claims processes is profoundly impacted by outdated processes, legacy systems, unclaimed claims, and laws changing.  To innovate in the space, first, C-Level needs to make claims a priority and see it as a customer-experience issue.  Finally, keeping your eyes and ears open to the disruption, new technology, and startups that are passionate about solving the same problems. 

My five-year vision is to have the following experience when giving presentations about Benekiva: 

“Bobbie, I just submitted a claim, and I instantly received notification that money is available in the account.  I also received a text message from an advisor that my dad was using who is going to help me plan for my future.”

Bobbie Shrivastav