Digitalisation impact measuring on claim management for the insurance sector

Abstract

Purpose of the article The aim is to investigate the impact of digital transformation on the insurance sector for claim management and claim reserves using the data from non-life insurance companies located in Baltic countries. The object is digitalisation measurement in claim management. The subject is non-life insurance companies in Baltic countries (Estonia, Latvia, and Lithuania).

Methodology/methods Regression analysis, comparative methods, and Pearson correlation analysis were applied to explore the impact of digitalisation on claims regulation speed, and claim reserves. Authors have also used actuarial methods like the development factor method using aggregate paid claims triangles.

Scientific aim is to provide a discussion of how digitalisation can be measured for insurance sector claim management. Authors have proposed to use claim handling speed as the digitalisation measure. The following hypotheses were advanced in the current study:

H1: Claim handling speed, impact of digital transformation depends on technical provisions structure in company’s portfolio; H2: Claim handling speed, impact of digital transformation depends on claims paid volume; H3: There is a positive relationship between quick claims paid ratio (claims paid in one year period over total paid claims), the impact of digital transformation and Baltic countries GDP per capita.

Findings All three hypothetical propositions are accepted by authors using the correlation analysis method with 0.05 significance level and regression analysis. Digitalisation’s signs can be seen in Baltic non-life insurers’ annual financial reports in years 2011-2017. Digitalisation transformation goes in line with economic growth. In 2011, 74% of total paid claims were paid within one year, and in 2017 the amount was 79%. The correlations results showed that digitalisation has positively impacted claim handling speed.

Conclusions This study has its limitations in the scope of data used, the results show 80% of market share (using seven observations) and analyse non-life insurers in Baltic countries.