Munich Re has developed a new claims management solution called Claims ARC that uses a rules-based questionnaire and data analytics to improve the claims process. Claims ARC allows insurers to classify claim risks early, engage rehabilitation providers quickly, and standardize assessments, reducing claim durations and costs. It also improves transparency and the customer experience. Initial results show shorter lead times, enhanced risk understanding, better customer management, and opportunities for cost savings through shortened claims. Claims ARC has the potential to significantly benefit customers, insurers, and the life insurance industry overall through more efficient claims handling and improved customer retention.

1. Rewriting the rules
Munich Re Claims Automated Risk Classification –
a paradigm shift in risk management

2. 1Munich Re Rewriting the rules
Reducing life’s complexities
Fierce competition and a dynamically evolving market present the life
insurance industry with a complex set of challenges. The result is often a
compromised claims experience, increasing lapses and churning, reputational
damage and decreasing profitability. Munich Re Australia’s Research &
Development team has responded with an innovation that reduces complexity
and adds value for customers and insurers. Claims ARC (Automated Risk
Classification) uses a 10–15 minute online questionnaire that yields key data
for the entire life insurance lifecycle and enables insurers to reconnect with
customers in a meaningful way.
Populations are aging, new consumer behaviours and workplaces are
emerging, economic conditions are evolving. Many life insurers have
struggled with these and other changes, leading to diluted product
definitions, loosened underwriting standards, archaic and non-
integrated legacy systems.
W ith the aim of pioneering a change in this unfavourable state of affairs
and paving the way for sustainable, profitable and customer-focused
industry practices, the R&D team of Munich Re in Australia has
leveraged its unique expertise and vision in the claims space to develop
a new approach. The resulting solution, Claims ARC, systematically
addresses the needs of life insurance companies.
Life insurers’ needs
– Improved claims risk management to address deteriorating experience
– Means of addressing a shortage of skilled claims personnel
– More efficient claims processes to minimise the time taken for
claimants to receive an outcome
– Higher degree of consistency and transparency in claims assessments
– Improved communication with claimants
– Improved quality of claims data to enable portfolio level
management and to inform improvements in claims
management
Claims ARC’s response
– An improved customer experience
– A decrease in processing times
– An increase in process efficiencies
– Better use of skilled claims resources
– Consistency in risk assessment
– Good communication flows between the insurer and the customer
– Increased visibility over the risk portfolio through increased
data capture and integrity
– Increased claims savings

3. 2 Munich Re Rewriting the rules
A new way of handling claims
Munich Re’s claims and risk management solution, the first of its kind
to date, comprises three dimensions. It incorporates a claims rules
engine, data manage- ment and analytics capability as well as
operational best practice and consulting services.
Claims Rules Engine (CRE)
The CRE provides a standardised, consistent and structured risk
assessment that helps insurers manage claims better and set the
customer’s expectations from the very beginning. A questionnaire is
completed by the claims assessor or customer service officer over the
phone with the claimant at the point of notification. This questionnaire
is made up of rules-based questions with an associated risk classifi-
cation depending on the answer provided, making it possible to
influence the duration of the claim. The questions cover a number of
aspects of risk including financial position, medical condition,
occupation and employment duties, policy information and eligibility.
Claims ARC Process
Data management and analytics
Claims ARC collects a comprehensive dataset on the risk profile of a
customer, opening up opportunities for good-quality data capture. The
50+ data points per claimant span many fields including
biopsychosocial metrics. This data, alongside the individual’s risk
assessment, provide insight into the different risks and dura- tion
drivers within the portfolio.

4. 3Munich Re Rewriting the rules
The new claims management paradigm
Operational best practice and technical consulting
Fundamental components of Claims ARC are our defined best practices
and con- sulting. These serve to combine the outcomes of the rules
engine with Munich Re’s wealth of claims expertise and leverage the
data analytics insights as actionable evolutionary developments.
Principle Process up to now Process with Claims ARC
Make it easier for the
customer to interact
with the insurer
A claimant or advisor notifies the
insurance company of the
intention to lodge a claim. The
insurer sends out claim forms
which can take up to 30 days for
the claimant to receive. The
claimant must then return the
forms for the claim to be
assessed. Claimants can expect
to wait around 3+ months for an
assessment to be made on the
claim.
First assessment is made at the
point of notification. The insurer
calls the claimant within 4 hours of
notification and conducts a 10–15
minute interview as guided by the
Claims Rules Engine.
Set customer
expectations right from
the start
A long, paper-based claims
process makes it difficult for
claimants to envisage a final
outcome. The pro- cess involves
much back and forth between the
insurer and the claimant as further
information is requested. The
process can be tedious, frustrat-
ing and discouraging for claimants.
The immediate risk classification
of the claim allows the claims
handler to communicate what else
might be needed from the
customer to progress the claim
from Day 1. The claimant’s
expectations are set at the time of
first call.
Leverage reliable,
consistent and
comprehensive data
Historically, data availability and
quality has been poor. Insurers
have been unable to drive
business deci- sions backed by
data and analytical insights.
Automation facilitates the
collection of comprehensive data,
allowing analysis of trends and
opportunities to help drive
business decisions.
Focus on faster early
intervention for a
quicker return to health
Early intervention
commenced upon the receipt
of claim forms.
This would take, on average,
approxi- mately 30 days from the
time of assessment.
Early intervention can commence
from Day 1, at the point of
notification, making it likely the
customer will return to health
sooner.
Standardise the
process across claims
teams
Non-standard claims
assessment methods lead to
inconsistent prac- tises and
outcomes.
A rules-based system, enables
a standardised, repeatable
process, plus visibility over
outcomes.
Focus on “risk” Claims handlers as
“assessors” of risk.
Claims handlers as “managers”
of risk, responsible for the manner
in which different risks are
managed.

5. 4 Munich Re Rewriting the rules
Mr. Y, the 50 year old Pharmacist
Mr. X, the 46 year old Builder
Name: Mr. Y
Age: 50
Occupation: Pharmacist, Self employed and Business owner
Cause of Claim: Ankle Injury
Name: Mr. X
Age: 46
Occupation: Builder, Self Employed
Cause of Claim: Infection after surgery for a fractured clavicle
WITHOUT Claims ARC
WITH Claims ARC WITHOUT Claims ARC
WITH Claims ARC–
Claims ARC Tele-Interview and first
assessment on Day 1
Claim identified as High Risk Await advice from GP with regards to
a return to work plan – expected at least
Rehab provider engaged within 3 weeks 5–6 month
Rehab provider discussions with treating
specialist and GP lead to an agreed return
to work plan of less than 3 month
Claim Paid and Finalised
Longer claim duration expected
Claims ARC Tele-Interview and first
assessment on Day 1
Claim identified as High Risk
Rehab provider engaged on Day 1
Rehab provider discussions with treating
specialist and GP lead to an agreed
return to work plan
Assessor negotiates to finalise claim
within 3 month
First assessment when claim forms
returned (up to 4 weeks)
Further evidence requested
Rehab engaged if return to work not
proceeding in 5–6 month
First assessment when claim forms
returned (up to 4 weeks)
Await advice from GP with regards to
a return to work plan
Further evidence requested
(e.g. treating specialist report)
Rehab engaged later if return to work
not occuring
No defined claim period
Claims ARC in action: Managing risk more efficiently
and with great customer outcomes

6. 5Munich Re Rewriting the rules
Results that speak for themselves
Claims ARC has proven to be a win-win-win solution for the customer,
insurance companies and the industry, delivering quick yet
sustainable benefits.
The customer
– Lead times from date of claim notification to assessment are
decreased, meaning customers receive the outcome of their claim
more quickly
– Increased transparency and awareness of the claims process from the
outset
– Access to the insurer from the outset for support on his/ her path to
health
The insurer
– Increased visibility and enhanced understanding of the risk at a
portfolio level
– Ability to engage with customers from the outset and manage
expectations while decreasing the lead time for claim resolution
– Extensive data capture possibilities, access to analytics capabilities
and consult- ing on the interpretation of insights
– Better positioning to offer early intervention to help customers on
their path to health, actively influencing the claim duration
– Consistent, standardised, objective rules-based assessment using a
number of risk variables which impact claim duration
– Opportunity for significant cost savings as average claim durations are
shortened and termination rates improved
Industry
– Better engagement with customers in a market dominated by
negative press where insurance practices are questioned and
customer scepticism prevails
– Increased visibility over the industry, helping to address problem
areas and/or identify opportunities and practises worth praising
The future of claims management begins now
W ith the many benefits of the approach offered by Claims ARC,
including oppor- tunities for more sophisticated business decision-
making, the solution has the potential to give its users a key
competitive advantage. Above all, by setting the stage for a new level
of customer dialogue and efficient service, its long-term effects could
have a huge positive impact on customer retention.