Thousands of jobs will go in insurers’ small claims management departments as they switch to automated processes, according to Ernst & Young Director Advisory Steven Girvan.

He predicts personal lines insurers may reduce their employee bases by up to 50%, with less severe cuts in commercial.

“A lot of claims come from low-cost events and this is what will be automated,” he told the Actuaries Institute General Insurance Seminar in Melbourne last week.

“Claims will work in a virtual team environment.”

Mr Girvan says automated, rules-based processes for less complex tasks will reduce corporate risk and provide more real-time data for insurers.

For the consumer it will bring faster, more standard responses.

Remaining claims personnel will be more skilled, because many of the simple and time-consuming tasks they perform will be eliminated.

Insurers will retain claims staff longer in more sophisticated jobs. There will be more demand for staff with analytical skills as data volumes grow.

“Dedicated specialists will be hired, trained or engaged to deal with emerging risks, especially cyber crime, data breaches and fraud,” Mr Girvan said. “Special response units and global cat teams will be in place to provide supply elasticity to manage surges and spikes in claims volumes due to increasingly frequent weather events or natural disasters.”

Customers will drive digital claims strategies as they seek to define how they interact with insurers.

“At different parts of the claims journey, automation will optimise the customer experience by using technology,” Mr Girvan said. “This is an innovative journey and it is just starting.

“The winning model has increased customer experience and reduced costs for the insurer.”

He does not expect the demise of the call centre.

“The role of the call centre depends on the business proposition,” he said. “If these are premium customers who want to choose how they deal with the insurer, the call centre will remain, but the headcount will be reduced.”

While larger insurers will increase automation, it will be a challenge for the smaller ones due to technology costs, Mr Girvan says.

“The smaller insurers will need to be selective when timing their investment in technology. The decision will be when to move towards a more mature system, but some of this technology is not expensive – the challenge is embedding it.”