7 MINUTE READ
Insurance has always been in the business of anticipating risk. It evaluates what could go wrong, prices it, and prepares to respond when it does.
Historically, that meant adapting to the world around us, from insuring horse-drawn carriages and industrial factories, to covering the rise of automobiles, aviation, and cyberattacks. Each shift in technology or society introduced new exposures, and insurers evolved to meet them. But those changes came gradually, giving insurers time to adjust their products and operations.
For decades, the landscape remained relatively stable. P&C carriers could rely on familiar product structures and build operations around them, protecting against well-known events.
But the world is changing fast.
P&C Insurance Claims Adaptation to New Emerging Risks
The types of risks insurers are being asked to cover today weren’t even on the radar ten years ago, but are now becoming standard in modern P&C portfolios:
Drone-related damage
From infrastructure inspections to delivery logistics, drones are now used more widely than ever. When they crash, interfere with aircraft, or cause property damage, insurers need clear liability models and workflows to handle these novel claims.
Injuries involving shared mobility devices
E-scooters, bike-share programs, and ride apps have introduced a whole new class of liability. These claims rarely fit cleanly under personal auto or commercial policies, forcing insurers to rethink classification and adjuster workflows.
Business interruption from cloud service outages
Downtime from AWS, Azure, or Google Cloud can cripple businesses. These incidents are difficult to assess, often involving third-party dependencies.
Reputational losses driven by social media virality
Viral backlash, brand damage, and online misinformation can lead to measurable business losses. Reputational risk coverage is no longer limited to Fortune 500s. Today, both businesses and individuals are seeking protection from reputational damage.
IoT device failures
Smart thermostats, water sensors, and connected appliances are now embedded in homes and businesses. When they malfunction – triggering water leaks, overheating, or disabling alarms -the resulting claims often blur the line between product failure, user error, and negligence. That complexity challenges traditional causality models and demands data-driven analysis.
The Challenges of Adding New P&C Insurance Programs to Claims Operations
Most claims organizations today are running on claim management systems (CMS) built for a different era. And while those systems may have evolved incrementally, their underlying structure hasn’t kept up with how fast risk and insurance are evolving.
Claims handling systems are often rule-based, heavily coded, and fixed in their design. Adding a new coverage type or handling an unfamiliar loss event often requires vendor involvement, additional software development, and multiple rounds of testing.
These delays often push adjusters to manage exceptions outside the system, using spreadsheets, emails, or other manual workarounds. The result is a fragmented claims management process where information gets lost, compliance risks increase, and consistency suffers.
Claims that don’t follow a predefined path are more prone to delays and errors. Managers lose visibility as data becomes siloed. Adjusters, instead of resolving claims, spend valuable time navigating scattered information across disconnected tools.
These are clear signs of a structural mismatch between legacy systems and the demands of modern insurance. And they’re holding claims teams back.
Outdated Claims Management Systems are Setting Back Business Development
Many of the large claims management systems were built to serve massive, traditional lines of business, like auto claims or home insurance, where regulatory demands and high volumes justified long, expensive change cycles and custom system adjustments.
But that model doesn’t scale well for innovation or for smaller, fast-moving lines of business. Adding a new coverage type or workflow often means a backlog of IT change requests, slow vendor turnaround, custom coding, and re-testing core logic. For emerging or niche lines, support is typically delayed, underdeveloped, or entirely unavailable, often due to financial constraints or operational limitations.
Inflexible claims management systems don’t just create operational inefficiencies, they actively hold back growth. When the technology can’t keep pace, innovation across the company stalls. Product teams hesitate to launch new offerings because they know the claims operation won’t be able to support them. Adjusters are left to improvise with spreadsheets, emails, or disconnected tools never intended to handle this level of complexity.
The result is that new business opportunities get stuck at the operations level. Claims teams are forced to work around their own systems instead of within them. Customers feel the friction through slower resolutions, inconsistent experiences, and limited responsiveness.
In the end, it’s not just the claims team that suffers. It’s the brand, the growth strategy, and the bottom line.
AI Tools Solve New Claims Handling Challenges
The ideal solution for these challenges is a modern claims management platform that’s flexible, configurable, and purpose-built to adapt. One that allows insurers, TPAs and MGAs to launch new products and programs, build custom workflows, and handle unfamiliar claims scenarios on the fly. Five Sigma’s CMS is a scalable SaaS platform, designed for fast, no code configurability and built to support maximum operational flexibility. It’s a strong example of what a modern claims platform should enable.
But although it would be easy to say this is all about upgrading your CMS, many insurers aren’t ready (or able) to rip out and replace their core claims system. That doesn’t mean they can’t evolve.
In fact, the most effective path forward is often a hybrid approach: keep the existing system, but layer adaptable tools on top that can handle the gaps, accelerate workflows, and introduce modern functionality where it’s needed.
Modern AI tools can make claims systems more responsive, more adaptive, and more effective in handling complexity.
AI tools that are built especially for claims management can:
- Adjust workflows in real time, based on what the claim requires
- Suggest next actions based on coverage type
- Interpret unstructured data like adjuster notes or customer communications
- Model new logic without touching the code base
- Highlight exceptions, flag risks, and surface decisions faster
In short, AI acts like a digital teammate, bringing structure and speed to every action.
Meet Clive™: The AI Claims Adjuster Built for Flexibility
At Five Sigma, we’ve built that digital teammate. His name is Clive.
Clive is the insurance industry’s first AI Claims Adjuster. He works on top of your existing CMS, adding AI, automation, and data-based insights to your operation.
Clive handles routine claims on his own, automatically progressing them based on the insurer’s Standard Operating Procedures (SOPs). He interprets policy details, analyzes coverage, and moves the claim forward with minimal human input. When something’s unclear, complex, or worth a second look, Clive flags it and recommends next steps.
Clive is trained on vast amounts of claims data, policy language, and industry best practices, giving him the ability to anticipate issues before they surface. Clive uses predictive analytics to identify risks, suggest missing documents, and recognize patterns of claim escalation early.
He supports flexible workflows that can be easily configured, allowing insurers to test, launch, and refine new products without waiting for vendor adjustments. Clive evolves with your operating procedures, your regulatory landscape, and your portfolio.
Ready to Handle Next Generation Insurance Claims
The next wave of insurance risks won’t look like the last. From climate volatility to virtual assets and autonomous systems, the future of claims will depend on how quickly insurers can adapt.
That’s why forward-thinking carriers, MGAs and TPAs are turning to AI, to prepare adjusters and equip them for what’s ahead. With AI handling scale, structure, and speed, claims teams are free to focus on judgment, service, and strategy.
The ability to adapt claims handling in real time will define the industry leaders of the next decade.
