Technological innovation is reshaping the insurance industry, and the shift in claim processing stands as a testament to it.

The criticality of claim processing in insurance can be inferred from one of the reports by EY, highlighting around 87% of customer churn is influenced by a bad claim experience.

In this blog, we will discover:

• Why claim processing is considered to be the make-or-break point in insurance
• The top 5 technologies that are transforming claim processing
• How are we empowering enterprises to drive this transformation

Here we begin.

Claim Processing - The Turning Point in Customer Experience

Claim processing is considered a turning point for both policyholders and insurers. When policyholders experience loss or damage, they rely on the insurer for payouts as per the coverage terms. During this time of need, they expect the processing procedures to be easy, fast, and accurate.

But suppose, for any XYZ reasons, they didn't get the support they anticipated. Or they felt the company was not prioritizing their claims or acting in their best interest. In that case, they become skeptical about the company's reliability. Often, in the worst scenarios, they decide to switch to other service providers.

This not only impacts the company's reputation but also its financial, operational, and regulatory stability in the following ways:

Financial Stability

When a company faces challenges with its claim management processes, its administrative costs rise due to customer complaints, legal disputes, and penalties.

Moreover, it impacts the company's reserve maintained to cover future claims. Based on their assessment of liabilities, companies set aside a certain amount. When claims are delayed, there is a risk of underestimating or overestimating. This, in turn, leads to liquidity issues.

Operational Efficiency

Delays in claim processes can lead to substantial operational challenges. One of the most prominent ones is the increased workload of the staff. When claims are processed slowly, they cause backlogs and require manual interventions.

This results in longer processing times and increases the probability of errors. Further, it also necessitates the need for additional personnel or overtime, which strains operational resources and spikes costs.

Regulatory Compliance

Regulatory compliance refers to the laws and regulations that control how claims are processed. Inefficiency in claim processing can lead to infringement of timelines mandated for claim settlement, which can attract fines and exacerbate the risk of fraud or misrepresentations. Additionally, this might affect the company's ability to respond effectively to regulatory audits and investigations.

However, embracing digitization and innovation can reverse the above picture.

Re-Thinking the Insurance Claim Process

Let's discover the top 5 cutting-edge technologies that are enabling insurance sectors to reshape their claim processing experiences:

Artificial Intelligence

In research conducted by Accenture, around one-third of respondents were not satisfied with their claim settlement experience. One apparent reason for this was the claim settlement speed.

Insurers can employ advanced technologies like artificial intelligence (AI) to lower processing time. For time-consuming tasks like document verification, chatbots and virtual assistants can be utilized. More advanced techniques like deep learning can prove beneficial in offering personalized interactions.

Additionally, capabilities like data analytics can be deployed to enhance the accuracy of fraud detection.

Blockchain Technology

Simply put, blockchain is an advanced technology that maintains secure and decentralized records of transactions.

In the context of insurance, particularly claim processing, it is preferred for its:

• Transparency: Tracks every step of the claim process in real time, from submissions to payouts.
• Security: Makes it difficult to alter records after they have been added. It further reduces the risk of fraud and false claims.
• Automation: Lessens the need for manual interventions. It automates time-consuming tasks such as triggering payments once predefined conditions are met, verifying claim conditions and calculating payouts.
• Autonomy: Allows stakeholders to interact directly with the system without central authority.
• Accountability: Records every step in the claim process, creating a history of all the transactions. Thus, any attempt to manipulate data would be easily traceable.

Robotic Process Automation (RPA)

A report by McKinsey and Company highlights that by 2025, insurance companies will automate 25% of their operations.

Technologies like RPA play an integral role in this digital transformation. Let's see how it assists in the context of insurance claim processing:

• From request submission to document verification and final settlements, claim processing involves a series of steps. RPA ensures a smooth workflow by identifying steps that can be simplified and automated.
• Extracting relevant information from unstructured claim documents can be tedious. RPA's state-of-the-art capabilities, like Optical Character Recognition and Natural Language Processing, make this process easy.
• Various rules and regulations govern claim processes. Each state has its own protocol. RPA can be programmed to follow these rules and regulations with precision.
• RPA eliminates the need for manual follow-ups. It automatically generates and sends notifications to claimants about their claim status, etc.

Augmented Reality (AR) and Virtual Reality (VR)

Augmented and virtual reality are changing the way claims are processed. Companies like Lemonade have already leveraged AR to settle claims in seconds. Let's explore how:

• Claims that initially necessitated on-site visits, usually taking 5 to10 days (about 1 and a half weeks), can now be completed within 24 hours using AR tools.
• By allowing policyholders to demonstrate damage virtually, AR and VR are supporting insurers in assessing claims remotely with up to 90% accuracy.
• In integration with AI, AR enables adjusters to hone their assessment skills by replicating various real-life claim scenarios. This equips them better for the actual claims.
• Further, companies are using VR to create an immersive experience where customers interact with insurance products and services more personally and humanly than before. This gives insurers a favorable edge in the final conversion.

Telematics

Telematics is widely used in auto insurance to collect real-time information on driving behavior. This helps in:

• Accurately assessing the circumstances of an accident
• Identifying inconsistencies or suspicious activities that may indicate fraudulent claims
• Providing customers with faster claim resolution and personalized services
• Anticipating claim-related issues before they arise
• Reducing claim frequency by rewarding healthy driving habits

However, its application goes beyond this sector. In healthcare, it can be used to offer customized health plans and incentives for maintaining a healthy lifestyle. While in commercial insurance, it assists in more accurate premium pricing and risk management strategies. Further, property and casualty insurers can leverage this technology to adjust coverage and pricing dynamically and so on.

How Are We Empowering Change in Claim Processing Services

While ensuring a transition to the latest technology, companies struggle with:

• Data security and privacy
  
• Regulatory compliance
  
• Return on investment
  
• Ethical consideration
  
• Necessary skills
  
• Interoperability
  
• User adoption
  
• Scalability

What if we say outsourcing can be a one-stop solution here?

With over 100% customer retention and 0% attrition, we have been helping industries achieve accuracy in claims processing and settlement for over two decades and grow their customer base with 2x speed.

Know more about our claim management services.