Inefficient claims processing can result in $170 billion of global insurance premiums at risk by 2027, states Accenture. Additionally, one-third of claimants are not happy with their home and auto insurance claims FNOL filing experiences. Medical expenses, physical damage, and property-related losses have higher frequency of claims filing and when not executed properly can have a negative impact on brand reputation.
While mishaps and accidents cannot be avoided or predicted, claims processing can be automated to be accurate and immediate. This will ensure claimants are free from claims filing burdens and insurers gain a competitive edge. Best of all, claims automation solutions can be easily integrated into the existing workflows and operations.
Let's discover the ins and outs of how claims automation can positively impact both insurers and the individuals they serve.
Why Automate Claims Processing?
Simply put, traditional claims processing involves a lot of manual work and paper-based documentation. This can complicate the whole claims filing process for both the insurers as well as the customers.
First and foremost, it is labor-intensive and time-consuming. Insurers have to collect, verify, and validate data from a lot of sources, such as claimants, witnesses, investigators, medical records, and police reports, if applicable. This often results in backlogs and delays.
It is also prone to errors and inconsistencies. When human agents are involved, despite diligence, data entry errors, miscalculations, miscommunication, and misinterpretation can be very common. This will further delay the already painstaking process of claims filing with disputes and dissatisfaction.
Next, it is expensive and less resourceful. Paper-based documentation requires storage, maintenance, and disposal. It can also increase the operational costs and overheads, such as labor, training, and auditing.
Lastly, it is open to fraudulence and compliance risks. Paper-based documentation can be easily manipulated, forged, or lost. It can be difficult to track and audit. This can expose the insurers to fraud, litigation, and regulatory penalties.
Considering the inefficiencies, insurers are now turning towards automated claims processing to stay competitive among increasing insurtechs.
How can Claims Process Automation Benefit Insurers and Claimants?
Insurance claims automation can dramatically elevate the processing and filing of claims for both the providers as well as the customers. For insurers, automation can improve operational efficiency and increase the number of claims processed without increasing their workforce. For claimants, it enables 24/7 claims processing and receive real-time updates on the status of a claim. But this only covers the surface, let’s explore further.
Benefits for Insurers
Faster and Efficient Claims Processing
In time-sensitive scenarios or critical situations, insurers can quickly gather and process the required information from policy documents, customer databases, and external data feeds to begin the claims process, ensuring a speedy response to the policyholder’s needs. Additionally, the insurance providers can process a large volume of claims quickly. In other words, speed and efficiency are unlikely in manual data entry.
The insurance sector is constantly evolving with advancements. Spending resources on new and upcoming technologies or affordable pricing will become crucial to stay competitive. However, proper resource allocation is difficult if claims processing is filled with inaccuracies and manual work. Automated claims processing follows a fixed framework (standardized forms and questionnaires) to eliminate errors. This will prevent incorrect payouts and delays, resulting in successful claims processing and by extension, improved customer satisfaction.
Automating the initial reporting of an insurance claim, often referred to as First Notice of Loss (FNOL) is crucial for subsequent claims processing and verifications. Accurate and consistent data will determine the appropriate course of action and build a reliable dataset that can be used throughout the claims processing.
Data Analysis and Prediction
One of the key benefits of automation in insurance claims is the ability to analyze a large amount of data, resulting in accurate predictions. Finding correlations and patterns can better forecast the likelihood of mishaps and adjust their risk models accordingly and reduce instances of losses.
Fraud Detection & Prevention
Automated claims processing often comes with predictive modeling and anomaly detection. Hence, in the event of fraudulent claims such as multiple claims from a single policyholder or suspicious claims patterns, it can be easily identified. As a bonus, automated claims processing comes with ML algorithms and AI. They continuously learn from historical data to adapt to new fraud patterns.
Automating claims processing will establish guidelines and standardized workflows and procedures that align with regulatory compliances. This will ensure every step of compliance is followed consistently and in line with the regulations. Apart from this, it will also help insurers provide a clear audit trail that can be easily accessed and reviewed if required.
Benefits for Claimants
Quick FNOL Filing
Automated claims FNOL filing and processing does not involve lengthy phone calls or in-person visits to insurance offices. The claimant can easily navigate the reporting process from the comfort of their home. Also, established guidelines will streamline the whole cumbersome process of filing FNOL with precision and speed.
24/7 Claims Processing
Claimants can file their insurance claims at any time, day or night, without having to wait for business hours or deal with long wait times on the phone. With a few clicks, all the required information is collected – details about the mishap, date, time, location, etc. The automated system in place immediately processes the reporting, supporting the customer round the clock.
Claims processing automation makes sure the claimant is fully aware of the status of their claims. They can easily access information such as the date and time of the latest update, any actions taken, and any additional documentation required. Sending real-time updates increases the level of transparency and trust in the insurance provider.
Automated claims processing is precise, accurate, detailed, and methodical. This makes sure there is no room for errors, drastically reducing conflicts and omissions. The system ensures all data is cross-referenced and validated before a claim is processed. This reliable dataset can also later be used for further verifications and or follow-ups.
Prior to claims filing or reporting, claimants might have queries to address. With an automated claims processing system in place, it is easier to resolve any queries they might have to ensure the actual claims filing is not cumbersome. The system can provide instant support and guidance and even walk the claimant through the filing process. Additionally, language barriers are eliminated because automated claims processing can help a customer in any language.
Reduced Documentation Burden
It goes without saying, automated claims processing removes the need for physical documentation and paperwork. Much of the information is pre-filled with existing data and updated, if required. Moreover, automation can flag any missing or incomplete information, avoiding unnecessary details in claims processing. Overall, less paperwork equals less stress for both parties involved.
The shift from manual claims processing to AI automation is expanding quickly. As a result, the claims processing software market is expected to touch $74.5 billion by 2030. Cost-effectiveness, efficiency, reduced errors, increased revenue flow, higher CSAT scores, and improved competitive edge are the common reasons behind this shift. Interestingly, both large enterprises and SMEs are equally investing in claims processing automation. On the whole, claims processing automation comes with a lot of advantages that can be quite transformative for insurers as well as the customers.
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