How Insurance claims processing and management is evolving

Insurance is a relatively stable industry, which was first shaken by Insurtech and is now being impacted by the COVID-19 pandemic. The former is facilitating a technological shift that will help the global market to deal with the negative effects of the latter. So, even if Insurtech was not as widely accepted in the industry before, it will be a crucial aspect of the insurance sector’s recovery plan from this global crisis. 

As per a report, the insurance industry has registered losses worth $760 billion globally in market capitalization. Although the effect is uneven across various sub-verticals within the industry, it is likely to bring some major structural and operational changes everywhere. The sector needs to take effective measures to ensure the short-term business continuity and then proceed to develop the long-term action plan.  

In the current scenario, every organization is walking on thin ice and therefore it is critical that they take appropriate measures that would strengthen their foothold in the market when the crisis subsides. Insurance claims processing is as complicated and tricky-to-handle a process as it is essential to both the insurance providers and buyers. For both the insurers and insurees, the claim adjudication process is nothing less than a nuisance. The traditional claim processing systems are opaque, cumbersome, and time-consuming, thus rendering an already vulnerable customer question the choice of their preferred insurance provider. On the other hand, insurers have to ensure that they handle the process with utmost accuracy, so as to prevent both underpayments and overpayments of the indemnity obligations.  

However, to err is human. Manual processes are highly prone to inaccuracies, inefficiencies, and costly mistakes. There is a need for more integrated, transparent, and seamless claim adjudication process and technology might as well be just the right facilitator for making that possible. Having a digital-driven claims settlement process may improve customer satisfaction by as much as 20% while reducing claims expenses by 25-30% by increasing efficiency. 

Shifting to a digital-driven claims adjudication process

The fact that 84% of the customers switch their insurance providers after a bad claims experience reinstate the importance of the process as well customer satisfaction. Insurance industry should move toward an ecosystem-based model that offers the customers an interconnected set of services through a single platform. Such ecosystems, driven by smart technologies such as Artificial Intelligence and RPA, can empower the industry to gain productivity by scale through channeling functional excellence, structural simplification, business transformation, and enterprise agility. In addition to an omnichannel experience, customers will be able to leverage digital capabilities throughout their journey with the insurer. 

After a customer provides a first notice of loss (FNOL) in a traditional claims processing setting, the manual acknowledgement and assigning of the claim to an adjuster take several days, significantly delaying the settlement process. Further, the manual investigation and erroneous documentation raise the possibility of claims leakage and litigation issues. Digital transformation can enable insurers to reimagine this legacy process with the help of smart technology solutions. 

The impact of Robotic Process Automation 

Deploying RPA-based software for acknowledging, filing, documenting, and similar time-consuming processes can result in a more accurate, less error-prone claim settlement. By using Robotic Process Automation, insurance providers can improve transaction processing by up to 50% while gaining productivity benefits of more than 60%. As RPA takes over the cumbersome processes, manual efforts are reduced by as much as 90%, freeing up the manual resources to invest their skills into more cognitive-intensive activities such as fraud prevention. Not only does RPA standardize the processes but also helps create an environment where sensitive data can be processed with much lower risks. 

Artificial Intelligence in Insurance claims settlement

Artificial Intelligence modules, as per McKinsey, enable truly innovative customer journeys by digitalizing claims prevention, First Notification of Loss (FNOL), claims management, loss assessment and repair, and settlement. AI will help the insurance providers to sift, collate, and make sense of the disparate data sets while ensuring maximum profitability for both the customer as well as the insurance provider. Data analytics being an imperative component of the insurance processes mandates the implementation of AI for gaining digital maturity. Several Insurtech companies are utilizing Artificial Intelligence to deal with complex data sets and apply the gained insights to offer evaluate risks, offer customized packages, and more. 

To conclude

In the coming future, insurance companies will need to harness the best of Artificial Intelligence and human intelligence to lead in the market. By using advanced analytics and sophisticated AI, insurers can automate processing of about 60% of the claims’ volumes. 

With the COVID-19 outbreak, digital channel adoption is expected to accelerate while the use of telematics will increase. We may expect to see remote-work call centers and overall shifts in how the insurance industry operates. 

Cigniti supports global insurers in their digital transformation journey & helps them deliver improved customer experience & gain competitive advantage. Our customized services in Insurance software testing range across Life Insurance (Life, Annuity, and Pension), Property & Casualty (P&C), Auto, & Reinsurance segments. We make sure your apps/systems run seamlessly by ensuring efficient back-office operations. Our testing services portfolio and matchless track record prove us as a trusted advisor and preferred technology partner for the Insurance clients. To transform your legacy processes with our specialized insurance software testing services, schedule a discussion with us today.