Automated Claims Processing – Why is it important for the insurers?

Last updated: 07 Mar, 2024 By | 6 Minutes Read

automated claims processing

Is the insurance claim process becoming overwhelming due to lengthy processing times? Automated claims processing can alleviate this burden and revolutionize your claims processing procedures.

Insurance companies have diligently worked on automating various claims management phases over the years. Some insurers have witnessed remarkable improvements in performance and productivity by incorporating technologies such as chatbots and modernizing claims platforms. Beyond cost savings, artificial intelligence, and document ingestion capabilities expedite insurance claims processing.

One of the core responsibilities of insurance companies is collecting information about an incident, including details like the policyholder’s name, policy number, address, and the time and date of the event. Embracing an automated claims processing system not only leads to cost efficiencies but also ensures enhanced accuracy and efficiency in handling claims.

How does Automated Claims Processing Work?

When an insured person meets with an accident and submits an insurance claim, it undergoes a comprehensive inspection process to ensure compliance with all regulations. Therefore, automating the processing of insurance claims is primarily an issue of speed and error-free performance for insurers. The benefits of automation are manifold, as it not only expedites the claim evaluation procedure but also enables the identification of fraudulent claim-related activity.

Here are the steps to automate the claims processing:

  • The initial process starts when a policyholder notifies the insurer of a claim. This can frequently be accomplished using a smartphone app or website. The policyholder submits basic information related to the claim, including the incident’s date, location, and any supporting records or photos.
  • After a claim is filed, the insurer evaluates it using automated technologies to see if it falls inside the policy’s coverage. The claims management services involves reviewing the alleged damages, evaluating the policy terms, and contacting third-party databases to confirm the claimant’s identity and track record of previous claims.
  • When the insurer determines the claim is legitimate, it will start the validation process by obtaining further data, such as repair estimates or medical records. This process can also be automated, with software gathering information from multiple sources and evaluating the allegation’s veracity using AI algorithms.
  • The insurer will decide on the claim based on the data acquired throughout the evaluation and validation phases. The system can also automatically determine the proper payment amount or coverage level using pre-established rules.
  • The insurer will start paying the claimant once the claim is accepted. This involves using electronic funds transfers or other digital payment options to automate the payment procedure.
  • Lastly, leverage automated technologies to evaluate the claims data to find patterns and trends that may enhance the claims process and lower fraud.

What are the top insurance claims automation trends?

The insurance sector has seen a radical move toward automation in recent years, especially when it comes to claims processing. Artificial Intelligence (AI), Intelligent Process Automation (IPA), and Robotic Process Automation (RPA) are the three major trends in claims insurance automation dominating the industry.

Artificial Intelligence

Insurers can analyze immense volumes of data using machine learning techniques and evolved algorithms. Research reports indicates that these innovations can result in significant time and cost savings, reducing the costs associated with claims regulation by 20–30%, processing costs by 50–65%, and processing duration by 50–90%, all while improving the caliber of customer service interactions.

Intelligent Process Automation (IPA)

IPA creates a more comprehensive and flexible automation method by fusing AI and RPA. Apart from routine tasks, it acquires knowledge and makes well-informed decisions using real-time insights and previous data. However, insurers can streamline claims operations by automating complex procedures. They can use data to make better decisions.

According to multiple cases reported by McKinsey Digital, IPA has been successfully adopted by businesses in various industries. They’ve found that up to 70% of current tasks might be addressed by automation. This change has resulted in continuous cost savings of 20% to 35%. Furthermore, it has resulted in an incredible 50% to 60% decrease in straight-through process time. As such, these businesses often see a return on investment (ROI) in the triple digits.

Robotic Process Automation (RPA)

RPA uses software robots, sometimes known as “bots,” to automate repetitive operations in claims processing. They extract data from multiple sources, validate claim information quickly, and update system records. It reduces human error and frees employees to work on more complex tasks. According to McKinsey case studies, the ROI of RPA implementation in the financial services industry can improve by up to 200% in the first year.

How Automated Claims Processing can Benefit Insurers?

With modern claims solutions, insurers can automate claims process and stay ahead in the market. Let’s dive into its benefits:

Enhanced Efficiency:

Automation speeds up and simplifies the claims process while reducing the amount of manual work.

Increased Accuracy:

Automation increases accuracy in claims processing by lowering the chance of human error.

Faster Turnaround Times:

When you process insurance claims, it ultimately improves the turnaround time of settling claims.

Improved Customer Service:

You can enhance customer service by processing claims quickly, processing accurately, and responding to consumer inquiries in minutes.

Decreased expenses:

Automation lowers the demand for manual labor, which can boost profitability and cut costs.

Enhanced Compliance:

Automation lowers the possibility of fines and penalties and helps guarantee compliance with regulatory regulations.

Final Thoughts

Claims happen, even if neither clients nor insurers like to see them happen. Clients, therefore, want their problems settled swiftly and amicably, while insurers seek accuracy, economy, and zero fraud. Automated claims processing in the insurance industry is available to help make the process seamless.

Regarding market demand, insurance companies have a pressing need to automate the processing of their claims. In the next years, those who ignore automated claims processing might not make it because their competitors’ administrative costs will be far lower.

If you are looking for reliable claims management services, ISW have got you covered. Get in touch with our experts at: [email protected] or +1 646-688-2821.

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