Insuranceciooutlook

2022 Trends and Strategies for Claims Processing

Insurance CIO Outlook | Wednesday, July 13, 2022

Claims processing is a procedure whereby an insurer receives, verifies and processes a claim/theft report submitted by a policyholder. It accounts for 70 per cent of property insurers’ expenses.

FREMONT, CA: Claims processing is the process by which an insurer receives, verifies, and processes a policyholder's claim/theft report. It accounts for 70 per cent of the expenses incurred by property insurers. Furthermore, claims processing has an impact on customer satisfaction; 83 per cent of customers who were dissatisfied with their previous claims processing provider switched providers. Despite the importance of claims processing, 80 per cent of claims executives admit to missing out on critical opportunities.

Customers in the insurance industry require the most human contact to solve their problems. It is especially appropriate for claims processing when policyholders are involved in a tragic event. 76 per cent of consumers prefer to submit claims over the phone. 22 per cent of clients prefer direct communication with experts. As a result, a large proportion of users are unwilling to submit claims via digital media and prefer to communicate with a live person. When choosing a provider, 22 per cent of business insurance policyholders prioritise fully digital claims processing. Furthermore, in any industry, millennials and urbanites prefer to consume digital services over physical interactions. Consequently, there may be a demand for further digitization of claims processing in the future. Millennials, for example, will account for nearly half of the adult population by 2030. In this context, it is anticipated that by 2030, more than half of all claims processing will be automated.

Technological advancements improve insurance companies' operational efficiency by automating claims processing and improving fraud detection. This contribution is made possible by four major technological advancements.

1. AI/ML models: These tools are transforming almost every industry, including the insurance industry. The following AI/ML model subdivisions aid in claim processing:

• NLP: Effective use of language is required for claims processing. NLP-powered chatbots can help to automate the FNOL process by directing policyholders to submit the necessary documents, including photos of the damage. OCR can also extract data from handwritten documents. Insurers must still use such documents when processing claims due to regulations.

• Advanced Analytics: are useful for detecting and preventing fraud by calculating insurance fraud coefficients.

2. Blockchain: Smart contracts, which are agreements stored on a blockchain and can be enforced by code, automate claim processing. Furthermore, due to its authentication capabilities, blockchain technology aids in the fight against double-dipping fraud.

3. IoT/ Telematics: The cloud of smart devices and telematics aids insurers in the detection of fraud. IoT constantly provides data about the environment, allowing insurance companies to determine whether policyholder claims are true or not.

4. Custome mobile apps: Customers can use this service to submit claims and track their status. Custom mobile apps, with the increasing use of smartphones, could be a promising tool for claims processing soon.

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