Insuranceciooutlook

Is AI the New Powerplayer in Digital Claims?

By Insurance CIO Outlook | Friday, October 04, 2019

The inherent ability of AI to process massive data sets makes it a perfect match for the digital insurance claim procedures

FREMONT, CA: Artificial intelligence (AI) is the first choice for the industries that plan to derive insights from massive, unstructured data sets. The powerful AI algorithms can extract crucial insights from the data sets and contribute to the betterment of the industrial processes with greater ROI. In the insurance industry, numerous customer queries, claims, and massive data set makes AI a natural fit. According to a recent study, the $124 million has already been invested in AI, which is much higher than an average of $70 million invested in others. According to experts, AI can be the primary disruptive factor in the insurance sector. Another study stated that 87 percent of the insurers are interested in investing more than $5 million in AI before 2020.

Claims management determines the future relationship with the customers based on their overall experience with the insurance company. The primary challenge for the insurance companies is to offer quick, effective, transparent, and satisfactory service to the customers, which means meeting customers’ expectations. With evolving customers’ expectations and rising competitors, the insurance companies are under tremendous pressure when it comes to claims management.

The insurance industry has wisely recognized the potential of AI. As a result, AI-driven chatbots, algorithms, and additional tools are increasing, gaining popularity in the sector. Many of the processes that were manual and paper-based are transitioning to AI-based platforms. AI-driven chatbots are offsetting the insurers’ workload by engaging with the customers for simple queries and faster claims processing.

 AI is also being used to allow faster claims and payouts. For instance, AI-driven solution can analyze lengthy instrument policy contracts in healthcare can be quickly analyzed with simplified experiences for the concerned personnel. Here are some of the benefits AI offers.

Efficiency

There are several procedures involved in the claims management process. Claim reporting is the first step where customer experience is critical. The next step is attributed to the verification of these claims to ensure that the claims are covered under the insurance policy or not. An insurance company is expected to be responsive while estimating the amount that must be paid. The processes are often tedious and time-consuming. 

Thus, the customer experience also gets compromised. AI-driven digital transformation is a way that can speed up these processes, thereby processing the claims faster. AI’s ability to quickly access and process the data associated with an individual claims once again makes it the preferred choice for the insurers. Moreover, AI algorithms will also match the claims with the policy standards and recommend the appropriate steps faster than it could ever be achieved via conventional means. Thus, incorporating AI will provide a competitive edge to the company.

Cutting Down on Operating and Staff Budget

Apart from faster claims resolution, digitizing the claims management processes will also result in increased efficiency of the overall process. AI-driven digitization will further result in reduced operating costs. AI fosters automation of the processes as it acts as a bridge between various processes. Process automation and collaborative digital tools allow human resources involved in managing a claim to share files easily, collaborate, analyze data, and make decisions. Thus, the processes are eventually sped up along with a significantly reduced operating budget.

Background Processing

Insurers are leveraging AI to enhance underwriting for routine tasks like claims processing and freeing staff to concentrate on more strategic types of work. ML systems are also being used by the insurers to scan accident images or to monitor the social media platforms of the claimants to garner any discrepancy between the claims and the reality. AI can also be crucial in quick identification of the repeatable patterns that are often being used in fraud activities in numerous claims. When such information is shared with third-party data sources, it can result in significant gains in terms of cost and effort.

Intelligent Case Management

As mentioned above, AI assists the insurers with the entire claim procedure journey while automating redundant and manual processes. AI algorithms can enable segment claim cases based on complexity. As per such segmentation, claims can be assigned to specific downstream handling processes- either a claims handler for more complex cases such as cases with high litigation risk or one of the entirely digital self-service journeys such as choosing a direct repair shop in self-service. Apart from this, AI can also assist in determining the optimal claims handling the procedure for a specific claim, thereby cutting-down some of the insurer's overheads. 

Some of the business-to-business (B2B) solutions are also enabling the services of digital assistant products to the insurers. Technological advancements are allowing insurance firms to deploy AI-driven, consumer-facing chatbots. The chatbots can also redirect the finalized customer claims to the insurers who can match specific instances against similar claims to gain legitimacy.

Apart from AI-driven chatbots, firms are also looking for the ways in which AI and machine learning (ML) can help them simplify claims by processing visual data and images. One such application of this use-case can be found in the automobile insurance sector. Image-based technology helps insurers estimate accident-related damage and the amount that must be reimbursed to the end-user. Thus, AI can significantly reduce the insurers' effort while optimally estimating the damage costs.

AI holds great potential for the insurers in the store. The companies that are early to realize and incorporate AI for their claims process will gain a competitive edge as well as customer loyalty.

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