Technological Advancements in Claims Processing

Insurance CIO Outlook | Tuesday, December 27, 2022

Claims processing includes all the steps in which the insurer checks the necessary information about the loss, policy, and the event to calculate and pay out its liability to the policyholder.

FREMONT, CA: Efficient claims processing boosts insurance companies' profits and policyholder satisfaction.

Nearly 70 per cent of insurance company expenses are devoted to claims processing. Considering that most types of fraud, such as hard fraud or double-dipping fraud, occur during the claims processing process, effective claims handling is linked to effective insurance fraud detection and prevention. Fraudulent claims, on the other hand, account for about ten per cent of total claims expenditure. So, roughly 90 per cent of claims handling is concerned with resolving the problem of a customer who has been involved in a tragic incident. 87 per cent of customers use claim processing effectiveness as a criterion for switching providers.

Claims processing begins with notifying the insurance company of the damage or theft. There are several options for completing this step, such as calling the broker or using the insurance company's website/mobile app to file the First Notification Of Loss (FNOL). Some insurance companies are no longer required to notify them because IoT devices can immediately alert insurance companies about a loss. However, the FNOL, which contains information about the loss, incident, and policy, should still be filed to determine the insurance company's liability. Following the submission of the FNOL, insurers begin the initial investigation phase. The goal of this preliminary investigation is to estimate the approximate cost of the claim based on the evidence gathered through FNOL. For example, claims adjusters or computer vision models may evaluate damaged photos/videos. If necessary, this step also includes obtaining witness statements. Following the completion of the initial investigation, insurers determine whether or not the insurance company should pay for the insured's damages. For example, the insurance company may conclude that the policyholder is engaging in a criminal act, such as drunk driving. In such cases, the company is not required to pay the policyholder's damages and the case is closed. However, if the case meets the policy's requirements, the company must pay all or part of the claim.

To determine the exact cost of the claim, insurers may need to consult with experts such as engineers. Insurers frequently recommend hospitals, dentists, or vendors to solve the insured's problem at the end of this stage of the claims process. Once the repair or threat has been completed, insurers collect information on which contracted repair shop or hospital the insured used. Insurance companies use this information to transfer funds to the provider on the basis specified in the contract. In some cases, the insured may receive the money as compensation directly. In such cases, both parties negotiate and agree on payment details such as account numbers and payment due dates.

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