How Claims Intelligence Improves Pain Points for Insurers

With a wealth of actionable data at insurers’ fingertips, claims intelligence can help them assess risk, detect fraud and reduce human error in the claims process, eliminating pain points for their businesses and the insured alike.


With the insurance industry notoriously lagging behind global digital transformation, insurers observing other industries are feeling the need to join the digital revolution. This is especially acute in the field of claims, arguably the area that most impacts customer satisfaction and ensures retention. With massive stores of valuable claims data, insurers are ideally positioned to make the most of claims intelligence so they can up their game, provide solutions to a variety of pain points that have been frustrating the industry, and leverage a truly competitive advantage.

From the consumer perspective, they’re now living in an instant online world, where customer experiences on websites such as Amazon, AliExpress, eBay, etc., are seamless and digital. Consumers are understandably now demanding the high quality advanced customer experience from their insurers that they are used to. And why not? With the amount of data available to insurers, it shouldn’t be a no-brainer to offer their customers a smooth online claims experience powered by intelligent claims software.

Claims intelligence can help claims adjusters achieve better outcomes, reduce costs and effort, and ultimately increase customer satisfaction. This is the future of claims, and the future is bright.

What is claims intelligence?

Claims intelligence uses advanced claims technology and artificial intelligence to create personalized and contextual recommendations based on all the historical data on a customer and the data collected during the claim process, to facilitate a more efficient claims journey. It provides the adjuster with smart recommendations; automatically calculates the reserve; recommends vendors; and overall, takes a lot of guesswork out of the claims process, using smart, automated AI-based insurance claims technology.

This improves insurers’ decision making by allowing businesses to create process models based on data analysis, and solves the critical business challenges that have been holding them back. Claims intelligence can assist insurers in automating processes that do not require human intervention, for example, assessing the damage to vehicles or properties using visual intelligence gathered via the Internet of Things (drone feeds, smart devices, etc.). Assessors can quickly make smarter decisions, shortening the claims process, reducing the cost of the process and increasing customer satisfaction.

Claims intelligence and claims technology provide well-informed, contextually accurate decisions that can solve the main pain points that have been hounding the claims process for too long:

Risk

So far, insurance underwriters trust their customers to provide them with the information they need to access their risks. Not a great method considering that people make mistakes or are simply dishonest. The result: inaccurate assessments.

Using artificial intelligence and machine learning, insurers can automatically locate accurate information about their customers, for improved risk assessment, customized policies, and more accurate pricing. By accurately pricing risk, insurers know what reserve they require to pay claims, and are  charged accurately.

Human error

Currently, claims processes are generally impacted by several human touch points from FNOL through to final settlement, and the more complex the claim, the more people will leave their fingerprints on the process. This opens the door to a slew of human errors – incorrect keying, information omitted, and other human slip-ups that can result in claims being more expensive than they should be. Add to that the fact that monotonous manual claims procedures can result in more and more claims being dealt with by rote, in spite of their unique features.

An artificial intelligence insurance claims process can put an end to human error and significantly reduce the time it takes for information to be passed from one source to the next. Quite simply, advanced claims technology doesn’t get tired, confused or miss a step, eliminating  preventable revenue loss and increasing customer satisfaction.

Fraud

Fraud is top of mind for insurers. In the US alone, insurers lose over $308 billion every year, with about 10% of property-casualty insurance losses the result of fraud. One symptom of human error in claims processing is the difficulty identifying fraudulent claims.

AI and machine learning are key in the fight against this expensive problem. Intelligent claims processes employ AI to detect patterns that are easily missed by human examination. Meanwhile, machine learning constantly improves fraud detection by analyzing new updated data so the intelligent claims software can learn, adapt and prevent fraud. Insurers can tackle fraud more effectively and stay up to date, as insurance claims technology increases claims fraud detection  rates, and offers recommendations about resolution and fraud protection enhancement.

Fraudsters will constantly work to stay ahead of the tech, but artificial intelligence and machine learning keep up with changes in fraudulent behavior, and quickly shut it down.

Claims Leakage

Claims Leakage is any situation in which an insurer pays more than required based on the policy. Claims management systems process $1.5 trillion in P&C claims annually and claims leakage is estimated at 10% of claims payout, creating an estimated $1.5 billion problem for insurers. These inefficiencies are largely driven by the insurance industry’s traditional dependence on legacy systems and manual processes, coupled with a lack of visibility into the claims process.

The claims process is complex, and when done manually, involves agents having to sift through large numbers of policies and a wad of information to calculate the claims payout. Using intelligent claims software to analyze the insurer’s data, insurers are far better positioned to settle claims accurately.

Customer service

One of the leading causes of client churn in the insurance industry is under par customer service underscored by a lack of communication. Customers want attention, important updates, and a personal touch. Customers, who exist in an always on, always available world, expect excellent communication and customer service. The insurance industry is not exempt and is being pushed to provide the same level of immediate online service that its customers are receiving from, well, everywhere, today. With competition fiercer than ever, and insurance policies so much easier to come by, insurers are constantly faced with the threat of losing customers if they don’t provide the highest levels of service.

Using AI tools that prompt agents to contact their clients quickly and at the right times, with the right information or updates goes a long way to increasing customer satisfaction and strengthening retention.

Data Silos

Information and data scattered across multiple systems give rise to a multitude of problems for insurers. Adjusters must manually input information from one system to another, such as policy systems, payments systems, healthcare systems, fraud systems, incident reporting and risk management systems; while managers find it difficult to report on data stored in disparate silos; and compliance issues can arise.

SaaS-based insurance claims technology offers open-APIs and seamless integrations with third party systems, enabling easy integration with policy administration, communication systems, etc., sending communications, receiving and analyzing the content, storing it in the database by context and initiating automated workflows.

How AI claims technology enables mutual benefits

So many pain points, but solutions to all of them are wrapped in an artificial intelligence claims package that enables insurers to make decisions backed by facts and context to the mutual benefit of the insurer and the customer. The list of benefits is lengthy. To mention a few:

  • AI-based risk assessment enables insurers to more accurately customize plans, so their customers pay only for what they actually need, and insurers have the right reserves to pay claims.
  • A reduction in human error as a result of increased automation in the application process, increases customer satisfaction by ensuring that customers have the right plans for their needs, and saves the insurer time and resources.
  • Claims artificial intelligence significantly reduces fraud, by doing what humans aren’t capable of in detecting patterns based on massive amounts of data, preventing major revenue losses, with savings passed onto the customer.
  • By using AI and machine learning to automatically calculate the claims payouts, insurance claims technology helps insurers significantly reduce claims leakage.
  • Intelligence claims software offers insurers automated decision-making capabilities for quick claims resolution, and prompts agents to communicate regularly with their customers, increasing customer satisfaction and reducing client churn. With 87% of policyholders believing that the claims experience’s speed of settlement and process transparency impacts their customers’ decisions to remain with insurers, claims technology can play a huge part in increased customer satisfaction and retention.
  • Navigating data silos with SaaS claims management raises the level of the insurer by enabling highly advanced integration across all systems for improved communications, sophisticated analytics and the ability to increase automation.

Decision intelligence is one of the top strategic technology trends of 2022, according to Gartner. Gartner notes that integrating data, analytics and AI enables the creation of decision intelligence platforms to support, augment and automate decisions, and predicts that by 2023, more than a third of large organizations will have analysts practicing decision intelligence, including decision modeling.

Claims intelligence with Five Sigma

The data at the heart of an insurance organization can be turned into claims intelligence that enhances operational efficiency, improves the customer experience, and boosts future growth. At Five Sigma, we believe that all relevant data should be stored in one database. With this in mind, we developed our claims management system (CMS), a cloud-native, agile, and scalable SaaS solution that enables insurers to automate their claims management process.

The Five Sigma CMS imports, collects, stores, and updates all data, including the claims-related communication in one database. It uses historical and online data to generate personalized and contextual recommendations that help adjusters perform better and facilitate a better claims journey. Complete visibility of all claims data empowers management with strategic insights that help insurers make smarter decisions to perfect their operations, sales processes, and more. Advanced API-based architecture enables integration with other applications and databases resulting in easy integration with policy administration, payment systems, and more.

Claims automation takes over tasks previously handled manually, such as filing or emailing reports, reducing the potential for human error. It also streamlines communication by sending alerts, tasks, or messages to adjusters, improving communication and creating greater organizational competency.

As today’s insurers constantly seek to increase productivity and processing efficiency, reduce errors and cut operations costs, while ensuring customer retention, it is clear that advanced intelligent cloud-based SaaS solutions are key. A survey the Five Sigma conducted this year, revealed that of 100 senior property and casualty (P&C) insurance professionals, 54% reported that within the next three years, they plan to replace their claims systems, which have the highest impact on the customer experience. The report indicates widespread interest in moving towards cloud-based claims management. When respondents were asked about their main investment priorities for 2022, the two capabilities they cited most often were automated capture of all claims communications (51% of respondents) and automated claims processing with an integrated workflow (47%).

Conclusion

While the insurance industry lags behind many industries when it comes to digital transformation, more and more insurers understand the need to shift to intelligent claims management, cloud-based SaaS solutions that will solve the major challenges facing their sector today: reducing risk, eliminating human error, clamping down on fraud, minimizing claims leakage, and improving the customer experience.

Intelligent, automated, cloud-based SaaS solutions will empower insurers to maximize their efficiency and increase revenues and enhance customer engagement. By using advanced claims technology, insurers can make the most of their vast stores of data to offer their customers highly personalized service for increased customer satisfaction and retention, while improving processes, reducing human error and saving revenues.

 

Frequently Asked Questions

What is AI in claims?

Artificial intelligence (AI) is the simulation of human intelligence processes by machines, especially computer systems. AI in claims automatically analyzes relevant historical claims and other data to, for example, determine next steps for a claims adjuster, detect patterns that might escape human cognition to prevent fraud, or reduce human errors that result from human fatigue or bad habits.

What are claim systems?

Claims systems manage the end-to-end insurance claims lifecycle, from creation to settlement. Claims systems automate a significant part of the claims process. The system collects and processes information on policies and coverages, claims, and claimants, evaluates and analyzes all aspects of the claim, and provides recommendations regarding further actions and payouts.

What is a digital claim?

Digital claims, or the solutions that allow for them, are claims management programs that allow insurers to manage the entire claims lifecycle in a single solution. Digital claims processing technology empowers adjusters and agents to automate manual tasks, sift through large stores of data and paperwork, and provide policyholders with a fast and simple customer experience.

How is technology becoming a viable tool in processing insurance claims?

Advanced technologies are increasing the efficiency and speed of the claims process in a number of ways. Using cloud capabilities, insurers can make use of data and AI to implement technologies, such as computer vision, robotics, and machine learning to help automate the claims process. Chatbots on the insurer’s website or mobile app, can initiate the FNOL and payment arrangement for claims processing in an automated manner, and can serve as a first point of contact for customers seeking to make a claim. Advanced analytics’ predictive algorithms that can be used in the initial claim investigation to check policies and payment calculations, as well as detecting fraud by identifying suspicious patterns. Blockchain can automate claims processing using smart contracts, agreements stored on a blockchain and enforced by code.

What is claims processing software?

Claims processing software helps insurers manage and evaluate insurance claims from FNOL to settlement. Using automated workflows and processes, claims processing software centrally stores all claim details, including communications with the customer, litigation, negotiations, settlement communications, relevant policy information, and claim assessments.

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