Automated Insurance Claims Processing: How Does It Work?

With more emerging players entering the insurance market and insurance companies recognizing the importance of the digital experience, consumer demands for a connected insurance experience have grown to new heights. For insurance customers, the claims process is a critical moment of truth, making it essential that insurers deliver a hassle-free, seamless experience with faster claims processing and excellent customer service.

Disconnected claims management, slow manual processing, and repetitive tasks harm an insurer’s competitive advantage and bottom line. When an insurance provider experiences inefficiencies in their claims processes, claims leakage—that is, the difference between what should be spent on a claim and what’s actually spent on a claim—becomes unsustainably high. Accordingly, 43% of respondents to Celent's North American Property/Casualty 2023 CIO Pressures and Priorities report noted they were currently either replacing, beginning replacement, or making significant enhancements to their core claims system. Another 57% said they were focused on digital initiatives, while 78% plan to make cloud investments.

There are many factors to consider that vary from insurer to insurer: first notice of loss (FNOL), reserves, reinsurance, catastrophe management, litigation, fraud—the list goes on. So how can insurers increase straight-through processing and optimize their claims processing workflow to deliver a more connected insurance experience? A recently published report from IDC, IDC MarketScape: Worldwide P&C Intelligent Underwriting Workbench Applications 2023 Vendor Assessment, helps insurers determine just that through the lens of the current technology landscape. Take a look to see their perspective on claims process automation and advances in technology, but in the meantime, read on to learn how it can improve operational costs, lead to fewer dissatisfied customers, and more..

Insurance companies have data living across many disparate systems, like CRMs, document management systems, accounting systems, core administration systems, and more. This can be exacerbated by issues like manual processes and unstructured documents. This leads to wasted time toggling between screens, searching for information, and reentering data, increasing the likelihood of human error. The result is a prolonged, disjointed customer experience.

Relying on outdated systems and manual claims processing takes a heavy toll on insurers' bottom lines. Forrester Research estimates that maintaining older applications and technology typically costs 70% or more of an organization's technology budget, severely limiting what can be spent on innovation or new development for value-added services that would enhance the customer experience. Instead of relying on these disparate systems, insurers should look to unify and extend their data across systems with low-code.

Using low-code, insurers can bring together their existing systems without data migration, creating a single engagement layer across the entire claims process. By using integrations and open APIs to unite data, systems, and processes in a single workflow, insurers can achieve the following digital transformation benefits:

• Access a single 360-degree view of each claim and customer.

• Stay agile by having a tech stack that can easily integrate with the industry's ever-expanding digital ecosystem of IoT networks, telematic devices, and insurtechs.

• Increase productivity by minimizing the “swivel chair effect” and empowering staff to concentrate on more high-impact work.

• Improve customer satisfaction by reducing the need for customers to provide duplicative information and improving processing time. 

Utilizing low-code enables insurers to reap immediate benefits, like an enhanced customer experience and increased operational efficiency, without the risk and expense of ripping and replacing core systems.

Disparate systems and data make it more difficult to manage claims from first notice of loss to close. The pre-defined data models of legacy systems limit the ability to capture quality data. This results in manual processing intervention at multiple points over the lifetime of the claim as well as cycle time delays, particularly during periods with a high volume of claims, like after a natural disaster.

Automated claims processing gives insurers the power to tap into technologies like intelligent document processing (IDP), robotic process automation (RPA), artificial intelligence (AI), and natural language processing (NLP) to optimize claims intakes and achieve these benefits:

• Replace initial claims phone calls and paper-based processes with digital intakes to reduce manual tasks.

• Leverage IDP and AI to automatically extract information from various claim document types, including handwritten documents.

• Capture relevant claims data outside the legacy system's proprietary data model for improved accuracy of claims processing.

• Better orchestrate the claims process workflow with intelligent process automation to ensure claims are quickly routed to the best resource, accelerating claim processing time.

By breaking down silos and unifying legacy applications and new data sources, insurers can more easily capture and manage each claim from the moment it's reported while reducing the risk of errors.

To compete in such a high-speed market, insurers must improve the efficiency of claims processing and accelerate average time to close.

Here are a few ways insurers can optimize their claims operations:

• Fine-tune the claims process with workflow, business rules, and data to better segment claims processing.

• Integrate with advanced data sources like IoT, telematics, and insurtechs to enhance  the efficiency of claims processing.

• Create custom-designed workflows for different user personas.

• Leverage AI and IDP to ensure complex claims are routed to a more experienced insurance adjuster.