As the insurance claims management ecosystem continues to evolve, now is the ideal time to reimagine the claims journey. Insurance carriers have much to gain by leveraging modern advanced technology. Insurers have the opportunity to completely transform their claims operation to become a dynamic, cost-effective, and (most importantly) efficient machine.
What is Straight-Through Claims Processing?
With straight-through processing, financial companies can speed up the time it takes them to process a claim by eliminating the need for manual intervention. While straight-through processing has yet to be widely adopted by the insurance industry, it's rapidly gaining the attention of insurance claims management professionals that want to improve how they do business and make the customer experience more convenient.
Technological improvements during the past 20 years are largely responsible for the industry's acceptance of straight-through processing. The ease with which consumers can access up-to-the-minute data on the internet has shaped their expectation that an insurance claim should be settled in a few days. Using legacy claims processes, insurers may take weeks or even months to process a claim. This unnecessary and expensive process can result in customer dissatisfaction.
Fortunately, insurers can now leverage the power of technology to produce a much shorter claims timeline without sacrificing accuracy.
When Does Straight-Through Claims Processing Work Best?
For straight-through claims processing to be most effective, four factors must be at play for an insurer:
- Straight-through claims processing works best when risks are completely understood.
- High-quality, reliable, and accessible data makes modeling easier.
- Productivity drives profitability because margins are thin.
- Consumers demand speed, and providing it allows the insurer to be competitive.
How Data Supports Straight-Through Claims Processing
Data analytic and AI tools help insurers shift their focus from their product to their customer by producing reliable insights into the behaviors and needs of consumers. Insurers are in an ideal position to use the data they collect to drive the straight-through claims process. They have access to financial data, CRM data, claims data, and policyholder data. While they constantly seek more efficient ways to improve the customer experience and drive results, they could use this data to also support situationally-appropriate straight-through claims processing.
Here's how new technology can help insurance carriers transform their operations with advanced analytics and automation.
Automated Claims Processing
According to McKinsey, automation has the potential to reduce claims journey costs by up to 30%. A report from UK-based Autonomous Research, LLP shows that AI could save U.S. companies across the banking, insurance, and investment banking sectors $1 trillion. When an insurer digitally transforms the claims experience, they benefit from reduced expenses, faster settlements, and fewer bottlenecks.
Of course, there's more to insurance claims management than shortening the amount of time it takes to process an insurance claim.
Claims Prevention and Anticipation
Insurers hoping to use customer data in the form of data streams from vehicles, homes, and workplaces must build trust with their clients. Smart tech can use data from these sources to help anticipate service failures and anticipate claims. This type of risk prevention presents a significant opportunity for commercial insurers if they can educate their clients on the benefits.
Fraud Detection
Many insurers are leveraging technology and AI to reduce fraudulent insurance claims. Fraudulent claims add up to a minimum of $80 billion each year in the United States, $30 billion of which is property-casualty claims.
Accessible and available data is critical to facilitating fraud detection. When a large amount of data is analyzed, systems can more accurately identify patterns of fraud.
The Future of Straight-Through Claims Processing
Implementing straight-through processing has numerous benefits for insurers. As insurers take a close look at their workflows to determine whether a straight-through process may be appropriate they have the opportunity to examine legacy mindsets that may have previously gone unnoticed. This may lead to time and money-saving improvements that wouldn't have otherwise materialized.
Technology such as AI, robotic process automation, chatbots, and advanced analytics is worth the investment if insurers can show how it supports business objectives and customer journeys. In the future, claims automation may also depend on data gathered from IoT-connected sensors, mobile apps, and even drones. Using this technology to improve the customer experience and streamline operations may require adjustments within the organization.
While the insurance industry is slowly learning how to use modern technology to facilitate straight-through claims processing, there will always be certain complex claims and unusual risks that require expert review. Even so, allowing technology to take over the most monotonous tasks associated with processing insurance claims frees up an insurer's most talented professionals to pay special attention to high-value work.
As insurers choose to invest in better data and identify scenarios where straight-through claims processing could be beneficial for the organization, human underwriters can leverage the same high-quality information to spend time on what really matters.
To learn more, check out our whitepaper on Touchless Claims.
