Why AI? 7 benefits of AI-driven insurance claims management

...updated 3/14/2024...

Digitization and automation in the insurance sector have both been gathering momentum over the last five years, with an exponential boost provided in 2020. With that, a new kind of customer has emerged; one who is now accustomed to the convenience, speed, and instant gratification of a digital world; a customer who now demands 24/7/365, always-on, anytime, anywhere access to their insurance provider.

So, it’s no surprise that as revealed in a recent Deloitte survey, a staggering 95% of insurers say that they are currently laser-focused on accelerating their digital transformation initiatives. That focus is largely on claims management which, according to Deloitte, is going to be the new behind-the-scenes battleground for transformation, differentiation, and importantly, automation. Considering that typical straight-through processing rates are at less than 10%, it’s easy to see why insurers must make use of the technologies that can dramatically boost data accuracy and help set up “clean claims.”¹

How Artificial Intelligence is transforming the claims management industry

Which technology is leading that charge? Artificial Intelligence (AI) and the implementation of AI in claims management and insurance. What, exactly, is AI? It's the application of advanced analysis and logic-based techniques to interpret events, automate decisions and initiate actions. This is made possible with the application of Machine Learning (ML), which enables the creation of algorithms or statistical models that can convert a series of data points into a single result. ML algorithms learn to identify patterns and correlations in data through “training,” which they can then use to provide insights and predictions without being explicitly programmed to do so.

By 2025, 60% of claims will be triaged with automation.² Forward-thinking companies are utilizing intelligent technologies, such as AI, to:

• Accelerate claims processing

• Increase throughput and accuracy

• Deliver an enhanced customer experience

• Meet industry compliance and regulatory agency requirements

• Protect data and business continuity

• Support a decentralized workforce

• Improve claims volume forecasting

1. Accelerated claims processing

Through the use of AI in claims management, an automated claims processing workflow can optimize human-in-the-loop processes, speed processing times, mitigate fraud, and enhance the customer experience. A claim is not, unfortunately, a single document. A single claim can include a packet of several documents – some paper-based, others digital – such as:

• Claimant’s identity and personal information

• Medical, damage, and accident reports

• Notice of loss reports

• Photographs and videos

• Witness statements

• Damage repair estimates

• Insurance coverages

• Government agency reports, and more

No matter the source or form of the document, however, AI can automatically capture, collect, extract, analyze, and validate what it determines as relevant data… and, with incredibly reliable accuracy. How? By utilizing enriched data analytics and quickly figuring out what to look for in defining the document type. It then identifies key data fields to pull out of each document type and determines where to feed that data. The resulting claims process is now automated, accelerated, and far more efficient. The process is also considerably more “human friendly.”

2. Increased throughput and accuracy with the “clean claim"

Leveraging sophisticated AI/ML technology, insurers can build a highly automated claims intake process that means fewer manual tasks. Manual processing, of course, can lead to errors that result in customer attrition, inaccurate claim payments, and an increased susceptibility to fraud.

The key to efficiency in claims management is the establishment of “clean claims.” However, even with the most sophisticated AI claims automation tools in place, tech-savvy individuals who can perform the “human-in-the-loop” tasks are still an essential component to clean claim processing. Here, the insurer may choose to rely either on the company’s internal resources or outsource the “human touch” tasks to a third-party team of experts.

3. AI can deliver a better customer experience

Due to the very customer-service-focused nature of the industry, insurance companies are particularly vulnerable to customer attrition. To further complicate customer service for insurers, today’s customers demand real-time, anywhere, anytime responsiveness to their needs; what is today often referred to as the “touchless customer journey.” This consumer demand is accompanied by an extremely low tolerance for failure to deliver.

At the same time, insurers rely on their Net Promoter Score (NPS), to attract and retain customers. An NPS is influenced by anything that changes the way a customer feels about the quality of the service they receive. Are they receiving the timely, meaningful interactions they’re looking for? This is where AI – with its ability to create more meaningful interactions between information systems and human beings – can assist with NPS. And the ubiquitous chatbot, or “conversational assistant,” is a perfect example.

Through AI, chatbots are capable of “learning” from each customer engagement. The assistant enhances its knowledge base with each interaction, making it increasingly effective with each engagement. Additionally, a chatbot responds almost instantly, regardless of call volume. But answering fast is not enough. Beyond simply answering customer questions, a chatbot can be integrated with an organization’s information systems; capable, even, of managing personalized customer inquiries, such as a request for a payment history. This not only frees agents to focus on more complex issues that demand a true human touch, but also improves time-to-resolution, overall customer satisfaction, and renewal rates.

4. Take the complexity out of compliance

Claims and costs are driven by regulations and compliance, and there are few industries as heavily regulated as Financial Services, with insurance companies leading the pack. Meanwhile, the gap between the surveillance capabilities of regulators, and the insurance company teams responsible for compliance, is widening.

Utilizing AI-driven compliance solutions, insurers can ratchet up their workflows to effectively navigate an ever-increasing, and evolving, compliance landscape. AI solutions can drive workflows in the areas of auditability and transparency. These workflows enhance the compliance team’s ability to protect and validate data and with that, mitigate the risks associated with regulations set forth, for example, by the California Consumer Privacy Act (CCPA), its amended California Privacy Rights Act (CPRA), the Gramm Leach Bliley Act (GLBA), and the Health Insurance Portability and Accountability Act (HIPAA), to name just a few.

5. Protect data and business continuity

Claims processing requires the storage and management of vast amounts of data. Like any information repository, an insurer’s data management system is susceptible to cyberattack and data breach. AI/ML can quickly stem a costly and reputation-damaging cyberattack with its ability to “study” and identify existing data similarities and patterns. It then seeks to recognize those same characteristics in all incoming data. Should it detect an anomaly, it will notify a user or network administrator, preventing both downtime and potential data loss.

6. Improve claim volume forecasting

Insurers rely on volume forecasting to set the proper premium at the start of a contract, and the ability to forecast claim volume – precisely and reliably – is a critical component of this process. Custom AI models, driven by Machine Learning, are capable of quickly and accurately analyzing claim data that can assist in forecasting the complexity, as well as the amount, of individual claims; the impact of which cannot be overemphasized. Large claims with uncertain outcomes, for instance, can now take precedence over smaller claims with more predictable outcomes and resources allocated accordingly. The result? Improved claims triage, business results, and customer experience.

7. Support a decentralized workforce

In our post-COVID-19 world, according to Gartner, 48% of U.S. employees now work virtually. Gone are the days of face-to-face collaboration among underwriters, adjustors, and support staff members. As work shifts to remote, insurers must shift to AI-driven information validation and sharing solutions. What do these solutions bring to the table? Instant, secure access to all claims data from any device, anytime, anywhere. Reliable capture, validation, and accuracy of data. The elimination of manual processes that would often result in time wasted in the search for physical documents or recreating lost ones. Near real-time access to actionable insights across individuals and departments that can further enhance claims processing operations. And that’s just the beginning.