The volume, diversity, and velocity of data are all still increasing (Figure 1.) This makes managing risk, the main responsibility of the insurance sector, more difficult than ever. Although there has been a recent push for carriers to adopt digital transformation, most automation and optimization projects have been limited to particular stages of various workflows.
The deliberate incorporation of Artificial Intelligence (AI) into organizational operations, with an emphasis on augmenting the competencies of knowledge workers, has the potential to enable institutional insurers to navigate the current unpredictabilities and confront the growing risks originating from the insurtech industry. Nevertheless, in spite of this acknowledgment, the complex web of regulatory supervision limits insurance executives and contributes to the industry’s glacial rate of advancement.
It is astonishing to see that certain progressive carriers, even in their updated paradigms, nevertheless gather data via paper records or irregular, unstructured digital representations. When important judgments need to be taken, this technique causes serious flaws since it frequently leaves workers—claims adjusters in particular—without instant access to essential information. This operational gap significantly reduces productivity and often results in expensive mistakes. Furthermore, it is a tedious, complex, and error-prone operation to manually examine and extract insights from data that is spread across numerous platforms, formats, and structures. The way standard operating procedures are now set up makes them insufficient to keep up with the rapid growth of the company. As a result, an increasing number of insurance executives are turning to the strategic application of AI to manage their data assets more successfully.
Considering all of this, it should come as no surprise that by 2030, the global insurance business is predicted to employ AI to the tune of USD 33.77 billion (Figure 2).
Based on our expertise, we claim that AI is a priceless tool for giving insurers a comprehensive view of their clients. It has the power to unify historically different datasets that are inherent to the insurance industry, allowing people involved in all stages of the claims management lifecycle unrestricted access to vital information.
When such transparency is realized, a world of game-changing opportunities opens up. Deep insights into client preferences and living conditions are gained, and new customer journeys that are firmly rooted in customer-centricity appear. This increased flexibility helps to strengthen client connections by providing better experiences, and it also makes it possible to offer highly customized quotes, policy suggestions, and tailored ads at each stage of the consumer journey. When taken as a whole, these strategic imperatives can significantly increase the bottom line.
- General Uses of AI in Insurance Management
- Top Insurance Management Trends
- So, in claim management with AI, is there a quicker route to resolution?
- How do we approach the AI-enabled claims processing transformation at Appic Softwares?
General Uses of AI in Insurance Management
In general, artificial intelligence can be used to partially automate the whole administrative process related to claim administration. Numerical and natural language data can be analyzed using a variety of techniques. AI-powered tools can quickly find the information they need by searching through a variety of knowledge bases, policies, healthcare forms, and other relevant documents. As a result, these models can improve the skills of knowledge workers by helping them quickly determine which claims are acceptable, see warning signs that point to fraudulent claims, and reliably ascertain which percentage of claims should be paid out.
Currently, finding and obtaining data from multiple sources takes up about 30% of a knowledge worker’s time. These technologies improve employee productivity while also freeing up time for more significant work by managing repetitive processes like data input, claim routing, and document inspection.
Top Insurance Management Trends
Currently, over 31 percent of claimants say they are dissatisfied with how their claims are being handled. This number makes up a sizable chunk of a carrier’s customer base, and the loss of these clients’ renewal payments might result in financial losses of an estimated $170 billion over the next five years.
This study indicates that, surprisingly, the amount paid out in a settlement is not the primary cause of this discontent, though it obviously plays a part. Instead, the matter is how quickly the claims procedure is completed as well as the complexities of navigating each step of the process.
An equally relevant estimate emphasizes that simple inquiries for claim status updates account for about 40% of incoming calls. These regular questions fall into a category that AI can handle both competently and on its own, increasing operational efficiency.
The challenges Insuarance Managers face
For a number of compelling reasons, accurate indemnity valuation has proven to be one of the most difficult tasks for claims adjusters. The attainment of accuracy in loss-valuation necessitates maneuvering across a terrain populated by elements such as imprecise policy wording, a propensity for careless underwriting and claims evaluations, the requirement for watchful fraud control, and the always changing regulatory landscape. Adjusters may find the procedure intimidating as they attempt to balance operational efficiency and accuracy with so many dynamic variables at play. These difficulties are made worse by the present problems with rising inflation, shortages of chips, interruptions in the supply chain, and other problems.
The manual procedures still used by many carriers present the second major obstacle. An adjuster’s time is frequently greatly consumed by managing paperwork, unstructured digital data, and communication with all parties involved. Additionally, computations and data entry done by hand are prone to mistakes and inaccuracies. These problems may therefore result in disagreements with claims, unjustified delays, and extra administrative labor. Aside from that, antiquated practices frequently lead to inconsistent results, uneven workloads, ineffective resource management, and higher overhead.
An analogy that is frequently used is that even if a lot of insurers have made progress in building digital highways, manual off-ramps are still there every ten feet. This suggests that even though some digital and automated processes have been incorporated into the workflow (claimants can take pictures of their damaged cars and submit them to the carrier’s app, for example), adjuster intervention is still usually necessary as a follow-up, frequently through phone calls. As such, the entire claims process continues to be disjointed, which may present further difficulties, especially when it comes to complex situations including disabilities, group benefits, and other situations.
The bar for expectations in the field of claims management keeps rising. Consumer behavior changes combined with competitive pressures have made it so that claimants now expect quick service and a simplified procedure. Carriers need to prioritize the wider deployment of AI and other technologies, increase automation, and focus customer-centricity if they want to survive in this dynamic environment.
So, in claim management with AI, is there a quicker route to resolution?
Unnecessary delays continue to occur in many stages of the claim management process inside major insurance businesses, especially for simple claims. These delays are frequently caused by the length of time it takes for claims to move through the carrier’s various teams’ processes. In addition to increasing the number of client requests, these fragmented stages add more steps to the process. Additionally, there are still a ton of optimization opportunities where AI can be effectively applied, even for high-end claims where prolonged adjudication and filing phases are to be expected.
How do we approach the AI-enabled claims processing transformation at Appic Softwares?
The First Notice of Loss (FNOL) and the whole claims lodgement procedure are optimized as the first step in AI-enabled claims processing transformation. AI technology is ideal for accelerating eligibility checks based on policy matching, offering policy explanations and assistance, and guaranteeing timely handling of basic checks during the initial claim submission. It can also be used in conjunction with Robotic Process Automation (RPA) bots. Artificial intelligence (AI) algorithms are used to gather, summarize, and classify the complicated paperwork needed for claims since claims material is usually not organized in a way that makes it simple for claims teams to obtain answers to particular queries that are required to progress the resolution.
Thus, the following reasonable actions are:
- streamlining and expediting the initial data intake process via a variety of platforms, including mobile applications and web portals (which employ chatbots and other Natural Language Processing (NLP) technology).
- putting in place a strong backend infrastructure to facilitate AI algorithms that can identify possible high-cost claims, predict claim complexity levels, validate covered events, and estimate the chance of litigation.
In adjudication, labor-intensive demands are often a defining feature of the process. Even for simple claims, staff members must carefully examine claims and the supporting documentation, determine the amount of loss, communicate with claimants through a variety of channels, possibly investigate previous exchanges if they are on file, and perform a significant amount of data entry work.
We employ AI to simplify this intricate process by using a straightforward binary decision for the program. To be more precise, we use Generative AI (GenAI) to gather preparatory information, extract pertinent data from several sources, and classify relevant documents. Next, based on the visual evidence a claimant presents, Computer Vision (CV) models assess the damages, and fraud-detection machine learning (ML) algorithms with specialized training detect possible fraudulent activity. We now know that these tools, when used in any combination that meets the needs of the carrier, can greatly improve an organization’s operational accuracy and efficiency.
Insurance companies need to stay fully aware of the intrinsic limits of the AI model. No matter how far technology progresses, some types of claims—most notably, those that are extremely sophisticated, emotional, or large-scale—will always be outside the purview of artificial intelligence. Errors and omissions (ENO), directors’ and officers’ liability (DNO) in the business sector, and serious accidents in the life insurance industry are a few examples of these.
Thus, the strategic focus in this domain is on processing optimization at specific stages, automating those that don’t require human intervention, and reserving human intervention for situations that require manual exception management.
AI offers many exciting opportunities as we move into the last stages of claim resolution, settlement, and closing. Settlement can take many different forms, from monetary payments to replacements or repairs. Different workflows are triggered by each of these instances, requiring different procedures. To calculate the necessary amounts and enable fund transfers to claimants or repair companies, for example, claim management systems of record must be consulted and payment mechanisms must be triggered as soon as possible.
Our supply chain management systems are used in the context of component replacement or maintenance to guarantee the timely delivery of necessary supplies. AI technologies have enabled us to automate most, if not all, of these processes with smooth integration with our current systems. This is especially true for high-frequency and low-complexity claims. Furthermore, human assistance is only used in situations that demand close examination.
We use orchestration tools driven by machine learning if the downstream jobs are compliant with APIs. When situations call for integration with less flexible legacy systems, we use AI-driven process automation solutions.
The involvement and communication of the client is another crucial component of the settlement phase. By utilizing GenAI-powered communication solutions, we quickly distribute alerts across the channels that our customers choose. This strategy improves the customer experience, keeps their clients updated about the status of their claims, and significantly reduces the workload on our companies’ contact centers.
AI can also be used to automate the final closure phase of claims review. We’ve had great success working with insurance companies to use predictive models to quickly identify possible areas for process improvement as well as significant trends in the types of claims and related expenses. Additionally, the models can provide us with thorough analysis and suggestions on the best deals and policy upgrades.
Notwithstanding the strict regulatory frameworks of the insurance sector, artificial intelligence (AI), including GenAI, CV, and other models, is becoming more prevalent in the field. Many carriers throughout the world, including our own clients, are already using algorithms for use cases including assisting claim adjusters in making quicker and more accurate decisions.
The ramifications will grow more important as adoption keeps increasing. Predictive models based on AI and ML show great potential in aiding insurers in combating fraudulent claims, which now cost them over 10% of total insurance claim expenses and about USD 80 billion a year.
If the company has the infrastructure and integrations in place to support end-to-end automated workflows, it can also cut the processing time for straightforward routine claims from days to seconds. When used properly, the models can significantly increase an organization’s efficiency and free up claim adjusters to concentrate on more valuable activities.