How Insurtech Is Helping In Automating Claims Processing For Insurance This Pandemic
In the past, insurance companies’ digital transformation has been slow. Now, many insurtech startups have been launched to fill the need for innovative technologies in the industry. One of the fields that urgently needed digitization was claim processing.
What is Claims Processing?
While the phrase itself may seem self-explanatory, claim processing is a highly complex system that forms the basis of any given insurance company. When an insured asset incurs damage that is covered by an insurance policy, a client will submit a claim that includes all the information regarding the nature of the damage and the costs associated with it. This information is essential to the insurance agent reviewing the claim, known as the insurance adjuster, as it helps them decide if the claim will be fulfilled and if so, what remittance will be paid.
If the claim is approved, the insurer will compensate the policyholder directly or an external party on behalf of the policyholder. However, claims are vetted thoroughly to ensure they not only fall under the applicable policy but to ensure they are genuine. Insurance fraud is a serious crime and can pose a major threat to an insurance company. Fraudulent claims are estimated to cost global insurers billions of money per year.
Modern Claims Processing and the Effects of COVID-19
Traditionally speaking, claims processing has always been conducted by an insurance adjuster. The adjuster may review multiple claims in a day and manually flag claims with incomplete information or those they suspect of fraud. This may have worked well in the past, but today the average insurance company can expect to have hundreds or even thousands of claims submitted in a single day. The quantity of information regarding a single claim has also skyrocketed to include things like telematics information and property sensors.
Robotic Process Automation and AI in Insurance Claims
Due to the surge in data for insurance, it is good to know that there are now insurance companies that currently depend on robotic process automation (RPA) to review claims, and other insurers are also considering adopting these technologies in the future.
RPA can be used to automatically flag predetermined markers of fraudulent activity or inconsistencies in a claim, and bring it to the attention of an insurance adjuster. For example, insurance companies have been able to reduce the processing time of life insurance claims by using RPA systems to automatically validate death certificates on government websites. RPA systems may also automatically submit typical claims for approval, speeding up the process, and reducing the need for manual labor.
Adding AI to the mix means a company will be capable of far more sophisticated claims processes such as risk monitoring, prevention, and mitigation. Just to cite an example, a driver in the future will likely have telematics built into their vehicles, similar to the existing technology in cutting edge cars and automobiles. These systems may send information regarding your driving behavior and routes and update your insurance regularly. If an accident were to occur, telematics systems could send that information directly to your insurer, accompanied by pictures for AI assessment, and then automatically approve your claim. A similar process may also evolve through telehealth.
Modern pandemics also bring to light the need for faster innovation and regulatory updates in the insurance industry. The COVID-19 pandemic is an unprecedented healthcare emergency, however, it has expedited some aspects of modernization in the healthcare industry, and by extension the insurance industry. As many were left without options, telehealth exploded in popularity. Although there may be some states or cities around the world now have laws that govern private payer reimbursement for telehealth services, many healthcare consumers have been resistant to engaging in telehealth. COVID-19 may change consumers’ minds about telehealth and other aspects of digital healthcare, and insurers should follow suit.
COVID-19 is already making waves far beyond healthcare, impacting commercial insurance and transportation insurance, among many other sectors of the insurance industry. The onslaught of claims brought on by the pandemic will likely leave a lasting impact on the insurance industry as claims, lawsuits, and legislators follow.
Startups on the Rise
The insurance industry has a thriving future, as many insurtech startups have been launched to fill the need for innovative technologies in the industry. Insurance companies have also acknowledged the growing importance of innovation: in fact, most insurers agree that technology is no longer advancing steadily, but rather exponentially.
Insurers have not shied away from startups either; as some of them are now actively working with startups or universities on digital initiatives.
To sum it all up, these currently are the innovative ideas that drive insurtech startups forward. Elegant solutions to complex technical problems are the lifeblood of the technological revolution. Claims processing alone can advance leagues with the technology available on the market today, but only if it is recognized and utilized properly.
Inmediate is an insurtech startup from Singapore that is using the latest technology such as Artificial intelligence, Distributed Ledger, and NLP, making insurance processing and underwriting fast, cheap, and flexible. That gives for better processes, lower costs, improved time to market, and new revenue opportunities.