The increasing use of claims automation in the insurance industry is a trend that has been gaining momentum in recent years, and many experts believe that it will continue to grow in the future.
While most insurance companies concentrate on sales as the primary source of revenue, claim automation will be the backbone of insurance as it has a huge opportunity to make good impression on the consumer by ensuring quicker processing, reduced costs, data safety, and reduced human errors.
For an insurance company, everything comes down to claims – the process that affects clients most directly when the insurer delivers on its commitment and the clients get their loss compensation.
Read on to learn why claims automation is considered the future of insurance.
Claims Automation is the Future of Insurance
McKinsey predicted that approximately 60% of claims will be fully automated by 2030 for good.
In fact, claims processing is the cornerstone of any insurance business because it is how an insurance company delivers on its commitment to its customers.
But even with all this information, there are still many institutions that still need to fully realize the potential benefits that insurance automation can provide.
A few factors will help you assess whether claims automation will be the future of insurance.
1. Faster Processing & Cost Savings
One of the most critical functions insurance companies deal with is filing the claim, such as
name, policy number, address, time, and date of an incident.
The process is slow and risks many operational errors because this data is mainly entered manually and consequently.
Automation in the insurance industry can streamline processes and reduce costs by 30%.
It can help insurers process claims faster and more accurately, which can ultimately lead to cost savings.
Claim automation can increase efficiency and save costs in insurance industries in several ways:
- By automating claims processing, insurers can reduce the time it takes to process a claim.
- Automated systems can quickly gather and analyze data, which speeds up the claims process and reduces the time it takes to disburse payment.
- It can be designed to detect patterns that may indicate fraudulent claims, which can help insurers avoid paying out fraudulent claims and save money.
- Automated claims processing can help insurers provide faster, more efficient customer service, reducing the costs of handling customer complaints or inquiries.
Thus, claim automation can help insurers streamline their operations, reduce costs, and improve customer service, all of which can contribute to increased efficiency and profitability in the insurance industry.
2. Technological Advancements
With the advancement of technology, claims automation has become increasingly sophisticated, and new tools are being developed to automate more complex processes.
It suggests that automation will continue to be a significant factor in the insurance industry.
Claim automation brings technological advancement to insurance industries by utilizing advanced technologies to streamline claims processing and improve the customer experience.
Similarly, 22% of business insurance policyholders prioritize entirely technological claims processing when selecting a provider.
Here are some ways that claim automation can drive technological advancement in insurance industries:
- Claim automation involves using AI and machine learning algorithms to process claims more quickly and accurately, improving their ability to detect and prevent fraud.
- Robotics Process Automation (RPA) can automate repetitive and manual tasks, such as data entry, which can free up employees to focus on higher-value tasks, increasing efficiency and reducing costs.
- By using advanced analytics to analyze large amounts of data, insurers can gain insights into their claims processes and identify areas for improvement.
- Cloud-based systems can help insurers store and access data more quickly, providing greater flexibility and scalability.
By adopting automated systems, insurers can drive technological advancement, stay competitive and provide better customer service.
3. Make a Good Impression on Consumer
Did you know an average of 61% of consumers prefer digital tools to monitor their claim and application status?
With consumers demanding faster services, manual claims processes are replaced with automated processes that make operations more accessible, making a good impression on the customers.
According to a McKinsey report, automation can increase customer satisfaction by 15%.
For a claims handling process to be successful, it must be organized and standardized.
Time is of the essence here; if the claims handling process takes too long, it will make policyholders frustrated and unhappy.
Today’s consumers expect fast and efficient service, and claims automation can help insurers meet those expectations.
As a result, insurers that fail to embrace automation may struggle to compete with those that do.
4. Regulatory Changes
Insurance companies deal with strict regulations and audit trails, where regulatory changes become a factor in driving the adoption of claims automation.
Automation in insurance helps companies improve data accuracy, allowing companies to monitor regulatory compliance data in real time through internal reviews and prepare them for external audits.
With Robotic Process Automation (RPA) you can automate all your internal and external reports and make claims meet regulatory requirements.
Claim automation can bring regulatory changes in insurance industries by addressing some of the critical issues regulators are concerned about.
- Automated claims processing can help insurers process claims more quickly, which can help them comply with regulatory requirements.
- Regulators may require insurers to report accurate data on claims processing and payouts. Automated systems can help ensure that data is accurate and up-to-date.
- Regulators are increasingly concerned about fraudulent claims, and automated systems can help insurers detect and prevent fraud.
- Automated systems can help insurers provide better customer service by processing claims more quickly and accurately, which can help them comply with regulatory requirements.
Thus, by adopting automated systems, insurers not only improve their operations but also comply with regulatory requirements and avoid potential penalties or sanctions.
5. Fraud Detection and Security
Did you know insurance fraud in the US costs more than $40 billion annually?
Insurance document fraud is, unfortunately, a growing reality. People can fake insurance claims, making it harder for examiners to locate errors, especially with sophisticated fraud.
The company may incur more expenses than it can afford by filing fraudulent claims.
Therefore, automation can improve fraud detection by leaving detection to robots and technological tools to determine fraud accurately.
- By using machine learning and other advanced technologies, insurers can identify patterns that may indicate fraudulent activity and take appropriate action.
- Claim automation systems can use fraud detection algorithms to analyze specific fraud indicators, such as repeated claims, claims filed from the same IP address, and claims for unusually high amounts.
- The automation system can monitor claims in real time and flag suspicious claims for review, which helps prevent fraudulent claims from being processed and paid out.
- The automation systems can analyze data from multiple sources to detect fraud. Such as, they can cross-check claims data against social media data or credit reports to verify the legitimacy of claims.
Eliminating fraud and maintaining security saves companies money and keeps the insurance company running even under challenging environments.
6. Reduce Human Error
Claim processing in modern insurance remains manual, inefficient, and error-prone.
In some cases, mistakes can lead to a lawsuit and permanent damage to the business’s reputation.
Errors cost money and time. Human error is not new to the insurance industry. Companies have lost millions of dollars just because of a single human error.
By automating claims processing, companies can reduce the inefficiency and inaccuracy of inputting data by hand, measurably decrease Loss Adjustment Expense (LAE), and keep customers satisfied.
Over half of the businesses agree that business process automation minimizes human error in the workflow.
- Automating the process helps reduce errors, saving time and money that would otherwise be spent on correcting mistakes.
- It can help reduce labor costs by eliminating the need for manual data entry and other tasks, saving money on staffing.
- It ensures that data is entered consistently and accurately, reducing the likelihood of errors occurring when data is entered manually.
Claim automation in insurance is designed to help manage the increasing demands from policyholders, customers, and other partners without breaking a sweat, making the risk of errors much lesser than humans.
It is fast, transparent, and available in multiple channels to maximize every opportunity and enhance customer experience with little to no mistakes.
The insurance industry is growing and expanding rapidly, which leads to an increase in the number of documents that need to be processed.
The best way to process documents quickly and accurately is through automated data extraction from documents.
Insurers that invest in automation technology and adapt to changing consumer expectations and regulatory requirements can be better positioned to succeed in the future.
To leverage insurance claim automation software, get in touch with Benekiva, the best claims automation software.