Impact of Innovation on Insurtech

5 Reasons Why Insurance Companies Must Move Towards a Modern Claims System

Why Insurance Companies Must Move Towards a Modern Claims System

Many Insurtech companies worry about damaging brand image resulting from complex claim processes that their customers must experience due to sluggish legacy systems.

Many Insurance companies worry about losing new customers because of the adverse claims experience their beneficiaries are facing.

Disparate legacy systems, manual processes, and a lack of proper digital intake tools create a frustrating experience for claimants who expect a hyper-personalized experience expecting from other service-oriented companies.

How Legacy Systems Contribute to Complicated Claim Process

Multiple legacy systems and manual processes created over decades contribute to claims management’s core problems.

Things have been “done a certain way” for so long that as associates retire, they take intellectual capital with them.

In contrast, younger associates’ acquisition and retention are poor as they look to more technology-forward industries.

While the legacy system and manual processes may get the job done, they are utterly outdated to support modern compliance standards, causing security risks.

Remember, you cannot update an outdated technology because the manufacturers have already stopped making new security updates. It will cost you more in the future, hurt productivity, and severely affect asset retention.

Additionally, with ever-changing compliance and legal requirements, carriers often need to work around the system.

Multiple touchpoints and human error can delay the payment processing, a rather unpleasant experience for the policyholder or the beneficiaries awaiting fund disbursement.

According to New Accenture Research, poor claims experiences could put up to $170 Billion of global insurance premiums at risk by 2027.

The bottom line is that not creating a solid digital foundation to elevate claims puts carriers at risk of poorer customer acquisition and asset retention, which gives a bad name to the enterprise.

However, we understand why many companies keep using a legacy system because adopting a change can be difficult when you know a new system may invite unknown issues.

Moreover, training the staff to use the new technology and switching to automation can be challenging.

Therefore, choosing a Next-Gen claims solution to create a solid digital foundation and optimizing existing processes for a straight-through claims experience will ultimately save money in the long run.

Why Adopt the Modern Claims System?

The typical process for a claim may involve multiple policy data sources, First Notice of Loss (FNOL) documentation, and manual methods that can take days or weeks to process. The entire process can be laborious, slow, and open to discrepancies.

Therefore, it is not surprising that insurers seek to upgrade their current claims operations to a more automated, efficient, quicker, and dedicated system.

To stay relevant, carriers must actively move towards a Next Generation or Next-Gen claims system.

Read on to figure out how adopting a digital claims solution will create operational efficiencies, free-up resources, and eases complex claims to improve your brand image and retain assets.

What are Next-Gen Claims?

Next-Gen Claims is the modernization of claims operations that exceed beneficiary and associates’ rising expectations and supports the evolving operational ecosystems essential for an integrated, cross-business experience.

Digitization of the claims process means insurance claims are disbursed to claimants in days, not weeks.

The digitization of manual processes means that associates have more time to focus on complex claims.

Additionally, claims the technology can provide an omnichannel experience where beneficiaries can choose to have a hybrid experience where they leverage both digital and human resources.

For the claims associates, a digital rules-based process improves efficiencies, reduces NIGO, eliminates manual work, and offers immediate solutions to complex problems.

Intelligent claims technology transforms processes and systems into a single claims platform.

  • It is accessible anytime, anywhere, and on any device.
  • It increases the capacity for processing complex claims.
  • It is configurable to meet specific carrier’s needs.
  • It enables dynamic workflow for efficient processing steps.
  • It enables the digital submission of FNOL documentation.
  • It supports internal and external audits with configurable claim packets.
  • It provides flexible payment options that can be programmed for each customer.

5 Benefits of Adopting Next-Gen Claims

Modern claims technology will change claims for good, from eliminating manual processes to increasing data accuracy for NIGO elimination.

1. Technological Growth

Technological growth should be the prime concern of every Insurance company to continually adapt to changing compliance and regulatory requirements while staying competitive for future growth.

Those who employ a thorough assessment have the opportunity to evaluate how to approach their situation best.

Carriers face challenges as they look to next-generation claims, whether or not they should build from within or partner with a technology solution.

growth of technology

Therefore, it’s essential to leverage a claims administration platform that is scalable to support growth and innovation

Adopting Next-Gen claims implies imbibing the latest technologies to process claims as quickly and effectively as possible.

Be wary of layering new technologies over the existing ones without evaluating current and future needs, as you could end up with more of the same issues.

2. Overhaul the Entire Claim Cycle

The claim processing cycle can be complex because of the many steps and variables requiring input from different systems, data sources, stakeholders, and manual calculations.

Insurance Claim Cycle

A thorough assessment of the entire claim processing cycle can be daunting, but it is a necessary step to determine if a carrier is ready to take a “crawl, walk, and run” approach to their claims transformational plan.

Therefore, a third-party assessment can help determine how to proceed best.

3. Lower Claim Resolving Costs

Processing each claim incurs administrative costs. These vary depending on the complexity of a claim and the need for manual involvement.

Most insurers pay over 20% of their administrative cost on processing a claim, which is relatively high.

Therefore, automating the claim process will help cut loopholes in between and shorten the process, saving you many claim-resolving costs.

Lower Claim Resolving Costs

Claims can be handled through complete digital processes, so associates can focus on assisting beneficiaries that want human interaction or solutions to complex claims.

Remember, you can add new customers yearly, but the claim-resolving cost will continue to increase if not addressed on time.

You can slash these unnecessary expenses and boost your profit by adopting the Next-Gen claim process.

4. Single Touchpoint Claim Handling

Next-Gen claims processing can be defined in different ways. It can be a completely automated claim experience or an omnichannel experience where a hybrid of digital and human interaction is used for the claim processing.

Offering an omnichannel experience reduces workload and narrows the point of interaction for the customers and claims associates.

Touchpoint Claim Handling

Claimants with straightforward claims can submit their requests via a dedicated channel like the website, chatbox, or email, and the automated system will process the entire claim cycle.

Since the introduction of automation, each step in the claim process has become quicker by 50-70%, and it can happen outside of traditional business hours!

In some sectors, the time taken to process a claim averaged from 20 minutes doing it manually to just 8 minutes via fully automated portals.

5. Reduce the Use of Legacy System

The future of insurance customer experience lies in adopting Next-Gen technologies; by that, we mean intelligent automation.

Maintaining legacy systems and using manual processes is getting more difficult and expensive.

Legacy System

Many legacy systems rely on old coding languages, and as more senior associates retire, they often take decades of knowledge with them.

Processing more claims manually are never the answer, nor is hiring more people.

Conclusion

Whether your carrier ultimately replaces its core claims system or takes an optimized approach, the need for digital evolution is ever more critical.

Undertake Benekiva’s SaaS solution for claims automation and claims optimization to make claims and client engagement more favorable.

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