3 Ways Claims Automation Improves the Policyholder Experience
Claims automation is now an integral part of the US insurance industry. Insurance claims processing traditionally involved many often monotonous manual tasks with potential for errors and discrepancies. The ability to automate time-consuming elements of the process has dramatically improved the claims experience and customer satisfaction.
There are three main ways in which claims automation improves the claims experience:
Increased efficiency enhances customer experience
- Claim processing times reduced
- Structured claims automation improves accuracy
Let’s analyze each of these enhancements in isolation and discuss the cumulative impact in the future.
Increased efficiency enhances customer service
Historically, the cost of insurance services had been the main purchasing factor for policyholders, sometimes to the detriment of the customer experience. Recent surveys have shown that this is no longer the case. Customer retention is now more closely linked to enhanced customer satisfaction, with claims process automation proving critical. Actively acknowledging the value of your customers will go a long way towards retaining them.
Robotic Process Automation (RPA) and Cognitive Process Automation (CPA) have considerably impacted claims processing. The ability to automate the data extraction process while also introducing an element of artificial intelligence has been a game-changer for many carriers, brokers, agents, and policyholders. We know that, historically, the process of extracting data from CMS-1500 claims forms has been a challenge for claims departments. Illegible handwriting, information in the incorrect boxes, and incomplete forms haven’t assisted claims processing efficiency.
The use of state-of-the-art Optical Character Recognition (OCR) technology has enhanced the data capture process. Artificial intelligence means that automated claims processing software can now handle unstructured data, actively seeking the information required from a CMS-1500 form. The claims management process now includes automated communication with customers, chasing up missing data and keeping customers in the loop. A 99% straight-through processing rate is now achievable, with a fully automated service between 400% and 800% faster than a human worker.
Significant reduction in claims processing times
In recent years, we have seen a marked increase in insurance claims, leading to huge demand for claims handlers. During 2020 alone, there were seven tropical cyclones, 13 severe storms, one drought and one wildfire in the US. The combined cost to the insurance industry was a staggering $95 billion, and unfortunately, there were delays in processing claims.
The introduction of intelligent automation and machine learning has hugely reduced processing times and also increased accuracy rates. Recent reports suggest that 83% of clients who had a "bad experience" with their insurance company actively sought to change carriers. As we face the prospect of more climate-related disasters in the future, insurance carriers are more conscious of customer satisfaction. While customers appreciate that catastrophic claims events are also often challenging times for insurers as well, policyholders need to feel that their investment in an insurance policy is offering value for money. In addition, the ability to speed up catastrophe claims processing means that policyholder claims are paid earlier, and with more accuracy.
The use of artificial intelligence has enhanced processing automation times and led to improvements in fraud detection. Insurance fraud will be a long-term and constant challenge for the insurance industry. However, advances in detection rates have a positive effect on customer premiums. This is often the unseen benefit for customers and ultimately leads to improved customer satisfaction.
Structured claims automation improves accuracy
The subject of how to improve claims handling has been a bone of contention for the insurance industry. Reducing the time taken to process claims, while maintaining accuracy and high levels of customer service, has been challenging. The introduction of RPA and CPA offers a more structured step-by-step approach to claims management. In addition, there has been a general reluctance by many to buy into the use of artificial intelligence. However, increases in efficiency and accuracy have alleviated many of these fears.
A number of business processes associated with claims management are now automated, with no stone left unturned. For example, machine learning now means that claims software will automatically contact clients where information is missing, or further details are required. As we touched on above, fraud prevention is also part of this structured claims automation process. The process will even review a claimant’s public social media channels to alleviate concerns about potential fraudulent activity.
As insurance companies constantly strive to increase efficiency, this structured, automated process has been a godsend. Where obvious that CMS-1500 claims are either genuine or fraudulent, the relevant action is taken automatically.
However, some claims may require further investigation and are returned to human claims handlers. Even though artificial intelligence/machine learning is potent, it does not replace the experience and skills of a competent claims handler. Therefore, the automated processing of CMS-1500 forms should not be seen as a battle between machines and humans. Instead, they actually complement each other leading to significant accuracy and efficiency improvements.
Claims automation is still in its relative infancy
In reality, automated processing, artificial intelligence and machine learning have been part of the claims process for some time. It is fair to say there have been considerable improvements in recent years, new technologies introduced and a more structured approach taken to processing CMS-1500 forms and similar documentation. The use of artificial intelligence means that modern-day software services are constantly learning, thereby increasing their value to the business.
When you also consider advances in OCR technology, previously unreadable CMS-1500 documents are now acceptable data sources. While structured forms are still an essential part of the claims process, data extraction is now more flexible with unstructured data recognition now possible. Claims management software will actively seek out the data required, wherever that may be on the form.
Slowly but surely, customers are becoming more accepting of artificial intelligence and automated claims processing. This has to a certain extent been going on behind the scenes for some time. However, advances in technology have taken this to a whole new level. Increased efficiency, quicker settlement of claims and an automated processing structure have benefited insurance companies and their customers.
It will be interesting to see where this technology takes us in the years ahead, but it is fair to say that we are only just scratching the surface of the potential benefits.