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How to improve claims handling with automation

Julianna Rice
August 26, 2022

Insurance brokers and agencies in the US have been using Artificial Intelligence (AI) for some time now. This is fast becoming a worldwide phenomenon, with the European insurance regulator recently releasing governance principles for the use of AI bots. Insurance automation systems are now an integral part of the business world, but how can they help to improve claims handling?

Five ways in which AI improves claims handling

The life of an insurance claims adjuster can be monotonous and long-term growth in business volumes can exacerbate the problem. While these tedious tasks need to be completed, many of them can be transferred to a Digital Coworker, often referred to as an AI bot. This allows companies to re-purpose employees to tasks that require a higher degree of decision-making.

Here at Roots Automation, we can create Digital Coworkers to fit specific purposes within your business processes. We bring together a library of parts, essentially different characteristics of the Digital Coworker, which will address particular issues and carry out specific tasks. When looking at claims handling, our AI bots can assist with a range of processes, including:

Acknowledging losses with an automated FNOL (First Notice of Loss)

The FNOL, often referred to as the first notification of loss, is the initial stage of the claims process. It involves the creation of a report detailing loss, theft or damage relating to an insured asset. While not all claims will result in a payout, all claims will require an FNOL. Consequently, our Digital Coworker can save valuable time and money with many time-consuming processes.

Some of the tasks which can be taken on include:

• Scanning insurance documents

• Extracting required information

• Identify loss claims

• Transfer of data to relevant systems

This is all done without any element of human intervention, exceptionally quickly, with a straight-through processing rate of 99%. In many ways, this process can be seen as the foundation of any insurance claim – without this, no claim can proceed.

Data extraction software

Whether looking at a CMS-1500, UB-04, or any other type of claims form, the process of extracting data from these forms is monotonous and time-consuming. In addition, historically, there have been issues with accuracy, especially when trying to auto-read challenging handwriting. At Roots Automation, we have created a cognitive solution for these challenges, an AI bot constantly learning and enhancing value to our customers.

Very often, we experience initial skepticism about our 99% straight-through processing rate. However, once our clients see the tasks carried out by our Digital Coworkers, they start looking at things from a different angle. The use of Digital Coworkers offers many benefits, which include:-

• Short, medium and long-term cost savings

• Accuracy rates that were previously unachievable

• Optical Character Recognition (OCR) offers greater flexibility when extracting form data

• Typically Digital Coworkers will operate at speeds of between 400% and 800% faster than a human worker

In the past, many insurance companies have outsourced the data extraction process. This can bring about data protection issues. Using our Digital Coworkers, all data extraction processes remain in-house therefore reducing data protection risks.

See also: Data Extraction Software vs. Data Entry Outsourcing Companies

Data entry automation

For many years there was reluctance amongst insurance companies to incorporate data entry automation processes. There were concerns about accuracy, the cost of checking and potential errors which might slip through the net. However, in 2020 the insurance sector formally acknowledged this enhanced style of data entry automation. In reality, this has been coming for some time.

Using our Digital Coworkers, you will be able to automate an array of different actions, including:-

• Data entry into specific systems

• Retrieval of additional information from third parties and other databases

• Acknowledgements to agencies and clients

In theory, data entry is relatively simple, but the time taken will significantly impact claim processing times. Therefore, the automation of this process can slash claim processing times and allows insurance companies/brokers to take on more business. Data entry personnel can be retrained and used in either:-

• Customer-facing areas of the business

• Human assisted decision-making processes

We know from speaking with clients that the data entry process can create a bottleneck with a significant knock-on effect on other areas. Alleviating this bottleneck by using Digital Coworkers, constantly learning and improving, has been a game-changer for many companies.

See also: Automation Tools: The 21st Century's Industrial Revolution

Automated claims processing

A recent report by the FBI concluded that insurance fraud (non-health insurance) is estimated to cost more than $40 billion per year. This equates to between $400 and $600 per year in increased premiums for the average US household. Fraud is a massive problem for the US insurance industry. The introduction of automated claims processing takes on a wide range of activities which include:-

• Claims set-up

• Analysis

• Handling

• Recovery

You are probably looking at this list and thinking, what is unique about that? Well, that is just the beginning of the automated claims process. The fight against fraud is an ongoing battle but, using Digital Coworkers, it is possible to automate the extraction of additional information such as:-

• Criminal history

• Previous claims records

• Social media entries

• Online databases

• Identifying possible fraudulent claims

Our AI bots will also request supplementary information where required, automatically sending out the relevant correspondence. The use of OCR, as mentioned above, is complemented by the AI bots use of Natural Language Processing (NLP) engines. Consequently, not only are they able to extract data from claims forms, but they can understand and comprehend what this means. This leaves Customer Service Representatives (CSRs) free to take on additional tasks which will fully utilize their skills.

Some of our customers have experienced an 80% reduction in manual activity surrounding the processing of claims. This has released significant cost savings, which can be reinvested into the business for long-term growth.

See also: Business Automation Heals Health Insurance Claims

Scaling up during times of high demand

Claims automation AI will be even more critical going forward, with the number of climate-related disasters expected to increase significantly. In 2020 alone, the US experienced seven tropical cyclones, 13 severe storms, one drought and one wildfire. These 22 disasters alone cost the insurance industry a combined $95 billion. There is no doubt that the frequency of such tragedies is increasing, and the cost to the insurance industry continues to rise.

In 2017, Florida was hit by Hurricane Irma, which caused damage estimated at $50 billion. This prompted a massive surge in demand for catastrophe claims handlers to no avail, as many catastrophic claims adjusters had already been deployed to Houston, TX to mitigate damage from Hurricane Harvey, which had occurred only one month prior. Consequently, many of those who saw their lives devastated in Florida were forced to wait months to hear back from insurance companies.

In this situation, there are many benefits to the use of Digital Coworkers:-

• Working 24/7 with outbreaks

• Achieving 99% accuracy rates

• Doing the work of between four and eight people

• Continually learning from experience

Reports show that 83% of clients who had a “bad experience” with their insurance company would look to change carriers. So, the introduction of AI bots helps reduce costs and increase efficiency and is also an important tool to assist with client retention.

See also: Catastrophic Claims Processing Adjusts Using AI

Your Digital Coworker will arrive fully trained

Unlike many of our competitors, here at Roots Automation, we build, train, integrate, and then deploy your bot on site. We carry out all of the IT work required to create your personalized Digital Coworker with no additional IT work after when your AI bot is introduced to the workplace. While there are significant cost savings and efficiency gains on introduction, don’t forget that your Digital Coworker is effectively still learning on the job. More cost savings and efficiencies to come!

Automation tools in the insurance industry

We know that some elements of the insurance industry have been using automated tools for some time. However, the introduction of Digital Coworkers (AI bots) has taken cost savings and efficiency gains to a different level. These bots can be proactive as well as reactive, something the industry has not experienced before. Many customers are amazed at the initial cost savings and efficiency gains, not to mention the fact that these Digital Coworkers are consistently learning on the job.

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