The business of insurance is often accused of being stuck in the past. It is said of the sector, and rightly so, that its processes, ranging from risk assessment, collection of premiums to settling claims, haven’t evolved since the concept of buying policies to secure one’s assets was first rolled out in 1861 in London.
On the flip side, there has been a 180-degree shift in the way consumers want to receive services. They’ve fully embraced digital interactions and expect service providers to be on board with this paradigm shift in doing business. They expect simplified, flexible, and transparent insurance solutions that are made available to them online. This change in expectation has nudged the insurance sector to rise from a self-induced coma and explore ways to approach digital transformation.
This presents an incredible opportunity to gain a competitive edge in the market by using digital technologies to bring a shift in the way services are made available to the end consumer. Those who choose to sit this shift out, on the other hand, will find themselves struggling to stay afloat in the face of increasingly competitive positions and intense price wars.
Some isolated instances of digitization offering a facelift to the insurance sector can be seen all around us in the way claims are being processed online and swift processing and settlement through photos and texts.
The future will increasingly leverage advanced digital technologies, turning the way insurance products are sold, and claims are processed on its head.
Let’s look at what these technologies are and how they will impact the insurance claims process:
Artificial Intelligence (AI)
Artificial intelligence has a key role in overhauling claims processing in the insurance industry. AI can make the entire process better, faster, and more efficient by enabling insurers with capabilities to pre-assess claims, automate damage evaluation, automate fraud detection in claims through analytics, make loss analysis more accurate, and predict patterns in claim volumes.
Machine Learning (ML)
Machine learning can be leveraged by insurance providers to train IT systems to adapt to new data swiftly, without requiring reprogramming. This technology can play a vital role in reshaping underwriting, product pricing, and claims processing.
Internet of Things (IoT)
A system of networked devices in buildings and vehicles, powered by IoT, can be used to mitigate accidents and reduce claims by keeping people, properties, and facilities protected through proactive care, secure communication, and preventive maintenance. The data collected from these devices can also give insurers accurate insight on consumer behavior, thus, helping them make correct assessments of the veracity of claims in case of a mishap.
Blockchain can be useful for documenting and storing claims on distributed ledgers, which can significantly reduce processing time. This technology can also serve as a facilitator of smart contracts, which are fully automated policies stored on distributed ledgers and updated from time to time.
AI-powered bot functionality can be used to streamline the course of claims processing. These bots can usher in the era of touchless claims processing by removing the element of excessive human involvement.
Bots can be used to report claims, capture the extent of damage, keep systems updated with the most recent developments in a claims process, and communicate with customers. This will simplify the process for insurers and make it near-effortless for customers.
With advanced automation tools such as robotics process automation (RPA), insurers can improve the quality of claims management through increased speed and error reduction. As opposed to rudimentary scanning software and OCR, these automation tools can perform repetitive tasks that are essential for processing claims with minimal error. This will free up human availability for more valuable tasks. Advanced automation tools can expertly emulate human action, allowing them to handle mass amounts of documents needed to get claims moving efficiently and accurately.
Self-service Mobile Apps
With self-service mobile apps, insurers can transform routine transactions using an intuitive tool for First Notification of Loss (FNOL) with self-scheduling functionalities for appointments and other tasks. As with other self-service tools, these apps must be well-planned so that the claims process is effective and successful. Also, such apps must be backed up by an exceptional support system in case a customer needs extra attention during their first self-processing claims journey.
End-to-End Digitization of Claims Process
These technologies exhibit great potential in transforming the insurance sector even as standalone tools. Still, it is when these are used in tandem that end-to-end digitization of the claims process becomes a reality.
Here is what it looks like:
You get into your car, and your auto insurer presents to you (via mobile app) the route on which you are least likely to experience an accident or other auto damage. Your insurance company adjusts your premium based on the route you take. Should you end up in an accident despite this precautionary action, you can share pictures from the scene with the insurer to help assess damage and process the claim within minutes. Mobile response drones can be deployed in more catastrophic situations where the policyholder involved is unable to contact the insurer. Other connected technologies can be used by customers to diagnose problems and report incidents.
In addition to this, data from different network devices such as home assistants, fitness trackers, smartphones, cars, and so on can be used by the insurer to understand their customers better and offer personalized experiences. This process is made more efficient with the help of deep learning techniques such as convolutional neural networks combined with AI to process complex structures of data to deliver on that personalized experience.
The processing of claims, which involves claims management, assessment and settlement, can also be made more agile, intuitive, and transparent. The entire process can be automated using a self-service model for FNOL through images or video streaming. Calculating settlements can also be automated, making it quicker and more accurate. For instance, details captured by video can be used to assess the loss and estimate a settlement amount within minutes. Information gathered through deep learning, and AI can be used to determine elements of falsehood or fraud. Once those have been ruled out, payments for legitimate claims can be fast-tracked. The entire data related to an automated settlement can be securely yet transparently stored on a blockchain distributed ledger.
A transformation is around the corner. Digital technologies are creating a new ecosystem for the insurance claims process that is innovative, customer-centric, and effective. This change is no longer a thing of the future—it’s well on its way to reality.