How Automation is Transforming the Insurance Claims Sector

Traditionally, claims are preceded over by an insurance adjuster, who may have to review multiple claims in a day and manually flag claims with incomplete information or in which they suspect fraud. Although this has worked well in the past, changing times have laid down new stipulations, and the transforming market dynamics have increased the burden on insurance adjusters.

Fremont, CA: The adoption of digital transformation in the insurance sector has been relatively slow in the past. However, in recent years, the launch of insuretech startups has filled the need for innovative technologies in the industry. This is especially true in the area of claims processing. Claims processing is a highly complex system that lays the foundation of any insurance company. Clients submit a claim for any damage incurred to an insured asset. The claim will include all details of the nature of the damage and the costs associated with it. This information is essential to the insurance agent reviewing the claim, known as the insurance adjuster, as it helps them decide if the claim will be fulfilled and, if so, what remittance will be paid. In case the claim is approved, the insurer will have to compensate the policyholder directly or through a third party on behalf of the policyholder. However, the process of reviewing claims need to be thorough and must involve in-depth analysis to ensure that the claim falls under the terms of the insurance and is genuine.

Traditionally, claims are preceded over by an insurance adjuster, who may have to review multiple claims in a day and manually flag claims with incomplete information or in which they suspect fraud. Although this has worked well in the past, changing times have laid down new stipulations, and the transforming market dynamics have increased the burden on insurance adjusters. The outbreak of the COVID-19 pandemic has had a severe impact on the insurance industry and made it extremely difficult for insurance adjusters to step out and manually inspect each claim.

The amount of information to be processed has also increased significantly. Despite the surge in data, only 5 percent of insurance companies rely on robotic process automation (RPA) to review claims. Only 25 percent are open to adopting the technology in the future. RPA can be used to automatically flag predetermined markers of fraudulent activity or inconsistencies in a claim, and bring it to the attention of an insurance adjuster. For instance, insurance companies have successfully reduced the processing time of life insurance claims by leveraging RPA systems to validate death certificates on government websites automatically. RPA systems may also automatically submit typical claims for approval, speeding up the process, and reducing the need for manual labor.

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