Claims process automation: Say goodbye to manual claims processing

Claims processing is an important service in the insurance sector, where insurers receive, investigate, and process a claim/theft report submitted by a policyholder. Like any other loan/insurance applications, claims also involve much paperwork, which is time and labor-intensive, thereby delaying claims settlements. Despite the HIPAA regulations stating that all standard transactions like claims should be submitted electronically, processing and submitting claims manually are still a reality for numerous unavoidable reasons. And, surprisingly, a large portion of customers still hesitate to present their claims digitally as they prefer human contact. However, experts believe that claims process automation will eventually take control over the claims market by 50% or more. New millennials and Gen Z will dominate half of the world’s adult population by 2030, and they prefer less physical interaction and more digital services.

What is claims processing?

Claims processing is a crucial business process involving obtaining all the necessary information about policyholders to determine the appropriate amount to be paid on a given claim. In addition, it specifies an insurance company’s liability for each claim.

The entire claims process is intricate, requiring complex data from internal and external sources for further assessment, approval, classification, payment calculation, and claims settlement. However, as stated earlier, the manual approach is time-taking and prone to error, resulting in inaccurate claim terms and ineffective customer service. Further, claims processing workflows are engineered solely for adjuster efficiency rather than maximizing user experience. As a result, without realizing it, insurers are losing profitable business opportunities while handling and processing claims traditionally.

Therefore, claims process automation is the best way forward, as it helps insurers to support speedy resolutions, clear communications about claims’ status, and human touch in customer service – the prerequisites of modern users.

Automation and its role in claims insurance, finance, and healthcare

According to experts’ predictions, claims processing would continue as a primary function for carriers. However, the need for efficiency and accuracy of operations, deliverables, and customer support is increasing steadily among insurers looking to eliminate the risk of litigation or fraud with claimants. The downside of manual processing wrong claims experience can lead to poor customer satisfaction and higher costs for insurers. That’s why insurers must look beyond cost savings for more data-driven and analytical customer service. Also, to preserve the growing expectation for the human touch in insurance claims, insurers need to bolster their technology infrastructure to settle claims faster, with high accuracy, and at lower costs. Therefore, manual workflows would be replaced by advanced technologies like automation and AI. Insurance claims automation leverages advanced algorithms to accelerate claims routing for greater efficiency and accuracy while curating a personalized customer experience.

An integrated claims process automation also provides data to fight and prevent fraudulent activities. With advanced technologies like IoT and new data sources at their fingertips, insurers are better positioned to monitor risk, trigger interventions, and mitigate challenges at scale. At the same time, automated claims processing relieves workers from labor-intensive low-value tasks so they can speed up case resolutions and payments.

The problem with manual claims processing

Manually processing claims is tedious, comprising numerous low-value recurring tasks like creating vendor profiles and collecting unstructured data from disparate sources. This approach increases the complexities of workflows and gives birth to process inefficiencies leading to a higher dependency on human resources. In addition, the manual method gives rise to processing backlogs and various other challenges, impacting daily operations. Lack of governance and cohesiveness, lengthy processing time, hurdles in data extraction and claim verification, higher operating costs, and poor compliance are some of the critical challenges of manual claim processing. All these factors culminate in poor customer support service and an increasing number of dissatisfied customers.

Manual claims processing and its business impact

Providers still residing in the ancient era are losing their market hold to rising competition from InsurTechs and other non-traditional players threatening the former’s existence Hence, there is growing pressure on insurance companies to start thinking beyond incremental improvements. Unfortunately, claims providers are not sophisticated enough to harness the wide variety of data available to improve the customer experience.

Today, speed, efficiency, and transparency are critical for quality claims experiences, and tech-native claimants expect service initiated from mobile devices and completed within seconds. The inability to accommodate popular choices is causing an existential crisis for insurers. And over-reliance on manual efforts is simply exaggerating the current challenges. As stated earlier, handling process requests in bulk manually takes work. The complexity of datasets delays the whole process, creating backlogs and an increasing number of dissatisfied customers. This affects process efficiency and employee productivity while driving growth opportunities for the business. Like many other areas in insurance, the claims process requires immediate automation attention as poor documentation, delayed application, inadequate insurance coverage, and insufficient knowledge of providers aroused out of manual processing prove detrimental to a business’s health.

Claims process automation – How is this an effective solution?

Claims are the most visible, customer-facing function in the insurance sector. Poor claims experience can damage the provider in terms of cost and brand reputation. In the digital era, where social media influences a buyer’s investment, purchase, and security preferences, the risks for insurers are further amplified when dissatisfied claimants share their bad experiences on social and customer review sites. Their reviews, in turn, influence other prospects’ choices as well. However, the same platform can be used to gauge customer needs and take necessary actions.

Insurance claims automation leverages advanced technologies, data, and analytics to accelerate the auditing and recording of applications and their approvals for speedy resolutions while meeting compliance standards effectively. Further, a combination of AI, automation, data, and human intelligence allows staff to work more productively and effectively to respond to unprecedented surges in claims promptly. Digital improvements and data in the claims process can help insurers with the following:

Therefore, claims process automation and data-driven and analytical experience can easily balance financial performance and customer satisfaction for insurers.

Roadblocks to claims process automation

The pandemic catalyzed innovation and improvement, a testing ground for insurers to put their technology investments on a fast track. Companies pivoted overnight to transform their operation dramatically and embrace the new norm of remote work and customer engagement, overcoming cultural, structural, and other barriers.

Today, claims process automation is no longer a privilege; it is necessary to meet the needs of digitally native customers, who will make up nearly half of the adult population by 2030. Until then, carriers must balance the varying expectations of young adults with those of Gen Xers and baby boomers not comfortable with digital interactions. Therefore, insurers are still confronted with numerous roadblocks when fully automating and digitalizing the claims process.

Resistance to change: For every change to occur, initiators must overcome the mental blockage of people toward transformation. The biased approach to technological advancements, especially for automation and AI, has stemmed from the general paranoia of technology replacing humans. Such resistance is detrimental to business growth and prosperity. Therefore, a good session should be arranged to educate employees on the potential benefits and career advances courtesy of new-age solutions.

Lack of technical know-how: A biased mindset is the birthchild of inadequate knowledge about innovations and technologies. Skills enhancements are crucial for advanced software solutions to run effectively and reap the benefits. Therefore, insurers should enhance their in-house staff’s skills and technical knowledge, which would be comparatively more cost-effective than hiring tech experts separately.

Absence of adequate IT infrastructure: Just elevating employees’ skills and technical understanding will not be enough if proper IT infrastructure is lacking. Hence, the first step towards strategic change should be building an in-house IT team responsible for integrating new software systems, educating employees about the software basics, monitoring its performance, and providing initial support during breakdown.

Data privacy and security concerns: Data privacy is a primary concern when implementing an automated software system and feeding it with confidential data. For instance, claims process automation requires processing, evaluating, and recording customers’/clients’ data for approving insurance covers. Any vulnerability existing in the system can lead to data leakage, costing the company’s trust, reputation, and revenue as penalty fees. Thus, automated platforms from providers like EdgeVerve, provide security assurance apart from accelerating the long-haul claims process.

Benefits of claims process automation

Claims process automation can help insurers overcome numerous challenges their staff faces, from documentation to record maintenance, claims approval, final processing, etc. Automation curbs settlement timelines and assists staff in crafting stellar customer experiences. Therefore, the benefits can be summed up in the following points:

Strategic steps to successfully implement claims automation

The steps to implement claims process automation would be similar to any software system integration. Here is a list of strategic steps to follow to initiate an automation pilot project:

Step 1: Define your automation objectives

Identify and shortlist reasons why you need an automated software system for the claims process.

Step 2: Decide your budget

Understand how much return you can obtain from an investment and decide your technology budget accordingly.

Step 3: Verify vendors before selection

Learn about the shortlisted vendors by checking clients’ online reviews, matching their offerings against the price, and taking your pick.

Step 4: Employee buy-in

Get your employees on board with the change and educate them accordingly.

Step 5: Pick a pilot project

Start by automating claims for smaller clients and understand how claims process automation works and the benefits you obtained before testing on more prominent clients.

Step 6: Prepare your datasets

An automated system works best in the presence of data. So, take the help of automation and AI technologies to capture, extract, and create your database.

Step 7: Build your IT infrastructure

The in-house IT team should be well-equipped to offer the necessary backup during system breakdown before the support team from the vendor arrives.

Step 8: Regular software monitoring

The in-house staff and the IT department are responsible for continuously monitoring the new platform for bugs and fixing them accordingly.

Step 9: Evaluate and scale

Observe the new software system’s changes and evaluate its performance and overall impact before deciding to scale automation to other vital areas.

The future of claims process automation

The future of claims process automation looks promising, with more data and analytics and advanced technology solutions redefining how claims are received, processed, approved, and settled. With cutting-edge solutions like IoT and Blockchain making inroads into the insurance sector, the whole process would be further streamlined, much to the satisfaction of both employees and customers. A few technology trends to look out for would be:

The key takeaway

Change is constant, and the evolving technology market can attest to this statement. So, it is given that digital native customers would expect services matching their conveyance and expectations. Therefore, claims process automation has become the need of the hour, and insurers can no longer steer clear of the change. However, its success depends very much on the type of software solution selected.

XtractEdge Platform from EdgeVerve can easily integrate with existing enterprise applications and tags along with various advanced added features, customization, and tech support, enabling insurers to scale up their claims process. In addition, the platform is known to process millions of documents at a time. And it offers robust security features to prevent any data breach. With InsurTechs making headway into the market, claims process automation is the only way for insurers to stay ahead of the competition curve while catering to their client’s needs per the latter’s preference and conveyance.