Insurance companies are reevaluating and reengineering their systems and processes to keep up with the digitization – including the insurance claims settlement process. Though this process has always required human involvement, digitization brings disruption and improves nearly every aspect. Insurance companies must now choose whether to remain working more traditionally or embrace the changes that come with the digital transformation of insurance.
This blog will discuss the insurance industry challenges and explore how digitization can liberate the insurance industry to enable faster and more efficient claims settlement processes.
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Challenges Facing Traditional Claims Settlements
One of the primary efficiency metrics is claims leakage. It’s the difference between the amount spent on resolving a claim and what should have been spent ideally. Over time, this difference adds up against the costs of claims settlement, thereby negatively affecting the bottom line of insurance agencies.
Another challenge is keeping up with changing customer expectations regarding efficiency in claims settlement processes. Insurers are under pressure to offer excellent customer service while maintaining efficient operations. It can be tough to achieve this balance, but it’s essential to ensure they deliver on their key metrics – particularly profitability.
The good news for insurers is that they can adopt insurance technology solutions based on artificial intelligence (AI) and machine learning (ML) that can improve the customer experience from first notice of loss (FNOL) through to settlement. Chatbots, fraud analytics, and document management solutions can increase accuracy and speed, providing a better customer journey.
How digital transformation of insurance can help with the challenges
To further explore some of these issues and identify possible solutions, let’s take a more in-depth look at what actions insurers can take to mitigate them.
Addressing Process Inefficiencies
One of the insurers’ main sources of inefficiency is managing their supplier network. This can be time-consuming, depending on the coverage offered and the variety of supplier agreements. When it is important to deliver a quality service, it is also crucial to do so in the most cost-effective way.
Several insurers are using blockchain to reduce the amount of invoicing and reconciliation errors. Automating accounts reconciliation for processing supplier invoices was implemented by a few insurers and is being run as a proof of concept by the London Market Group. All have shown a significant reduction in invoicing and reconciliation errors, reducing levels of rework and improving end-to-end delivery times.
Digital Self-Service Enablement for Customer Satisfaction
The rise of digital self-service is changing the way we live and work. Insurance companies have enabled multiple elements of their claims processes digitally, including FNOL (or ENOL), progress tracking, and settlement. This benefits customers by making the process more transparent and flexible – for example, they can report a claim 24/7 – and also delivers cost savings to the insurer.
Technology companies can provide both in-house and off-the-shelf solutions to customers. Off-shelf solutions enable customers to describe an incident, add supporting photos and videos, and submit their claims online anytime. The claims information is instantly available to claim handlers in a clear, ordered fashion, allowing the handler to determine the appropriate claim outcome. Customers can monitor the claim’s progress from their phones and tablets.
Fraud Detection and Mitigation
Fraudulent claims are a sensitive topic for any insurer because they can be very costly. Fraud detection is often considered a ‘dark art’ because insurers are usually reluctant to share their strategies and methodologies. However, several vendors, such as shift technologies, deliver successful fraud detection solutions.
Furthermore, insurers need to have effective anti-money laundering measures in place to prevent criminals from being able to launder the proceeds of their crimes and turn ’dirty’ money into legitimate funds. One such measure is machine learning, which can help detect and flag suspicious activity.
Future of Digital Insurance Claims Settlement
Technology has already arrived to help digitize the claims process, and some insurance providers are already experiencing the advantages of the digital transformation of insurance. Software not only helps companies get products to market faster, but it also enhances the customer experience at every stage.
By automating certain tasks, customers can get answers to their questions faster and with less hassle. As a result, they are more likely to be satisfied with their experience and renew their policies.