Why insurance claims are the perfect use of automation
Claims are a multi-step process that are sequential and rules-based, making them ripe for automation.
January 18, 2022 – Robocorp
In an industry as competitive as insurance, companies are looking to increase efficiency while controlling costs. Technologies such as robotic process automation (RPA) can do just that, but while it sounds enticing, it isn’t always clear where to start.
A good first step is identifying which processes can be automated. For the insurance industry, claims processing stands out as a prime candidate for RPA. Claims are multi-step, multi-party, and rules-based, and with that in mind, let’s explore what makes this process ideal for the application of automation.
The insurance claim process
As we all know, an insurance claim is a request made to one’s insurance company to pay for an expense resulting from an incident covered by their insurance policy such as a fire, motor accident, or other covered event.
The multi-step process can involve several parties including the insurer, the claimant, a broker or agent, and other third parties. While insurance claims can vary in complexity, they typically follow a process that resembles the following:
- Customer files the initial claim.
- Insurer reviews the claim and gathers information.
- Insurer evaluates the claim and compares it to the policy.
- Insurer pays or denies the claim.
Why it makes sense to automate claims
In general, it can feel like the question of “which processes to automate” has no single correct answer. That’s because there are many elements that go into deciding whether to automate a given process, including many internal factors. In addition to the sheer volume of claims that an insurer processes, there are several distinct reasons why insurance claims are generally a good candidate for automation.
1. Claims follow a sequential process
While it is a simplified version, the process outlined above highlights that claims follow the same general process every time. That is, steps three and four will not occur before steps one and two. Furthermore, there are several employees within the insurer who are responsible for each step. Automation allows the team to accurately track the progress of the claim, for the right person to be managing it at any point in time, and for the handoffs between teams to be seamless.
2. Data is received in a variety of formats
Initial information from the claimant can come directly from the claimant or from a broker or agent. Regardless of the party or the format, the data needs to be entered into the insurer’s system. Automation can open emails or PDFs related to a claim and automatically input the data to the claims platform. This can happen throughout the process as other pertinent details are collected, including police reports, pictures of damaged property, and more.
3. Claims are rules-based
Automation thrives on rules. Instead of an employee checking to see if a required document has been received, the automation can be set such that if the document has not been received, then send a reminder and do not let the claim move from one stage to the next.
Additionally, there are rules outlined in a policy that govern how to calculate a payment, and what happens to the policy next. For example, one-time and annual deductibles can be calculated automatically based on the policy’s rules. Additionally, there can also be rules that increase premiums based on the number and/or dollar value of claims in a given time period. The insurer may cancel a discount or increase the premium for the next period if a claim is made within a certain window, exceeds a particular payout amount, or conforms to a pattern in the customers’ claims history indicating a high risk.
The benefits of claims automation
By now, you probably have a good idea of how automating claims can benefit insurers, but to outline the benefits specifically:
- More accurate data—faster. Automation can help to avoid errors in data entry, ensuring that the information being relied on to make decisions is accurate from the start.
- Better customer communication. Automation helps to trigger timely notifications to claimants about the status of their claim and any pending requirements.
- Inform underwriting decisions. The frequency and value of claims can be automatically tallied and added to the customer record, so underwriting has a full picture of the evolution in the risk for each customer.
- Faster claims processing. In addition to reducing manual work, automation helps insurers process claims faster since they are immediately notified when a specific requirement is met by the claimant.
The role of AI/ML in claims automation
It stands to reason that artificial intelligence (AI) and machine learning (ML) can play a role in automating claims. For example, optical character recognition (OCR) technology is a simple form of AI/ML that can be used to extract data from documents relating to the claim.
A more complex use of AI/ML is in the approval/denial of the claim. A key step in the claims process is deciding whether to approve or deny the claim. Instead of a human reviewing every single claim, AI/ML technology can make the decision whether to approve or deny the majority of the claims, while reserving human review for the edge cases.
How, when, and where to bring AI/ML into your claims process is a topic for another time (and a great idea for a future article). For now, it’s worth noting that while AI/ML technology can play a role in your claims automation, it is not required. That is, a claims automation solution can be complete without AI/ML, and it can still provide value to your organization.
Automating insurance claims with Robocorp
As the relevance of insurance claims automation becomes more evident, one of the next important questions is what to look for in an automation solution.
Robocorp offers massive opportunities to integrate with other tools in the realm of insurance and general workforce collaboration and productivity. This means that you can easily link your automation tools to other tools being used to store client information, trigger email communications, perform underwriting, compliance checks, policy reviews, and more.
Additionally, Robocorp’s pricing model allows you not only to sidestep expensive vendor lock, but to start small and scale up. That is, rather than investing in an end-to-end insurance automation solution, you can run a simple process as a test, see how it benefits your company, and build from there.
Finally, because Robocorp is built in Python, adding OCR or advanced AI/ML technologies to the automation process is seamless. Python is the programming language best equipped for AI/ML technologies based on its syntax and extendability, and therefore the technologies are inherently compatible with Robocorp’s platform.
Getting started with claims automation
The first step is to understand your claims process, and identify where chokepoints and bottlenecks apply. From there, you can identify which issues can be solved by automation, and which ones have to be left to humans.
Robocorp recommends enlisting the help of one of our certified partners to better understand how the automation technology can be applied to your process. Or you can always reach out to the Robocorp team for further assistance. Click here to learn more about automation for the insurance industry.