Claims Process Automation – Why is it the Best Investment for Insurance Companies?

Claims Process workflow Automation

Claims processing is the most important and also the most tedious work that insurance companies are tasked with. Most insurance companies find it challenging to manage tasks or distribute work to the right resources in a timely and cost effective manner. These inefficiencies keep you from achieving your organizational goals and impact customer satisfaction. Claims process automation is the most effective way to optimize claims processing. Claims processing automation helps prioritize tasks based on value and resource availability. This blog explores claims process workflow, automation in insurance claims, and various technologies in claims automation. 

What is Claims Processing?

For an insurance company, everything comes down to claims. Claims processing is an intricate workflow that involves 20+ checkpoints that every insurance claim must go through before it is approved. The formal definition of claims processing is the fulfillment by an insurer of its obligation to receive, investigate, and act upon a claim filed by the insured. There are several administrative and customer service layers in the claims processing workflow. 

Claims processing starts when the insured submits an insurance claim. In essence, claims processing refers to the insurance company’s procedure to check the claim for adequate information, validation, justification, and authenticity. At the end of claims processing, the insurance company reimburses the claim amount in whole or in parts. The company may also reject the claim if found invalid or duplicated or forged. 

Why is claims management so important? It is the process that affects clients directly when the insurer delivers on its commitment and the insured gets compensated for their loss. Most insurance companies focus on sales as the main source of revenue, but claims processing is a bigger opportunity to impress clients. Quick and efficient claims processing drives satisfaction and loyalty, and reduces costs at the same time. 

For a claims handling process to be successful, the workflow needs to be organized and standardized. Time is the most important factor here, timely claim processing translates to customer satisfaction. Claims that take too long to process leads to frustrated and unhappy policy holders, and ultimately loss of clients. According to Deloitte, claims processing takes up around 70% of insurers costs. 

In most insurance companies, claims handling is a complex and rigid manual process that involves sifting through large volumes of unstructured data. Manual processes are slow and often take days to weeks for processing complex claims. The errors and fraud attempts in manual claim processing is very high. The efficiency of claims processing is related to the amount of insurance fraud that costs the insurance sector billions of dollars each year. 

Automated claims processing helps in solving the problem of duplication and fraud in claims processing. Claim automation is a remedy for solving most of the issues faced by the insurance sector. The customer satisfaction score (CSAT) and net promoter score (NPS) are the most important metrics for any insurance company. Automated claims processing in insurance helps bring revolutionary change to costs, operations, and customer experience. 

Steps in Claims Processing

An insurance claim typically involves 5 main steps, from the moment you report your loss to the resolution of the claim. From an insured’s perspective, they need to gather all the relevant documents required to support their insurance claim. Let us look at the steps in claims processing. 

  1. Connecting with the agent – your insurance agent is the primary contact for your insurance policy. The agent should fully comprehend your situation and have complete knowledge on how to proceed with your claim. Once you have given the agent a complete list of all the items that are damaged or all the healthcare services availed, you need to support the claim with documents that explain the situation further. An adjuster will then follow up with you to continue the claims process. 
  2. Investigating the claim – once the claim has been reported, it will need to be investigated by an adjuster. The investigation conducted by the adjuster determines the amount of loss or damages covered by the policy. The adjuster also identifies any liable parties, and you can support the process by providing any witness information or contact information of parties. 
  3. Reviewing the policy – once the adjuster’s investigation is completed, the adjuster will go through the insurance policy to determine what is covered and what is not covered. In the end the adjuster also informs about any applicable deductibles that may apply to your policy. 
  4. Evaluation of damage – the insurance adjuster may hire appraisers, engineers, or contractors to lend their expertise towards accurate evaluation of the damage. Once damage evaluation is complete, the adjuster will provide you with a list of preferred vendors to help with repairs. It is not necessary to hire these experts, but they save a lot of time and research. 
  5. Arrangement of payment – once repairs have been completed and damaged/lost items are replaced, or healthcare services have been rendered, the adjuster will contact you regarding the settlement of your claim and payment. The time for receiving the reimbursement amount depends on the complexity and severity of the damage. 

Every claim is different, and claim processing varies according to the type of claim. Irrespective of the type of claim, the adjuster devotes the time and attention it requires to process the claim. 

Ways to Improve Claims Processing

Insurance companies are unable to manage tasks or distribute work to the right resources. Right from submission of the claim to payment of reimbursement – customers expect complete transparency and speed that manual claims processing cannot provide. So, the first step towards improving claims processing is to do away with labor intensive, paper-based manual processing. 

Optimizing internal processes is the best way to improve efficiency of claims processing. In a typical insurance company, offline work items remain unmanaged and unorganized, hence, the time required to work on them is not tracked effectively. When time is not tracked properly, it becomes difficult to optimize the productivity of staff. Streamlining the claims processing workflow by eliminating manual, repetitive tasks, ensures that resources are optimally utilized. Workflow automation is a great way to streamline claims processing, prioritize tasks based on value and staffing, meet service delivery levels, and analyze processes for insight and process efficiency. 

Aligning claims-processing priorities with overall organizational goals is the key to efficiency. Which claims should have highest priority? Which tasks are at a risk of missing due dates? And which claims require specialized resources and processing? These are some of the questions that one must consider while assigning priority to insurance claims processing. A careful, rules-driven approach to task assignment ensures that resources are optimally allocated, and priorities are assigned appropriately. 

Another effective way to improve efficiency of claims processing is to analyze existing processes for efficiency and insight. Understanding internal processes as they happen helps identify saving and improvement opportunities. Real-time and historical reporting and tracking of claims processing, allows you to continually optimize claims processing and gain visibility into trends into claim membership that would otherwise be ignored. 

Improving the pre-claims experience by offering assisted service offerings can streamline claims management even before filing for insurance claims. Some ways to improve the pre-claims experience are in-context web chats, delivering personalized status updates, recording relevant customer information, and communicating with customers via channels of their choice. 

Claims processing automation offers an integrated approach to processing claims. Automating the claims workflow provides several benefits like fewer errors, clearer communication with clients, quicker claim settlement, and deep insights into claim status. 

Importance of Automating Claims Processing

Process automation provides a host of benefits to insurance companies. Claims processing being a tedious and time-consuming process, has a direct impact on the financial health of the business. To appreciate the importance of automating claims processing, we should first identify the main challenges in manual claims processing. 

Varied Insurer systems – there are hundreds of insurance companies in the United States of America, some are public companies, while others are private ones. There is a lack of standardization in claim processing due to variety in the type of insurance companies. For example, some insurers accept claims via web portals, while others require email communication. Insurance staff therefore, need to toggle between different systems to customize the claim submission format for each claimant. 

High volume of claims – insurance companies need to process thousands of claims on a daily basis, which requires a significant amount of time and effort. Such high volumes result in backlogs in claim processing and payments. When done manually, claims processing eats up a huge chunk of productive work hours of employees. 

Costly data errors – a certain degree of human errors and bias is present in every industry. But, in a data-intensive industry like insurance, data errors margins are huge and have a significant impact on business operations. Submission of inaccurate claims or non-compliant claims results in delays or even rejection of claims by the insurance company. When the time and effort wasted in validating and processing these claims is factored, these errors might be highly expensive for the company. 

Speed dependent cash flows – the cash flow within the company is heavily dependent on the speed and accuracy of claims processing. Insurers are reliant on successful claims processing to secure and augment their cash flow. Slackening in claims processing or errors in claims processing endangers a provider’s bottom line. 

Claims automation helps insurers overcome all the above challenges and also improve the efficiency of claims processing significantly. Claims process automation is important for insurance companies in the following ways – 

Faster claims processingautomation in insurance claims processing increases the volume of claims processed on a daily basis. Moreover, RPA bots in insurance claims processing can process claims continuously, without needing a break. Training and deploying a single bot allows the insurance provider to increase the number of claims processed in a day by as much as 70%. 

Minimal data errors – automation eliminates the possibility of several types of errors in claims processing- like wrongly entered data, invalid insurance codes, non-compliant submission formats, etc. Consistency and accuracy in claims automation is greatly improved as it brings standardization into processing of claims. Moreover, an RPA bot will not perform a task outside of established parameters, which eliminates non-compliance. 

Better employee satisfaction – manual toggling between insurance systems is not the best use of human capacity for innovation and creativity. Spending too much time on mundane tasks in claims processing lowers employee morale and productivity. Automating repetitive, admin tasks in claims processing, those that require low-intelligence and are labor intensive, do the heavy lifting for insurance professionals. Employee satisfaction and productivity increases because they are no longer engaged in low-value tasks. 

Increase scope of insurance offerings – when insurance agents are freed from manual heavy lifting, they get to focus on higher-value responsibilities that increase the scope of insurance offerings. The number of claims a provider can process is nearly unlimited, when Bots are brought into claims processing. 

Sustained and substantial ROI – the investment in claims automation is well worth due to 2 main reasons – one is the improved productivity directly impacts the business bottomline, and second reason being the lasting value provided by automation. Claims processing automation enables faster and more accurate claims processing, which in turn ensures timely and consistent payments. The potential to scale up via automation delivers higher throughput even when handling larger claim volumes. RPA bots are trained and suited for the long haul. Moreover, Bots require minimal training as opposed to human resources that require intensive training. 

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How to Automate Claims Processing

Claims automation takes care of the entire claims processing lifecycle – from claim submission to payout. Automation may be done for specific tasks in claims processing or the entire lifecycle may be automated, depending on the nature of insurance operations followed in the company. For example, in companies where the claims processing is made up of complex tasks, automating the entire process may not be feasible. Instead, automating simpler, straightforward, repetitive tasks may be the right thing to do. 

Irrespective of the type of automation route that your company adopts, there are 3 main components that the automation system must include. 

  1. Integration with other core systems – the core of the claim automation system must integrate seamlessly with other systems like accounting or underwriting. The core of the automation solution plays a key role in the automation initiative. To achieve best results, the system must integrate with other business systems. 
  2. Automated data management – accuracy and consistency of insurance data throughout the organization is a must in any insurance company. The core of claims processing systems focuses on analysis of unstructured and disparate data. Automating data management and analysis accelerates and streamlines the claims management process. 
  3. Centralized access and seamless connectivity – claims processing automation implements a central repository that connects to various data sources and combines them to eliminate redundancy and repetition in data entry and related errors. 

Once you have the above critical components in the claims automation system, you can add other features that add business value. Whether to automate the entire claims process or parts of it is a decision that the management team needs to make depending on the budget and business requirements. 

Automation Technologies in Claims Processing

Popular automation technologies in claims processing automation are Artificial intelligence (AI), Intelligent Process Automation (IPA), and Robotic process automation (RPA). An article titled “Artificial Intelligence and Machine Learning in Claims Processing” published by GlobalLogic reveals that AI and machine learning technologies are transforming the Insurance Industry. Consumers are constantly looking for tailored solutions when they apply for insurance claims, and AI and ML technologies intelligently extract data, analyze it, and make recommendations by reviewing user profiles. 

Robotic process automation for insurance claims processing is the most popular automation technology adopted by insurance firms. RPA uses automation tools and workflows that automatically extract data from insurance documents. 

Intelligent process automation (IPA) is used for classifying claim policies, providing details on policies, and minimizing operating costs. IPA is useful for collecting insights from previously created documents and creates smarter machine learning models using this data. 

Conclusion

As per Allied Market Research, the Global AI in Insurance Market is projected to reach $45.74 billion by 2031, at a growth rate of 32.56% between 2022 and 2031. Claims automation is effective due to the rule-based and structured nature of insurance operations. A no-code workflow automation solution like Cflow delivers seamless automation for small, medium, and enterprise-scale insurance companies. Cflow offers a host of features that simplify and accelerate claims processing. With the right workflow automation tool in place, insurance companies can enhance revenue growth while streamlining insurance services. Choose Cflow, and choose intuitive claims processing. Sign up for the free trial today. 

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