Document Automation in Insurance Claims Processing
In the modern economy, automation has become a must-have in nearly every industry. Insurance is no exception. Claims processing is a mission-critical task for any insurance firm. Claims processing makes up a significant part of the insurers costs / expenses. According to Deloitte, claims processing makes up around 70% of insurers’ costs.
Processing claims entails interacting with frequently unhappy people who had an undesirable experience and impacts their overall satisfaction. As a result of their unsatisfactory final claims processing experience, EY discovered that nearly 90% of insurance clients consider switching their insurance provider. This is the reason why insurance companies look for automation to reduce operational costs and improve customer satisfaction.
Automation has the potential to revolutionize the way insurance companies process claims and can help in the following ways:
- Reduce costs associated with manual processing
- Reduce time to process a claim
- Faster customer service
- Higher customer satisfaction
- Better management of workload
- Reduce paper work
Challenges with claims processing and potential opportunities
Claims processing is one of the most common — and time-consuming — workflows for insurance carriers and customers alike. The common problems that insurance companies experience include
- Various forms and types of documentation in variety of file formats
- Influx of high number of customer service inquiries across many channels
- Dissatisfied customers because of time to get a response
- Manual labor inefficiencies that frustrate employees
- High prevalence of errors because of manual work
- Heightened susceptibility to fraud.
The insurance industry is no stranger to technological change. 80% of the CEOs are looking to improve operational efficiency to drive revenue growth. The following areas are what CEOs are looking to address
- Improve Customer Satisfaction
- Reduce costs for processing the claims
- Improve accuracy of claims handling
- Improve Employee Satisfaction
A 1% improvement in the accuracy of claims processing can help save millions of dollars for an insurance company. Source: 1
Claim process & documents review
The insurance claim process is a complex process. It involves a lot of paperwork, data collection, and knowledge of the insurance product. The process typically begins with the filing of a claim form. This is a request made to the insurance company for an incident covered by their insurance policy such as a fire, motor accident, or other covered event. This involves many steps and typically involves a number of people: customer, broker, agent, contractors etc.
- Customer files the initial claim
Customer will provide the necessary information to the insurance company, such as the policyholder’s name, contact information, and a description of the incident or event that caused the claim to be filed.
The process the information is sent adds complexity in the downstream processing.
- This information can be sent in various forms — email, fax or a picture in an email attachment.
- Along with this information, a lot of supporting documents, including pictures, are sent via email or uploaded to a portal.
- Some of these documents include details from contractors involved in this process and can be in various formats depending on the contractor.
- These documents can be sent in various formats such as picture, word or PowerPoint or text or pdf or excel etc.
- These documents can also be packaged as zip files or as email attachments and sent as well
2. Insurer gathers the information sent
Once the customer files the claim, an insurance company employee or contractor has to review all the information that is sent in a variety of formats.
- This includes reading various documents in variety of templates and variety of file types
- Document in picture format needs to be converted in to text
- Identify for what kind of claim it is & verify coverage is present
- Identify what kind of claim documents that is sent
- Verify if all the information needed are sent
- Verify if the files or the claim is duplicate
- Do any preliminary check for fraudulent activity
- Extract specific information from many of these documents and copy it over to the right place in the insurance system
This typically is a very time consuming process. This is repeated for any additional information received from the customer.
3. Insurer reviews the claim
After the claim information is fully copied over to their internal system, the insurer will investigate the claim and determine if it is covered under the policy.
- If the claim is approved, the insurer will provide a payment or reimburse the policyholder for the expenses.
- For some insurance claims, additional paperwork may be required, such as bills, receipts, or proof of ownership. This request will go to the customer.
- Additional appeals if claims are rejected also involve additional document requests.
Claims process pain points summary
- Time consuming and error prone process across multiple work streams
- Manual identification, categorization and extraction of relevant information resulting in higher costs, lower efficiency and inaccuracy
- Too many data points needed for evaluation using unstructured documents submitted by customers that come in different formats
- Lower customer satisfaction as the customer is looking to get this claim done quickly and get a fast response.
- More work downstream including identifying duplicate claims, duplicate documents, incorrect fraudulent documents and any missing documents
Benefits of document automation in claims processing
Automated Claims Processing offers a variety of benefits to businesses, including cost savings, improved accuracy, and increased efficiency.
- Automation can provide an improved customer experience, since claims are processed quickly and accurately with minimal manual intervention.
- It can also reduce the amount of time spent on administrative tasks, freeing up resources for more strategic efforts.
- Automated Claims Processing also reduces the risk of human error and improves accuracy and consistency, ensuring that all claims are correctly processed.
- Automation can provide real-time updates to customers, giving them greater visibility into the status of their claims.
- Automation can provide greater visibility into KPIs and help guide decisions on optimizing the claims process.
Per McKinsey’s study, automation can reduce the cost of claims processing by as much as 30%.
Use of AI in Document automation in Claims processing
AI can help in many ways in claims automation including playing a significant role in identifying various documents, extracting relevant information from that document and copying it to the right downstream system.
- Processing documents from variety of file formats
Insurance companies often must process a wide variety of documents of different file types (almost 200 different file formats). This can include image files that need to be digitized, complex email attachments that require specialized processing, CAD drawings that require specialized knowledge, and documents stored in zip files as well as email attachments. First step is to standardize all documents from various file formats by converting it into a unified PDF format.
2. Digitize text from images / fax documents
It’s very common for customers to take a picture of various documents and send it for processing. Insurance companies have to OCR (Optical character recognition) these documents and extract text and numbers from these documents. Many times the quality of the image may not be great and could be skewed. This is where the sophistication of the OCR engines in detecting these inconsistencies and still do a good job to extract the relevant text and numbers from the image.
This not only includes extracting text but also includes extracting costs from invoices with the right context as shown in the example below.
4. Identify what document category this document belongs to
Document classification can help automate and streamline the claims processing process by quickly and accurately identifying the type of documents that are involved in a particular claim, and routing those documents to the appropriate claims processing workflow for further processing.
Document classification is a type of machine learning algorithm that is often used in claims processing to help automatically classify different types of documents that are involved in the claims process. Here are the common examples for document classification in claims processing / automation include:
- Categorizing distinct forms of property damage documentation, like repair quotes, invoices, and pictures, to facilitate the accurate evaluation of property damage compensation that is to be disbursed.
- Organizing various types of property damage records, including repair estimates, receipts, and photographs, to accurately determine the necessary level of property damage benefits.
- Classifying different types of life insurance documents, such as death certificates, beneficiary documents, and insurance policies, to help determine the appropriate level of life insurance benefits that should be provided.
- Classifying various insurance benefits documents, including those related to disability, unemployment, and accident benefits, to assess the appropriate amount of benefits to be allocated.
5. Extract context specific information from these documents
All the data needed to process a claim are typically scattered inside various documents received so far. For the insurer to process this data, it is important to extract key information from various documents and copy that over the evidence to the insurance system to streamline the decision making
This is where AI can be trained to look for the kind of information based on the claim context and extract that information and copy it over into a meaningful format for further downstream processing.
The following picture is an example of a roof claim that is processed and cataloged for further processing. Some of the information needed for the claims processing are automatically extracted from one or more documents and copied over to a centralized system to further reference downstream.
6. Identifying Missing / Duplicate documents
Insurance companies must ensure that all documents are accurate and up-to-date to ensure compliance with regulations. AI can identify which documents are missing, which are duplicates, and which may be potentially fraudulent.
Additionally, any outliers should be identified and flagged for further review. If any suspicious activity is suspected, the documents in question should be sent to a specialized unit for further investigation. AI can help insurance companies to maintain a comprehensive document review process and actively monitor documents to ensure accuracy and compliance.
Conclusion
In conclusion, document automation in insurance claims processing is a great way for insurers to improve customer service, reduce costs and improve operational efficiency. Being able to process various kinds of documents, identify the context and extract meaningful information from that document is the core for document automation
Document automation will help reduce paperwork, improve accuracy and reduce the time required to process claims. Automation will also help insurers offer better customer service to policyholders by streamlining the claims process and providing fast and accurate claims resolution. Automation is the way of the future and insurance companies are moving fast to embrace it.
