October is Cyber Awareness Month, so what better time for brokers to explore options to upgrade their technology and systems? One area that brokers, insurance carriers, and third-party administrators (TPAs) have sought to improve for years is claims management.
Claims processing is complex and often bogs down the insurance value chain. Artificial intelligence (AI) has emerged and poses a promising solution. AI can not only streamline operations but also prevent fraud, improve customer satisfaction, and provide a competitive advantage to brokers. And it’s growing in adoption; by 2025, 60% of claims will be analyzed via automation.1 Here’s how AI is improving the claims process:
AI not only automate information gathering, but it can also analyze data quickly from various sources so claims can be efficiently ranked by complexity and severity. Simple claims can then be fast tracked and pushed through automatically while more complex claims can be assigned an adjuster with the appropriate level of expertise. Furthermore, automating repetitive tasks frees up adjusters to increase their capacity for complex cases.
Claims fraud is a challenge and priority for every insurance broker. According to the FBI, the total cost of insurance fraud (non-health insurance) is estimated to be over $40 billion per year.2 Claims fraud is becoming more nuanced and sophisticated, making it harder to identify. Conventional claims management requires a claims adjuster to manually collect and review a multitude of documents, making it near impossible to allocate enough resources to detect most fraudulent claims. However, AI and machine learning systems can scan enormous volumes of data and detect trends that indicate fraudulent activity. Generative AI is a subset of AI that uses data to create new content. In the context of claims fraud, generative AI can learn from past instances of fraud and generate models to detect suspicious activity. Insurance brokerages can then focus their resources on suspicious activity to efficiently prevent fraudulent claims and minimize the financial impact.
Providing clients with a positive claims experience is a priority for most insurance brokerages, and client expectations regarding efficiency and service are becoming more demanding. Effective communication with clients is at the forefront of mitigating frustration and creating a positive claims experience. Leveraging AI can not only shorten the claims process but also enhance customer communication through automated real-time updates. Proactive communication can reduce client anxiety and increase satisfaction. TPAs are already relying on AI to cut costs, automate processes, and focus on outcomes which can help maximize client retention and ensure growth.
How can insurance brokers utilize AI for a competitive advantage? Brokers maintain the relationship with the insured and typically receive the first notice of loss. They can use AI to amass appropriate claims data and provide TPAs or carriers with relevant information to efficiently determine the complexity or severity of a claim. The broker then becomes more valuable and integrated into the claims management process. This not only improves the client experience, but helps the broker become a more valued partner to their carriers.
Although in its infancy, AI technology has already had a significant impact on insurance, transforming various aspects of the industry. As client needs evolve, the integration of AI technologies will become increasingly important to accurately assess pricing, fraud, risks, and more. Today this is only a concept, however, tomorrow it could be table stakes.
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