8 Strategies to Optimize the Insurance Claims Process
What do insurance claims have in common with the game of chess, a Rubik's cube, learning a new language, financial derivatives, quantum physics, and sending rockets into space? They're all intricate tasks involving complex processes to execute. It may not rank as high as quantum physics on the universal complexity scale, but within the insurance industry, claims processing is considered by many to be one of the most complicated.
Why are claims so complex?
There are many variables in any given claim, including the unique context of the incident, nuanced local, state, and national regulations, emerging technologies, changing customer expectations, and the nature of the insurance coverage itself. Distilling a wide range of claims variables into a simplified process has been a longstanding goal for insurance carriers, stymied by a lack of tools to holistically align an equally wide range of parties involved in every claim.Coordinating communication, information sharing, and negotiations among policyholders, insurers, third-party claimants, repair shops, medical providers, legal representatives, and others can be challenging, especially in complex or high-value claims. Couple that with the increase in available data from connected cars and IoT devices and the level of difficulty, intricacy, and specialization grows. The impact can mean:
Delayed claim settlements: More complexity typically translates to slower and longer processing times, which can be frustrating for policyholders who are awaiting reimbursement or coverage for their claims.
Increased administrative costs: Managing complex processes often requires more resources and manpower. Insurance companies may need to invest in additional staff, technology, and infrastructure to handle these intricacies effectively, and those increased administrative costs can lead to higher premiums for policyholders.
Higher potential for errors: Misinterpretation of policy terms, inaccuracies in documentation, or human errors can result in claim denials or incorrect settlements.
Increased potential for fraud: Bad actors can exploit claims complexities and submit false or exaggerated claims, making it harder for insurers to detect and prevent fraudulent activities. This can lead to financial losses for insurance companies and potentially higher premiums for policyholders.
Negative customer experience: Lengthy, cumbersome procedures, unclear instructions, and limited communication channels can make the already friction-filled claims process even more confusing and frustrating. This can lead to policyholder dissatisfaction, reputation damage, and even customer churn.
To diminish these outcomes, it's important for claims organizations to continuously evaluate their processes. Here are eight strategies carriers can use to improve the claims process to boost customer satisfaction, reduce costs, and mitigate risk:
Streamline documentation: Simplifying the claims process starts with minimizing the paperwork and documentation required from policyholders and between stakeholders. Insurers can leverage technology to allow digital submission of claims and use automated systems to extract relevant information from supporting documents, reducing manual efforts.
Enhance communication: Clear and prompt communication is essential in simplifying the claims process. Insurers should aim to accommodate their policyholders’ preferred method of communication – phone, email, text, or chat – to provide regular updates on claims progress and easily communicate details around required documentation.
Embrace automation: Implementing automation technologies like artificial intelligence (AI) and machine learning can streamline claims processing. From initial claim assessments and estimating, to fraud detection and expedited claims handling, automated systems can help reduce the time and effort required from both carriers and policyholders.
Implement self-service options: Offering self-service options through online portals or mobile apps allows policyholders to initiate claims, track their progress, and independently access relevant information. This not only empowers customers through enhanced convenience – it also reduces administrative burden for insurers.
Provide clear guidelines and instructions: Clear and concise instructions can help policyholders better understand the claims process. Insurers should provide step-by-step guidance on how to file a claim, what documents are needed, and any specific requirements or deadlines. Simplifying language and providing examples can improve comprehension.
Offer digital tools and resources: Insurance companies can develop user-friendly digital tools and resources to help policyholders navigate the claims process more easily. Examples of these might include online claim calculators, interactive FAQs, video tutorials, and guides.
Improve claims handling efficiency: Insurers should strive to expedite the claims handling process to minimize delays. This involves efficient coordination among different departments, robust internal processes, and proactive measures to address any bottlenecks or delays that may occur.
Invest in customer service and training: Excellent customer service can make a significant difference in the claims experience. Insurers that invest in training for claims representatives can improve customer satisfaction by better equipping their team to provide clear and accurate information, handle customer inquiries promptly, and display empathy.
Who said it was easy?
Advancing these optimizations can be challenging for a variety of reasons, among them:
Legacy systems requiring significant investment and modifications to integrate new technologies.
Data management and integration across multiple systems - both internal and external - as well as regulatory and compliance considerations.
Complex workflows and decision-making where digitizing across multiple parties can be a significant undertaking.
Extensive configurations are often required to incorporate customizations and exceptions into existing digital systems.
Sophisticated technologies and advanced analytics capabilities are often needed to integrate robust fraud detection mechanisms and risk assessment algorithms into digital systems.
Despite these challenges, the insurance industry has been making progress in its digital transformation, investing to modernize infrastructures, adopt cloud-based solutions, and partner with technology providers to develop innovative digital solutions tailored to their needs.
