source: Sanjay Datta
Technology is now being increasingly utilized to make the insurance claims simpler, faster and more cost effective
Historically, the insurance industry has been slow on the innovation front. The systems and processes that are in place currently, have remained unchanged for decades and are being followed in the same way today too. This use of legacy systems have led to claims being a slow, cumbersome and time-consuming process, that is not at all pleasant for the customer and even the insurer.
But, times are changing slowly but surely as insurance companies are embracing technology in an attempt to make the claims process faster, consistent and qualitative. According to market research conducted by Technavio, the global insur-tech market is expected to grow at a steady pace with a compounded annual growth rate (CAGR) of more than 10 percent by 2020.
The nature of the claims process makes certain tasks repetitive, and the outdated processes do little to improve claim turnaround times, leading to frustrated customers. Advancements are being made in the field of Artificial Intelligence (AI), and the technology holds enormous potential for disrupting the insurance industry, especially the claims process.
As of now, processing of claims is a manual and laborious affair that requires the involvement of several people and a lot of paperwork. This approach is not only time consuming and costly but is also prone to errors and inconsistencies. The introduction of artificial intelligence and machine learning, albeit on a small scale, in claims adjudication is already helping increase the efficiency of case managers and enabling them to take more informed decisions.
Machine learning makes use of intelligent algorithms that learn from historical cases and continuously evolve their understanding of the process. In the future, it is quite possible that due to machine learning, artificial intelligence systems will automatically be able to identify any discrepancies in the claims process with minimum human involvement or intervention.
Another benefit of artificial intelligence in claims processing will be fraud detection. This is a big concern for the industry globally as fraud cases cost the industry in excess of US$40 billion on an annual basis. Thanks to advancements in machine learning, instead of going through reports manually, an algorithm can be deployed which can identify particular patterns and raise a red flag before the claim is processed.
Technology is changing how claims are processed and the details captured. A leading general insurer in India, in a bid to improve claim processing time, has developed a tablet application for its field personnel. These are the people who are responsible for verifying the claim raised by a customer, and also have to collect the evidence for the same. Earlier, this process used to be done through the filling of paperwork, but now, all that the person needs to do is enter the necessary details in the tablet.
The information is then transferred in real time to the central server, ready for analysis and claims processing. This method of capturing claims reduced costs by 4-5 percent, increased customer satisfaction and reduced chances of human error. This also signifies the shift that the industry is going through: from a call and paper model to an online web/app-based model.
The adoption of technology in the claims process can be further seen in the newly introduced crop insurance scheme. Crop insurance, which is mainly led by the government’s flagship programme known as Pradhan Mantri Fasal Bima Yojana (PMFBY), has become a major product for insurers. It poses challenges to conventional assessment methods deployed by the insurers due to the sheer scale of coverage. It would take a lot of time and effort to send individual assessors to complete the task. Hence, drones are being widely used to assess yield data, determine the sown area and even estimate crop damage.
The drones are particularly useful in assessing the damage of areas which are rendered inaccessible due to any reason, including natural disasters. In 2016 when a flood damaged the crops in Beed district of Maharashtra, a drone was used to assess crop damage in areas that had been cut off.
In conclusion, it can be said that technology is now being increasingly utilized to make the insurance claims simpler, faster and more cost effective. The outdated processes are slowly being changed for the better, in view of the advancement of artificial intelligence and machine learning, among other forms of technology. Not only will this adoption of technology improve the insurance processes, but will eventually lead to a much better and smoother customer experience.
The writer is chief underwriting, reinsurance and Claim, Actuarial, ICICI Lombard General Insurance