Today, insurance companies around the world face a shared challenge- to grow the business, stay profitable, and respond to rising customer expectations. Uncertain economic pressures, ever-changing regulatory constraints, the need for improved transparency, and operational inefficiencies have always increased the complexity of this task for insurers.
Complex regulatory mandates push regulators to rethink the way they operate if they are to remain relevant and viable. Insurers must now review all areas of their operations for efficiency improvements and process optimization to drive down operational costs.
Automation is the central idea on which cost optimization rests. The fifth CAQH index reported annual savings of $11.1 B in healthcare with automation in claims management. As technology advances, companies are now looking at various repetitive functions that can be taken up by automated programs to increased speed, efficiency, and accuracy of these processes.
At the core of each insurance company is claims processing. At this stage, the insurance company meets and responds to its commitment to its customers, drives credibility, earns trust and loyalty, and sets standards of service. The claims environment is a driving factor behind the reliability of any insurer and relies heavily on the process accuracy and speed for achieving customer satisfaction. Deloitte reports that customer satisfaction from claims automation increased by 20 percent.
But, like all processes that need transformation, the claims management process is lined with managerial, administrative, and customer service tasks that further contain intensive manual functions and multiple document formats.
Let’s look at the various challenges within the claims processing and how they lead to increased operational costs.
Challenges in the Claims Management Process
Disparate Input Formats
Images, emails, paper documents, electronic documents, and the apps that bring these in are often not integrated into a central repository. This means insurers deal with a lack of accountability and time and money spent on shuffling through a variety of documents.
Traditional claims processing relies on manual labor. This makes the entire process prone to errors and inconsistency. Insurance companies often hire outsourced talent, dealing with unreliable and scarcely skilled workers to fill the shoes of full-time professionals. That directly means increased costs and more time to complete processes.
Insurance companies are often trapped within legacy systems and frameworks to drive their core processes. These apps and systems are outdated and don’t integrate well with new-age solutions, hindering digital transformation within insurance companies.
Regulations and Compliances
Changes in regulations are frequent for insurance companies. And, these broadly affect the underlying processes, which might often need a complete overhaul. This becomes a challenge for insurance companies operating at various geographies with countries with their own set of regulations and laws.
Without sufficient digitization, data exists in siloes in various parts of an organization, often not updated to the truth. The time and cost dedicated to clean this data and retrieve it poses a significant cost burden for insurance organizations.
How Automation Can Help Slash Operational Costs in Claims Processing
Claims processing is a defining moment in the relationship of an insurance organization with its customers. A streamlined claims processing system can help insurance companies improve customer acquisition and retention rates while delivering a smooth experience.
Here’s how claims management can be optimized with automation:
Complex claims management processes that span multiple systems, tools, data stores, and third-party services can be managed with case management. This unique capability can enable insurers to leverage the right resource at the right time to bring out the best-case claim outcome.
Automated case management can be integrated with back-end systems, using assets in real-time to create a streamlined process.
Automating claims processing can lead insurance companies to gain in-depth insights about customers. To realize the full potential of this capability, companies can utilize the right tools to capture information and then dig it for insights. Automation and digitization can give insurers more power to turn these insights into action than they currently have.
By embedding analytics into the claims process, insurers can use business insights in real-time, including churn risk, settlement potential, fraud scores, and more to drive the next best action in the claims process.
Insurers often receive inquiries for a claim after it has been submitted. These queries might come in from within the organization. Customer service might be researching a claim for a customer, appeals, and grievances department might need more detailed information concerning a claim. Or, an account manager might ask questions for a commercial group.
No matter what the source or nature of an inquiry is, automation and consistent data management can help address these queries quickly and accurately.
The saying ‘garbage in, garbage out’, makes a lot of sense for insurance companies about the front-end of claims processing. Regardless of paper-based or electronic, if the input is not clean and accurate, it can affect the downstream processes adversely.
It is, therefore, critical for organizations to capture precise information at the onset itself. The number of ways companies use to code and claim data from is increasing, driving the higher need for companies to capture high-quality data at the onset consistently.
Front-end data capture errors can be minimized by using automation in every task -- right from standardizing incoming claims and documents before scanning them to processing all transactions through a uniform rules engine, enabling one accurate upload to back-end systems.
Beneficial capability insurers can leverage with automated claims processing is a comprehensive mobile platform. Such mobility can increase processing speed and customer satisfaction.
A customer-facing mobile application can allow them to upload documents and information with greater accuracy, compared with manual inputting. A mobile interface can also help third-party and in-house adjusters, reducing the time it takes for a claims person to receive critical information during the claims process.
Automation can allow insurers to engage customers in a robust and enterprise way, process claims more efficiently, operate at lower costs, and deliver a retail-like experience, increasing customer loyalty and retention.