Like in most other industries, the possible uses for Artificial intelligence (AI) in insurance processes continues to expand. This is especially true for more repetitive and resource-intensive functions like claims processing. AI can help insurers improve accuracy, become more efficient, and provide a better policyholder experience.
But before insurers take the leap to integrate AI, they should thoroughly consider the advantages and limitations of this tool and why delegating claims processing to an experienced business process outsourcing (BPO) provider might be a win-win solution.
How Can AI be Used in Insurance Claims?
One of the prime opportunities for using AI in insurance is with claims processing. Either in part or from start to finish, AI can streamline the process both for insurance teams and policyholders.
When a policyholder needs to initiate first notice of loss (FNOL), they can interact with an AI-powered chatbot to begin the submission process. They may be prompted to provide essential information like policy number, details about the incident, and supporting documentation. From there, optical character recognition (OCR) technology can derive insights from uploaded documents and photos, such as police reports or repair estimates.
The AI system can categorize claims by type and urgency and then analyze the provided data for any inconsistencies or anomalies that might suggest it’s fraudulent. In some cases, it may be able to evaluate damage from photos or videos and then apply pre-set rules to either approve or deny payouts for claims.
Benefits of AI in Claims Processing
As explained above, AI can be used at every step of the claims processing workflow to lessen the reliance on manual intervention from team members. Here’s a closer look at the benefits:
Increased Efficiency and Speed
AI and machine learning programs can automate portions of the workflow and process data much quicker than humans. Thus, with AI, the time spent to process a claim is significantly less than when done manually.
Rather than waiting on human workers to sift through large amounts of paperwork, AI systems can also continuously process claims. As the insurance industry faces skilled staff shortages, AI-powered claims processing can help insurers maintain or expand their capacity without being limited by internal head count.
Improved Accuracy and Reduced Fraud
AI systems can efficiently process large volumes of data from various sources and make it easier to detect unusual patterns or anomalies that might otherwise go undetected. These potential fraud cases can be flagged for manual review.
In addition, AI systems run on pre-set rules and logic, so there isn’t the same variability or inconsistency as from human decision making and manual error. For instance, there’s no risk that an AI system will accidentally miskey a number or transpose the value of assessed damage when entering it into the system.
Cost Savings for Insurance Companies
When insurance employees spend less time on tedious administrative tasks, insurers can enjoy greater cost savings and a lower reliance on the operational expenses of manual labor.
For example, Accenture reports that 40% of inbound call volume regarding claims is to simply check claim status. If these inquiries were handled by AI-powered chatbots with natural language processing (NLP) or automated phone systems, insurers wouldn’t need as many team members on staff to field simple calls from policyholders.
Not to mention, with better fraud detection capabilities, insurers avoid fraudulent claims payouts, providing further savings.
Enhanced Policyholder Experience
Using AI in insurance claims can mitigate bottlenecks, resulting in quicker decision-making and less time for policyholders to wait for a payout.
Even before there’s a decision, policyholders may enjoy the enhanced transparency of the process. They can interact with a chatbot to quickly check the status of their claim. It can also enhance their confidence with the knowledge that their claim was handled fairly and accurately, and wasn’t subject to the subjectivity of human decision making.
Challenges of AI in Claims Processing
Despite the benefits of using AI in claims processing, there are also some potential challenges to consider.
Data Privacy Concerns
Insurers must meet strict data privacy regulations, like HIPAA, when handling sensitive policyholder data, medical records, or financial information. This requirement remains the same when operating an AI-powered claims processing system. So, insurers need to thoroughly evaluate the security measures of the AI program they decide to implement to ensure policyholder data will be kept private and secure. Otherwise, they could face costly fines and penalties if found non-compliant.
High Implementation Costs
The cost of implementing advanced AI technologies can also be a limiting factor for insurers. Not only do insurers need to invest in the AI technology and program itself, they may also need to upgrade their tech infrastructure and data storage solutions to accommodate the large volumes of data these systems store and process.
Need for Skilled Personnel
AI claims processing programs do not operate in a vacuum. The tools must be properly trained and maintained by skilled personnel to produce reliable and fair outputs, meaning you’ll need staff skilled in data science, machine learning, and artificial intelligence.
Hiring and training these professionals can be expensive, and creates high dependency on these employees with specialized skill sets. If the experts ever leave the organization, the insurer could face serious disruptions with claims handling until they find a replacement.
Outsourcing Claims Processing to BPO Providers
AI-powered solutions can help insurers enhance the efficiency and accuracy of their claims processing workflow. However, AI won’t completely replace the need for human expertise in this insurance workflow.
The ultimate win-win for insurers looking to streamline claims is to find a business processing outsourcing (BPO) provider with a technological edge. This way, you get the best of both worlds: access to knowledgeable claims specialists who treat your policyholders with care and empathy while also taking advantage of the latest tech.
Why Outsource Claims Processing?
Insurers may not have the in-house capacity or resources to handle claims effectively. Maybe their team specializes in other insurance workflows. Or, they simply don’t have enough time in their schedules to process claims on top of their other duties. Outsourcing this function to an expert provider gives insurers the extra people power they need to process claims efficiently without compromising service quality for policyholders.
Benefits of Using BPO Providers with AI Capabilities
The specific benefits of BPO services vary between providers. However, if you find the right partner that embraces advanced tech and has a team of expert claims specialists, you can enjoy advantages like:
- Cost savings.
- Quicker claims resolution times.
- Access to specialized claims processing knowledge.
- Economies of scale on advanced technology.
- Scalability to handle peak demand.
- More time for teams to focus on core activities.
Technological Edge of BPO Providers
Outsourcing claims processing to BPO providers doesn’t mean insurers give up advanced technological capabilities. Top BPO partners leverage the best of human expertise and technology to deliver a high-quality service.
Access to Advanced Technologies
It can be expensive for insurers to implement and train advanced AI solutions in-house. It’s often more cost-effective to partner with a tech-forward BPO provider that’s already adopted these solutions. This way, insurers can enjoy the human touch and expertise the BPO’s team offers in addition to the efficiency benefits of their advanced technology systems.
Integration of AI in BPO Services
The level of AI integration with BPO services will vary between providers. Depending on the strengths and expertise of their teams, they may choose to leverage AI in unique ways to ensure the best results for insurers and their policyholders. In some cases, BPO providers may not use AI at all, with the confidence that their team can deliver the efficient and high-quality service that policyholders expect without it.
Streamline Claims Processing with Covenir
AI is driving innovation throughout the insurance space, offering unparalleled data processing speeds and accuracy. Partnering with a tech-savvy BPO provider allows you to enhance the efficiency of workflows without the hassle or cost of implementing on your own.
At Covenir, we get it done using people and technology. Our people are our “AI”, or actual intelligence. Whether you need daily claims processing support or temporary backup to handle a surge in claims, our team is on standby 24/7/365 to handle voice or electronic claims submissions.
If you want to learn more about our insurance claim services, click here to get in touch with an expert from our team—we’d love to hear from you.