By Ravi Mathur, Co-Founder & CTO, Insurance Samadhan
The advent of technology has created a new market and opened new avenues for many industries. Over the years, technology has become the backbone of almost every business. Be it education, marketing, or advertising, everyone has reaped the benefits of the technology. Talking about the insurance sector, one of the key determinants for prospective clients to decide which company to choose is the claim-settlement ratio, as companies compete to gain market share. Settlement of claims isn’t as easy as you might think; the main reason is that insurance companies have to process thousands of claims every day, depending on how many customers they have.
The insurance-claims journey has historically been a pain point for customers. There is a lot of confusion about its handling and settlement. As a result, they have paid in advance for a technical product to protect themselves against risk, and when the “moment of truth” arrives and they wish to recoup a loss, they must figure out a complex, cumbersome, time-consuming, and iterative process. As it is clear that the customer expectations have changed according to the digital world, the insurers also need to up their game in order to stay in the market.
Which disruptive technologies are reshaping insurance operations?
AI, machine learning, and robotic process automation are some of the most disruptive technologies in the insurance industry. Because of the sheer volume of daily claims under the earlier traditional model of claims processing, insurance companies had difficulty speeding up the process. In the claims data, it’s challenging to discern specific patterns that require closer inspection by humans. However, with artificial intelligence, identifying specific claim patterns at random or at scale takes only minutes and deft programming. Moreover, all of this can be achieved without greatly increasing operational expenses or taking up excessive amounts of time.
In the P&C and employee insurance sectors, AI and RPA have increased automation possibilities. As an example, machine learning algorithms are used for fraud detection to detect anomalies that even the most trained human cannot detect.
Big data and analytics: Data is the most valuable asset for every organization. Using big data analytics, for instance, you can accurately predict patterns and enhance your decision-making capabilities, reduce operational costs, improve claims triage, and even spot emerging trends. A long-running problem for the insurance industry has been the claims process. It is cumbersome for insurance companies to verify claims manually, process claims amounts, and segment policyholders before claims are made to avoid undesirable outcomes.
Insurers have been fortunate that data analytics has saved the day, like the proverbial knight in shining armor. With all the data available to insurers today, it has only become easier for them to segment policyholders and provide better products customized to their needs. As a result, some insurance products have been cross-sold and up-sold, as well as customer satisfaction, has been improved. Additionally, Big Data has helped insurance companies process claims more quickly and efficiently.
With the assistance of technology, or, more specifically, the use of blockchain infrastructures and sophisticated software to analyze data, fraudulent insurance claims can more easily be detected. Support offered through technical means not only helps the company with the burden of unnecessary costs but also the customers on whom the liability of accidents/unforeseen incidents has fallen fraudulently. In addition to the numerous benefits of digital transformation resulting in revamped efficacy, ease of management is also one of the major benefits. Furthermore, it also allows a company to render smoother and faster services to their customers, resulting in fewer complaints from them.
There will be a huge amount of disruption in the industry. Even though these shifts cannot happen overnight, a number of them are already getting started, and there is an advantage for first movers. The insurers will be better served by clearly explaining their strategy and adjusting their operating models accordingly. A shift of this magnitude will take years, but insurers can gain a competitive advantage and prepare for 2030 by laying the groundwork now.