Future-proofing the claims management process is critical for insurers as the industry must manage cost carefully to remain profitable, according to Appian, a US software company that provides enterprise automation solutions. 

Claims leakage today accounts for at least 2-4% of insurers’ total claims cost, with noticed leakage as high as 20-30% due to poor claims management and handling. The term claims leakage refers to the difference between what should be spent on a claim and what’s actually spent on a claim. 

“This figure will only continue to grow as extreme weather, cyber attacks, fraud, and other catastrophic events intensify in frequency, severity, and complexity,” Appian Regional VP Financial Services Rick Browne says. 

“So how can insurers better manage the entire claims lifecycle, so they quickly settle claims and reduce costs while delivering a superior customer experience? The answer is intelligent, connected claims management.” 

Traditional approaches to claims management can be inefficient and labour-intensive, requiring excessive amounts of paperwork, phone calls, and data stored in numerous systems.  

When data is stored in numerous systems it means employees have to manage numerous computer screens to find the information they need, manually re-entering data to collate and assess policyholder information, which opens the process to human error. 

In contrast Mr Browne says automated claims management systems optimise claims efficiency with advanced algorithms and machine learning. 

“They make it easier to collect, analyse, and process massive amounts of claims data faster and more accurately, reducing the cost of manual data entry and human error,” he said. 

He says “disconnected” claims management is not just an operational annoyance for employees trying to resolve a policyholder matter, but it can directly harm an insurer’s competitive advantage and bottom line. 

“When insurers experience bottlenecks, breakdowns, or inefficiencies in their claims management processes, claims leakage becomes unsustainably high,” he said. 

“Automated claims management systems can help insurers expedite claims handling and increase straight-through processing. 

“By combining the strengths of human claim adjusters, automation, and a centralised location where all important data is easily and quickly accessible, insurers can gain better visibility into the claims process.” 

He says such an approach will help insurers better identify potential fraud, recoveries, and litigation, enabling adjusters and external legal/recovery teams to collaborate across multiple channels while making smarter and more efficient data-driven decisions. 

Insurers need to prepare for future changes and challenges heading the industry’s way and digital claims management is a tool that can help them. 

“The speed of change will only continue to increase as technologies like AI become more mature and deeply integrated into the insurance ecosystem. Insurers must prioritise flexibility and speed to market more than ever before,” Mr Browne said. 

“With agile technology like digital claims management systems, insurers can rapidly update processes and workflows, integrate with the latest data sources, and differentiate themselves, ensuring they are prepared for the future changes and challenges the industry is set to face.”