Can AI overcome low-touch claims challenges?
AI is drastically improving insurance claims processes, particularly for minor damages, and improving the customer experience.
Processing insurance claims has historically required careful assessment and analysis by a human to determine the extent of the damage, the validity of the claim and the appropriate compensation. This means a significant amount of time and effort, often leading to delays and frustrations for both the insurer and the policyholder.
Unsurprisingly, insurers are constantly seeking ways to improve the efficiency and accuracy of the claims process, as it directly impacts their bottom line and customer retention. The need for quick and accurate assessments is becoming increasingly crucial to customer satisfaction. In 2022, over one-quarter of policyholders switched providers, with the main driver being faster claims processes.
The challenges for low-touch claims automation
Advancements in AI have helped to automate a lot of the manual steps associated with insurance claims, particularly low-touch claims.
Low-touch claims refer to cases where the assessment and processing can be done remotely without an adjuster physically inspecting the property. This type of claim often involves minor damages that can be easily evaluated using photos or other forms of digital evidence. For example, damage to glass or glass ceramic hobs.
However, despite their relatively straightforward nature, low-touch claims still present their own challenges for insurers.
One of the main challenges is the need to accurately estimate repair costs without a physical inspection. There is also the risk of fraud, as it may be easier for policyholders to fabricate or exaggerate damages without face-to-face interaction with a claims adjuster.
To handle low-touch property claims remotely, insurers need to have access to a wide range of external data sources to ensure accurate assessments. This may include databases of repair costs, market values of properties and appliances and historical data on similar claims. These data sources help insurers make more informed decisions and provide fair settlements to policyholders. Moreover, as this data becomes more accessible and manageable for insurers, it becomes more efficient to use AI algorithms to automate low-touch claims processes.
Benefits of powering low-touch claims processes with AI
AI algorithms can analyze digital evidence and compare it with historical data to instantly provide accurate repair cost estimations. The entire claims process can be streamlined by leveraging AI, reducing human error, and improving overall efficiency.
Reducing human error
AI can help automate many of the manual steps in claims processing, resulting in quicker turnaround times and improved accuracy for most low-touch claims. AI algorithms can extract relevant information from claim forms and policy documents, eliminating the need for manual data entry. This not only saves time but can help minimize simple mistakes.
Faster evaluations
AI-powered visual intelligence systems can remotely analyze images and videos of property to assess the extent of the damage. By comparing the photos to a database of known damage patterns, AI algorithms can quickly determine the severity of the claim and recommend the appropriate course of action, such as a cash settlement, taking response times from days to minutes.
Fraud detection
Another area where AI excels is in fraud detection. Insurance fraud is a significant — and growing problem — costing insurers billions of dollars each year. According to the Association of British Insurers, the value of the average insurance fraud case rose by 20% in 2022. AI algorithms can analyze historical data and identify patterns that indicate potential fraud cases, flagging suspicious claims for further investigation.
Impact on the customer experience
Automating low-touch claims processing not only benefits the insurer’s bottom line but also significantly enhances the customer experience. By reducing the time taken to assess and settle claims, policyholders experience faster claim resolutions, providing them with peace of mind during a challenging time.
AI-powered chatbots or virtual assistants can help to provide real-time updates and assistance to policyholders, so they never have to pick up the phone. These automated systems can answer frequently asked questions, guide customers through the claims process, and provide updates on the status of their claims in real time, thereby improving customer satisfaction and reducing the burden on human agents.
Cost-cutting advantages
The use of AI in low-touch property claims also enables insurers to offer more competitive pricing and tailored policies to their customers. By accurately assessing risks and estimating repair costs, insurers can provide policyholders with fairer premiums and cash settlements, and ensure their protection without overcharging.
Low-touch, big impact
The need for more efficient property claims processing is evident. Insurers are under constant pressure to streamline their operations and provide faster resolutions to policyholders. By bringing in AI, insurers can automate more of the assessment and processes involved with minor damages, overcoming the challenges associated with manual processes while maintaining accuracy and providing a better, faster customer experience.
Julio Pernía Aznar is CEO of Bdeo, a technology company that provides visual intelligence for the insurance and fleet industries. A fast-growing insurtech AI startup with proprietary “visual intelligence” technology, Bdeo has increased its international presence by 30% over the past year, and has offices in Europe, Latin America and Africa.
Opinions expressed here are the author’s own.
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