How Hyperautomation pays off with faster and more accurate claims processing

A key moment of truth in the insurance industry—for both the covered and the coverage provider—is the claims process. This is where an insurer’s promise to its policyholders is tested.

Unfortunately, traditional claims processing methods have been fraught with inefficiencies, leading to delays, errors, and widespread customer dissatisfaction. In an era where customer expectations are higher than ever, these pain points have pushed the industry toward embracing hyperautomation. In the previous three blogs, we have explored the several industry-level benefits of hyperautomation and how it is already revolutionizing the underwriting process for insurers and reinsurers across the world.

Today, let us examine how this transformative technology promises to revolutionize claims processing for claims departments, offering faster, more accurate, and more satisfying outcomes for insurers and policyholders.

Key pain points of traditional claims processing

In the previous blogs, we have gone over how the cost of capital is not as inexpensive as it used to be due to geopolitical headwinds, economic uncertainties, rising interest rates, and shifts in investment preferences. For example, Higher interest rates can enhance returns on bonds and fixed-income investments; however, they also elevate the cost of maintaining claims reserves.

The cost of processing claims and the pressure to process them faster is only going up with the varied risks associated with assets. As per another example in a recent Deloitte report, claims associated with the theft of catalytic converters shot up by >48,000 in only two years between 2020 and 2022[1]. This is because while these convertors have seen vital adoption to neutralize environmentally harmful exhaust engine gases, they have also attracted thieves who want them for valuable metallic components. Severity patterns on claims processing resultingly inhibit short-term returns to underwriting profits. Customer expectations are also a stressor where instant claims processing has become mainstream for new entrants and Insurtech players using advanced tech.

In such a world, traditional ways of processing claims, like the ones below, are major hindrances to the claims department’s (and insurers’) growth and profitability.

• Delays: Traditional methods involve extensive paperwork, multiple touchpoints, and manual data entry, which can significantly slow down the process. For instance, a claim might need to pass through several departments for validation, each introducing its own set of delays. This slow process not only frustrates customers but also increases insurers’ operational costs.
• Errors: Manual processing is inherently prone to human error. Data entry mistakes, department miscommunication, and oversight can lead to incorrect claim assessments or denials. These errors create additional work to rectify and can damage the insurer’s reputation and lead to financial losses due to incorrect payouts.
• Customer dissatisfaction: Delays and errors inevitably lead to customer dissatisfaction. Policyholders expect quick, seamless, and accurate service, especially during the stressful period of filing a claim. When these expectations are not met, it can result in negative reviews, loss of customers, and a damaged brand image. According to a PwC survey, 41% of consumers are likely to switch providers due to a lack of digital capabilities, highlighting the critical importance of efficient claims processing in customer retention​[1].

Hyperautomation solutions as ‘evolution catalysts’ in claims processing

Hyperautomation integrates advanced technologies such as AI, ML, robotic process automation (RPA), and intelligent document processing (IDP) to automate and enhance claims processing. Here’s how hyperautomation can address the pain points and transform the claims process:

A: Automated claims intake and data extraction from various sources

Hyperautomation can streamline the initial stages of claims processing by automating claims intake and data extraction. Using technologies like RPA and IDP, insurers can automatically collect and process data from multiple sources such as emails, scanned documents, and customer portals. Imagine an insurance firm (as many are present in the market) leveraging AI and chatbots to handle claims intake, allowing them to process claims in just a few seconds. This system can collate data from various sources and verify claims data through cognitive automation, which effectively analyses images, audio, and natural language texts.

B: AI-powered fraud detection and claims adjustment

Fraudulent claims are a huge pocket burner for insurers, often leading to significant financial losses they cannot afford. In this case, AI-powered fraud detection systems can analyze large datasets to identify patterns and anomalies that may indicate fraud. ML algorithms can be trained to continuously learn purposeful insights from new data, where claims professionals can work on improving their accuracy over time. For example, AI-driven systems can help evaluate claims data, compare them against historical data, and even flag suspicious claims for further investigation.

C: Chatbots and virtual assistants for faster customer support

Chatbots and virtual assistants powered by AI provide 24/7 customer support, handling routine inquiries, guiding customers through the claims process, and providing real-time updates on claim status. These tools can answer policy-related questions, assist in filing claims, and provide updates on claim progress without human intervention. This also reduces the workload on human agents, ensures consistent and timely customer service, and enhances customer satisfaction by providing immediate assistance. AI-driven chatbots manage client inquiries and assist with first notice of loss (FNOL), offering a seamless and efficient customer experience​.

D: Real-time claim processing and faster payouts

One of the most significant benefits of hyperautomation is the ability to process claims in real-time. By integrating various automation technologies, insurers can achieve straight-through processing, where claims are handled from submission to settlement without manual intervention. RPA bots and AI systems work together to automate the entire claims process, from data extraction to final payout. This ensures that claims are processed in minutes with complete due diligence rather than days or weeks​.

Benefits of Hyperautomation in Claims Processing

A policyholder’s claims experience directly impacts their decision to stay with their current provider or begin browsing for new ones. As customer expectations continue to rise and the competitive landscape evolves, insurers that adopt hyper-automation will be better positioned to meet these challenges and drive sustainable growth. The future of claims processing lies in leveraging advanced technologies to create a seamless, efficient, and customer-centric experience.

In the next few blogs, we will explore a bit further how hyper-automation ensures seamless renewals, optimizes policy management and reinsurance, and helps measure the ROI of hyper-automation initiatives.

Stay tuned!

• Claims Processing
• Hyperautomation
• robotic process automation