How AI Has Improved Insurance Claims Processing?

AI, or artificial intelligence, has taken the world by storm ever since it was launched for the general public in the form of ChatGPT and countless other language models. AI is now being incorporated into many industries to increase efficiency and effectiveness. The insurance sector isn’t different, although it is slow to change. 

Using AI in insurance brings significant advantages for the whole industry. It doesn’t just get rid of a lot of tedious paperwork, but it also guides the industry about the newest marketing trends to get more customers interested. AI helps answer questions that don’t have a clear yes or no, and it provides valuable things to make customers happier.

Trying out new technology is a big reason things are changing in the insurance world. This has made things work a lot better. And other kinds of technology can help insurance companies handle claims that are also becoming more popular. 

How does AI help in the Insurance Sector?

In the old days, getting insurance involved a lot of paperwork, long meetings, complicated claims, and waiting a while for decisions. Before AI, insurance companies spent much time, labor, and money on claims processing.

But now, AI is changing insurance by using computers to do things automatically. This is making people trust insurance companies more. With AI, businesses are growing, risks and fake claims are going down, and using computers to do tasks is making things simpler and cheaper.

In simple terms, AI is helping insurance companies and people with insurance. Here’s how:

• Insurance companies use AI to understand risks, catch fake claims, and make fewer mistakes.
• AI in insurance is improving customer service, making dealing with insurance claims easier and quicker.
• AI can make the process of figuring out risks easier and with less need for people.
• Using AI in insurance is helping experts understand risks better. This allows them to set fair and personalized prices for insurance.
• Also, AI in insurance makes it easier to connect people who want insurance with the right insurance companies. This is making the whole process work better.

Different AI Models to Help With Claims Processing

#1. Natural Language Processing (NLP)

An AI that recognizes and understands text to record data is NLP or Natural Language Processing. It can understand written documents and language, automating data processing with various tools. Two major applications of NLP are OCR and chatbots. 

• OCR identifies text on handwritten documents and converts it into digital data. Since the insurance industry has to follow regulations and work with a lot of paperwork, automatic data transfer and conversion are beneficial and time–saving.
• Chatbots used for insurance can make sending damage reports faster. In the past, customers had to wait for experts to report damages. But now, chatbots that understand human language (NLP-driven chatbots) can help customers take videos and pictures of the damage. These videos and pictures are then quickly turned into descriptions of the damage.

#2. Computer Vision

Computer vision is a way that AI models understand what they see in pictures and videos. These models help experts who handle claims. They look at geographical information (like maps) from satellites and check out photos and videos taken by customers or drones. For instance, companies that use technology to improve insurance use drones with computer vision to quickly check how bad the damage is to things like cars, buildings, houses, and places hit by disasters. Computer vision helps in speedy claim adjustment with fast diagnosis.

#3. Advanced Analytics

Advanced analytics are really good at finding and stopping fraud. Insurance companies have to manually check if claims are real or fake, which takes a lot of time and could be more efficient. But suppose insurance companies use smart computer programs that learn from supervised and unsupervised models and look at how people behave. In that case, they can do a better job of reducing the cost of fraud.

Benefits of Using AI in Insurance Claims Processing

#1. Faster Claim Processing Automation

There are many documents in a single claim processing. Humans cannot work as fast as AI, nor can they work as accurately as AI. It can automatically grab, gather, pull out, analyze, and double-check important data all by itself. Artificial Intelligence uses smart data analysis to understand what kind of document it is dealing with quickly. Then, it figures out the primary data it needs to get from each document type and where to put that data. This makes the whole process of dealing with claims much faster, automated, efficient, and user-friendly.

#2. Better Customer Experience

Due to the customer-focused nature of the insurance industry, retaining customers is crucial. However, modern customers demand instant, reliable service anytime, anywhere. This is where AI, particularly chatbots, comes in. These chatbots learn and improve from each interaction, responding instantly and integrating with systems. They handle personalized inquiries, freeing up human agents for more complex tasks and improving resolution time, customer satisfaction, and renewal rates.

#3. Better Claim Volume Forecasting

Insurance companies need to predict how many claims they will get to charge the right amount for insurance when people start. Being able to guess this accurately is important. This is where AI and Machine Learning come into the picture. Advanced AI models powered by Machine Learning can rapidly and reliably analyze claim data. This analysis helps predict the complexity and value of each claim, which holds immense significance. AI enables prioritizing significant claims, even those with uncertain outcomes, over smaller, more predictable ones.

Examples of Companies Using AI

Insurance companies are finding AI helpful in improving their work and customer service. Let’s take a look at some examples of insurance companies using AI:

#1. Lemonade 

Lemonade is a company based in New York that provides insurance. They use AI to process claims quickly, which is way faster than the usual waiting time.

#2. Hippo

Hippo is a company that offers insurance for homes. With AI’s power, they can spot fake claims with almost perfect accuracy, ensuring that only valid claims are approved.

#3. State Farm

 In the United States, there is an insurance company called State Farm. They have an AI chatbot named AskJake that is available 24/7. This friendly chatbot helps customers with their questions anytime, day or night.

#4. AXA 

Over in France, there is a big insurance company called AXA. They use AI to develop new insurance plans that fit each customer’s needs like a glove. This way, everyone gets the insurance that is just right for them.

Conclusion

In conclusion, AI’s integration offers substantial benefits despite the insurance sector’s slower adaptation. It streamlines processes, guides marketing strategies, and bolsters customer satisfaction. AI transforms the insurance landscape by addressing paperwork, providing insights, and significantly aiding claims processing. Increasing the efficiency of insurance claims processing is essential to reduce manual labor and bring accuracy. As showcased by companies such as Lemonade, Hippo, State Farm, and AXA, AI’s application propels insurance toward heightened effectiveness and tailored customer service.

Resources

• https://www.forbes.com/sites/forbestechcouncil/2023/04/17/harnessing-the-power-of-ai-in-the-insurance-sector/?sh=807db68335d6 
• https://appinventiv.com/blog/ai-in-insurance/ 
• https://www.ricoh-usa.com/en/insights/articles/ai-driven-insurance-claims-management-benefits 
• https://research.aimultiple.com/insurance-claims-ai/ 

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