Claims processing is a complex affair and doesn’t come cheap. Deloitte estimates that it accounts for up to 70% of an insurer’s costs. It’s a figure that stresses the financial impact of claims management on insurance businesses.
In this context, insurance adjuster tools can be game changers, helping companies move toward effective and precise claims resolution. They can transform a traditionally sluggish process into a smooth, efficient one.
In this article, let us look at the impact that modern adjuster tools have had on the claims processing landscape.
Why Is Processing Claims So Challenging?
Claims processing is inherently complex due to the multifaceted nature of insurance itself. At its core, insurance is a promise of compensation for specific potential future losses in exchange for a periodic payment.
This promise is contingent upon several variables, such as the type of policy, the nature of the covered peril, and the value of the claim. Each claim is a unique event with its own circumstances, documentation, and parties involved. This means the process must be both flexible and precise to address the needs of each case effectively.
Historically, claims processing complexity has arisen from several factors. These include:
- Volume of data: Adjusters must sift through extensive data, including policy documents, claim forms, and evidence of loss.
- Regulatory compliance: The insurance industry is heavily regulated, requiring strict adherence to laws and guidelines that vary by region and type of insurance.
- Fraud detection: Identifying fraudulent claims requires careful analysis and sometimes investigative work, adding another layer of complexity.
- Valuation of losses: Determining the value of a claim involves assessing damage, estimating repair costs, and applying depreciation, all of which require expertise and discretion.
In the past, claims processing was dominated by manual methods. They were filed using paper forms, which adjusters reviewed by hand. Adjusters often needed to physically inspect damage, which was time-consuming and could delay the processing of claims. Calculations were also done manually with the help of calculators and printed reference tables.
When it came to filing systems, everything had to be done physically, leading to large storage needs and challenging retrieval processes. Communication about claims was also conducted via postal mail, adding to the time it took to process a claim.
How Did Claims Processing Become Easier?
One of the most significant advancements is the digitization and automation of routine tasks. This automation reduces the risk of human error and frees up adjusters to concentrate on more complex aspects of claims processing.
Insurance adjuster tools have made it so that the entire claims processing pipeline becomes streamlined. These tools are essentially software solutions that can help with risk analysis, document management, and even customer relations.
According to VCA Software, the use of such tools allows companies to save as much as 30% during the entire claims journey. None of this would be possible without the shift from paper to digital documentation.
Adjuster tools also make things easy for the policyholder. A study by J.D. Power showed that homeowners’ claims processed digitally, including online filing and digital damage assessment, could have payment times reduced by up to 5.5 days compared to traditional methods.
Data analytics tools can process vast amounts of information to identify patterns, flag potential fraud, and predict outcomes faster than any human can. This is a reality that insurance companies accepted a long time ago. Today, with AI and machine learning advancing at the pace they are, we are on the verge of gaining new, efficiency-boosting tools.
Are There Any Flaws or Blindspots That We Are Overlooking?
While the benefits of modern claims management solutions can feel revolutionary, are we missing anything? After all, insurance companies deal with sensitive, personal, and financial information that could be a target for data breaches, identity theft, and fraud.
Reliance on digital systems means that technical glitches or system downtime can bring the claims process to a halt. Will companies be willing to run both digital and manual claims processing in the near future when going purely digital becomes the norm?
In spite of a growing inclination towards digitization, a mere 4% of insurers have implemented completely automated, self-managed claims systems. Nevertheless, introducing automation technologies has been shown to potentially boost returns from 30 to 200% and bolster customer loyalty at the time of policy renewal.
Instead of drowning in paperwork and playing phone tag for weeks, adjusters have these nifty digital tools that make claims processing simple. However, even with new technology making life easier, it doesn’t come without its own concerns.
Sure, time and money are saved, but cyberattacks, data errors, and other compromises are a ‘what if’ moment just waiting to happen. Insurance companies need to ensure that they don’t make the ancient mistake of putting all their eggs in a single basket.