The insurance industry is a catch-22.
On the one hand, it is a customer-facing landscape, and there is marginal room for error due to the scope of the business. On the other, a vast amount of customer data, usually logged manually by humans, must be accounted for and analyzed. According to Experian, when data is entered manually, incomplete or missing data makes up 55 percent of errors, and typos account for another 32 percent — both mistakes that are easy to miss.
The claims handling process defines the relationship between the insurer and the insured, but it is a major operational hurdle if managed incorrectly. And so insurance agents are faced with a dilemma. How can they transmit data in the shortest amount of time with the highest rate of accuracy? Taken a step further, how can they correctly verify claims, including fraudulent ones, under the same pressures?
Artificial intelligence (AI) is emerging as an effective way to both speed up the claims verification process and improve data accuracy.
Moving past the inaccuracies
In a survey from accounting firm EY, global consumers said they trust the insurance industry less than banking, supermarkets, car manufacturing, and online shopping. Much of this distrust stems from claim inaccuracies, which are difficult to avoid when data is input manually. AI technology helps solve this by reducing the amount of manual input.
Despite advances in technology, many claims processes still rely on humans to manage tasks like matching customer information within numerous databases. Insurance organizations that implement AI to take over this process can match the information in half the time. By automating step one, insurance agents can move on to more customer-oriented tasks, like personalizing the customer experience.
And incorrectly typing information isn’t the only source of inaccuracies. Insurance agents struggle with outdated claim systems and poor data quality, factors that make it difficult to properly manage claims. AI technology bypasses these systems to help increase overall accuracy.
Using AI to recommend claims payouts
Claims cycle time is the leading indicator of customer satisfaction, according to a recent J.D. Power & Associates property claims satisfaction study. The study found the average claims cycle can take as little as 11 days, but there’s no reason this cycle can’t be cut further.
Part of the claims cycle is deciding whether or not to actually pay the claim, and this can be time-consuming. By integrating AI technology, insurance companies can use cognitive analysis to quickly recommend the appropriate payout. First, AI mines the information and auto-validates the policy. Then, using machine learning models, it makes decisions on the claim and chooses whether to automatically transmit data into the system for payment. AI has the ability to analyze structured data (i.e., online databases) and unstructured data, like handwritten forms, letters, and certificates, to make a cohesive recommendation. Less than 30 percent of insurance customers globally report having positive customer experiences — and AI technology may be the difference between a good customer experience or a bad one.
Catching fraud in real time, or earlier
One of the biggest sources of frustration for insurance agents lies in trying to identify fraudulent claims. Each year, fraud is responsible for $80 billion a year across all lines of insurance, and it is considered a crime in 48 U.S. states. Insurance organizations are under pressure to catch fraudulent claims, but it’s easy to be outsmarted by fraud experts.
Using AI technology, insurance agents can supplement their own human intelligence with auto-validation, ensuring each policy is comprehensively reviewed. AI matches information from the claim to the policy and checks for red flags alongside the agent, automatically and in a fraction of the time. It can even use its cognitive analysis capabilities to identify the insurance claims most likely to be fraudulent, providing insight into where insurance agents should pay extra attention in the future. Pairing artificial and human intelligence is the most efficient way to prevent fraud and can save insurance organizations money, time, and peace of mind.
Insurance companies are adopting AI technology at an exponential pace. Around 62 percent of enterprises expect to use AI technologies by 2018, and those investing anticipate a 39 percent revenue rise by 2020. These statistics forecast a major digital shift in the overall workforce, one in which the insurance industry will play a vital part.
Insurance organizations that have already implemented an AI strategy are seeing a return on their investment — new insurer Lemonade reports it paid one claim in three seconds, thanks to its smart AI devices. In the future, insurance organizations that use AI tech will have the competitive edge. If AI helps increase overall speed and accuracy, as well as verification of fraudulent claims, customer satisfaction is bound to increase as well — and ultimately, this is the driving factor for industry success.
Although some claim AI will displace jobs, it will more likely augment them. In such an information-dense, high-pressure environment, AI technology takes care of repetitive business processes, minimizing the pressure on human agents and up-leveling them to tasks worthy of human intelligence, like providing top-notch customer service. As Tony Stark wears the Iron Man suit to increase his human capabilities, AI serves as the insurance agent’s body armor. It allows them to accomplish things they couldn’t before — due to limits on time and resources — and to do them with much greater efficiency.
Adam Devine is head of marketing for WorkFusion, where he leads market development, product and brand marketing, and strategic partnerships.