Insurance companies have been dealing with multiple documents and physical records, to take care of their daily transactions. However, they have realized the value of automating these processes, especially for processing claims.¹ Insurance sectors have a competitive business scenario, but sometimes the benefits of automating claims processing are not fully realized. This leads to non-optimization of the claims processing costs, lengthier cycle times and poor sales – customer relationship.
Experts believe that one of the keys to profitability is to reduce the overall cost of processing claims. According to Infosys, nearly 7.5% of the total operational expenses are gone in processing claims. A decrease in the duration of cycle can certainly facilitate in enhancing the customer satisfaction, as it decreases the time taken to raise a claim by the customer and settle the same with little or no delay.
The benefit of decreasing the cycle time and cost of claims can be realized through automating the claims process. Some of the notable changes that automation of claims processing brings in an organization include:
- Improved customer satisfaction rates and increased customer retention.
- Better control of claims, starting from claim initiation to settlement, by improving internal and external communication.
- An automated mechanism in place to handle simple claim requests.
- Assigning priority to specific claim requests becomes easy.
- Enhanced standardization to the claims process.
- Integration with other tools and solutions to enhance overall business productivity, etc.
Other benefits include improved accuracy of the information shared internally and externally, increased efficiency in archiving and accessing of data for compliance reasons, ability to capture data from various sources and application of data to various business processes.
These benefits can help insurance companies to increase operational efficiency, thus promoting faster coordination and collaboration with internal and external entities. This will also facilitate companies in becoming productive and responsive in supporting customer requests, marketing and sales campaigns.
A study by AHIP (America’s Health Insurance Plan) reveals that automation of claims processing, costs insurance companies less than 50% of the actual costs for paper processing. Some of the other findings mentioned in the report include:
- Claims settlement can be achieved in 7 to 14 days in comparison to manual paper processing, which takes 2 to 3 months.
- Insurance companies can cut half of their costs and improve their processing time by up to 85%.
- Companies can also improve their overall productivity and can deal with other areas of operations like resource allocation, cash flow and budgeting.
While claims processes vary in insurance companies, it is important to take a systematic approach to automate the claims process by involving a Business Process Analyst. If the implementation is carried out before having a thorough analysis of the claims process and other processes in the organization, then this may lead to longer implementation cycle and risk of being ineffective.
Taking an organized approach to implementing claims processing automation helps Insurance Companies realize the business impact in at least two ways:
- Impacting the bottom line by cutting costs.
- Helping gain an edge over competition by increasing customer satisfaction rate leading to increase in customer retention.
- Infosys, “Towards an efficient, paper-free and automated claims process,” 2011
- GRM. “How it pays to automate claims processing.”