The insurance industry has always been at the forefront of adopting new technologies to improve their services. Now, with the rise of automation powered by AI, the industry is undergoing a massive transformation. This is a topic of great interest and debate, with experts predicting significant changes in the way insurance companies operate.
According to a report by Accenture, the significance of AI is becoming evident to insurers, leading to an anticipated surge in its adoption. Although only 44% of claims executives currently consider their organizations to be advanced in utilizing automation, AI, and machine learning-driven data analytics, a substantial 80% of them believe that these technologies can deliver greater value. Moreover, 65% of claims executives express their intention to invest more than $10 million in AI over the next three years.
Challenges of Manual Document Processing in Insurance
Policy agreements play a vital role in setting the terms and conditions for business relationships in the insurance world. These agreements act as legally binding contracts that establish the rights and responsibilities of both insurers and policyholders. Needless to say, processing comprehensive and concise policies that outline coverage and exclusions while addressing individual needs can be quite a challenge.
Traditionally, this intricate task was carried out manually, demanding significant time and resources:
- Time-consuming: Labor-intensive process, requiring significant time and effort from insurers.
- Inefficiency: Multiple steps and handoffs are needed between different departments or individuals, causing bottlenecks and slowing down the overall workflow;
- Lack of scalability: As the volume of claims and policies increases, manual processes struggle to keep up, leading to backlogs and longer processing times;
- Inconsistent decision-making: Different individuals may interpret policies and assess claims differently;
- Limited data analysis: Challenges with analyzing large volumes of data effectively, hindering insurers’ ability to identify patterns, trends, and potential risks.
Where Does AI Fit in?
In the insurance industry document processing is a critical aspect of handling policy agreements and insurance claims. With the advent of AI, companies specializing in IPA (Intelligent Process Automation) are leveraging advanced technologies to streamline these processes, reforming the way insurers manage documents.
An insurance company is receiving a large volume of claim forms from policyholders. Traditionally, this would require manual data entry, verification, and processing, resulting in significant time and resource investment.
Using AI algorithms, the system can extract relevant information from various types of documents, such as claim forms, medical reports, and invoices. Optical Character Recognition (OCR) technology enables the system to decipher handwritten and printed text, capturing essential details like policy numbers, names, dates, and claim amounts. Natural Language Processing (NLP) algorithms analyze the extracted text to understand the context and categorize information accordingly.
Once the data is extracted, AI-powered systems can validate and cross-reference the information against existing policy agreements and claim databases in real time. This enables insurers to quickly verify the authenticity of the submitted documents and evaluate the validity of the claims. By automating the document processing workflow, insurers can significantly reduce processing times, eliminate manual errors, and ensure faster claims settlement for policyholders.
Main Triggers That Set the Stage for AI to Meet Insurance Landscape
In their new report, Insurance 2025 and Beyond, PwC noted five influential trends reshaping the insurance landscape:
- A widening trust gap in an uncertain world;
- Rapidly evolving customer needs and preferences;
- An increasingly digital and AI-driven world;
- Climate risk and a focus on sustainability;
- Convergence, collaboration and competition.
The integration of AI-driven document processing in the insurance industry presents a powerful use case. By automating the extraction, validation, and verification of information from policy agreements and insurance claims, insurers can expedite their processes, enhance accuracy, and provide a seamless experience for policyholders. This technology not only saves time and resources but also improves customer satisfaction by enabling faster claims settlements and reducing the burden of manual paperwork.
What Does the Future Bring?
AI is transforming the insurance industry, bringing numerous benefits and challenges. The integration of AI and automation into policy agreements and claims processing can streamline processes, reduce costs, and improve customer experience. However, insurers need to address data quality, privacy, and regulatory compliance to ensure the responsible use of these advanced technologies. The future of the insurance industry is likely to be shaped by AI and automation, and insurers need to adapt to these changes to remain competitive.