Automated Claims Processing: How It Works & What Are The Benefits?

Learn more about how you can automate the different steps of claims processing with intelligent solutions to improve accuracy, efficiency, and customer experience.

Last updated:
May 17, 2023

Although the insurance industry has long grappled with challenges related to slow adoption of new technologies, resulting in inefficient claims processing, 75 percent of insurance companies are thinking about implementing some types of insurance automation. Automated claims processing has emerged as a solution that promises to revolutionize the way insurance claims are handled. By leveraging intelligent document processing and various automation solutions, insurance companies can address these challenges and significantly improve the efficiency, accuracy, and the overall experience of claims processing.

In this blog post, we will take an in-depth look at the steps of insurance claims and explore the multitude of benefits that come with automating the claims processing workflow. We will also delve into the future prospects of claims process automation and how it can pave the way for a more streamlined and customer-centric insurance industry.

How Does Insurance Claims Processing Work?

Before we get into automating the entire insurance claims processing workflow, we first must know what are the steps involved:

  1. Claim Submission or Reporting:
    • Policyholders initiate the claims process by submitting a claim form to the insurance company.
    • The form includes essential details, such as policy information, incident description, and supporting documents (e.g., receipts, police reports, medical records).
  2. Claim Assessment:
    • Insurance companies receive and review the submitted claim forms.
    • Claims adjusters or intake specialists assess the completeness and accuracy of the information provided.
    • Claims are registered in the company's system, assigned a unique identifier, and categorized based on the type of claim (e.g., auto, property, health).
  3. Evaluation and Coverage Determination:
    • Claims adjusters or examiners review the submitted information, assess policy coverage, and evaluate the claim's validity.
    • This evaluation involves comparing the claim details against the policy terms and conditions to determine if the claim is eligible for reimbursement or coverage.
    • Adjusters may also investigate the incident, gather additional information, or consult experts (e.g., medical professionals, accident reconstruction specialists) to make informed decisions.
  4. Claim Adjudication and Settlement:
    • Once the claim evaluation is complete, the insurance company determines the amount of reimbursement or coverage the policyholder is entitled to.
    • This process involves considering policy limits, deductibles, and any applicable exclusions.
    • Claims are either approved, partially approved, or denied based on the findings.
    • Settlement offers are communicated to the policyholder, and the agreed-upon amount is disbursed accordingly.
  5. Claim Submission or Reporting:
    • Policyholders initiate the claims process by submitting a claim form to the insurance company.
    • The form includes essential details, such as policy information, incident description, and supporting documents (e.g., receipts, police reports, medical records).
  6. Claims Documentation and Archiving:
    • All relevant information, decisions, and communications regarding the claim are documented and stored for future reference.
    • This documentation ensures transparency, legal compliance, and easy retrieval of information if needed.

While this traditional claims processing workflow has been a mainstay in the insurance industry, it is susceptible to challenges such as manual errors, delays in document handling, and inconsistent data extraction. By automating various stages of this process via different technologies such as robotic process automation, intelligent document processing, and more, insurance companies can overcome these challenges and streamline their claims processing operations to achieve higher accuracy, efficiency, and customer satisfaction. In the following sections, we will explore the benefits of automating claims processing and the steps involved in implementing this transformative approach.

Benefits of Automating Claims Processing

To automate claims processing, insurance businesses must start with automating data extraction from claim forms and the supporting documents. By leveraging intelligent document processing powered by machine learning and large language models like ChatGPT or GPT-4, insurance businesses can gain significant benefits. Let’s explore them in more detail:

Improved Accuracy and Reduced Errors

Repetitive manual tasks like data entry can be prone to human errors. The staff may accidentally misspell certain words or enter the data in the wrong fields. By automating claims processing with IDP, insurance companies can significantly improve data accuracy and reduce errors, which can lead to financial loss.

Enhanced Efficiency and Faster Processing Times

Automating data extraction from claim forms and supporting documents significantly reduces processing times. With IDP and automation solutions like RPA, the laborious and time-consuming manual tasks are replaced by rapid and accurate data extraction. This streamlined approach accelerates the claims workflow, allowing insurance companies to handle a larger volume of claims efficiently.

Cost Savings and Resource Optimization

Manual claims processing requires significant human resources, resulting in higher operational costs. By automating data extraction, verification, adjudication, payment processing, etc., insurance companies can reduce the need for human intervention, minimizing staffing requirements and associated expenses. This optimization enables insurance companies to reallocate their workforce to more value-added tasks while reducing overall costs.

Steps for Automating Claims Processing

Automating claims processing involves a systematic approach to ensure a seamless transition from manual workflows to an efficient automated process. The following steps outline the implementation process:

  1. Assessing the Existing Claims Processing Workflow:
    • Conduct a thorough analysis of the current claims processing workflow to identify pain points, inefficiencies, and areas that would benefit from automation.
    • Evaluate the specific requirements and challenges faced by the insurance company in processing claims.
    • Evaluate the specific requirements and challenges faced by the insurance company in processing claims.
  2. Identifying Data Extraction Requirements and Pain Points:
    • Determine the specific data extraction requirements for claims processing.
    • Identify the key fields and information to be extracted from claim forms, supporting documents, and other relevant sources.
    • Pinpoint pain points in the manual data entry and document handling processes that can be alleviated through automation.
  3. Sign up for FormX and set up your extractors
    • After identifying your data extraction requirements, you can sign up for FormX and create different data extraction models, or extractors, that are needed in order to complete claims processing and assessment. Training new extractors now only requires a few samples as we’ve integrated FormX with large language models like GPT-4. After setting up your extractors, you can upload sample images to test them out.
  4. Integration of into the Claims Processing System:
    • Integrate FormX seamlessly into the existing claims processing system via a single point of API.
    • Or, you can also use our Desktop App that will generate a csv file for you to upload to your claims processing system.
  5. Deployment and Monitoring of the Automated Workflow:
    • Deploy the automated claims processing system in a controlled environment, gradually transitioning from manual to automated processes.
    • Monitor the performance and effectiveness of the system in real-world scenarios.
    • Continuously gather feedback from claims adjusters, examiners, and other stakeholders to identify areas for further improvement and fine-tuning.

Start Automating Claims Processing with FormX

Automating claims processing presents a significant opportunity for insurance companies to revolutionize their operations and elevate the customer experience. The traditional manual claims workflow can be transformed into an efficient and accurate process through intelligent document processing, RPA, and other intelligent process automation solutions. By embracing automation, insurance companies can reap numerous benefits, including improved accuracy, enhanced efficiency, cost savings, standardized data extraction, and real-time tracking and analytics.

Contact us today to tell us more about your insurance businesses for us to help you automate data extraction and claims processing.

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