Why Straight-Through Processing Is Important for Insurers
Straight-through-processing can cut manual input by up to 90% and it’s getting more attention in the insurance industry. Learn more about STP and how IDP can enhance it.
Integrating OCR and IDP allows the insurance industry to gain a huge advantage as they can help automate document processing, a process that plays a significant role in the industry.
The insurance industry runs on data. Insurance companies use data to understand their customers better and to classify risks. Despite its dependence on data, the industry is still trailing others when it comes to the adoption of digital technology and process automation. By embracing technologies like optical character recognition (OCR) and intelligent document processing (IDP), insurers have an opportunity to transform their industry.
Underwriters are among the most significant employees in any insurance company. However, according to a survey conducted by consultancy firm McKinsey, they spend up to 40% of their time on administrative tasks. Data entry and physical data analysis make up a large part of that time. Whilst they are necessary for an industry that relies on data, much of this work can be automated today.
Manual processing and paperwork are simply not making the most of a highly qualified underwriter’s time. Digital technologies like OCR and IDP can cut down on time spent completing administrative tasks manually. They can revolutionize the way insurers do business.
In this blog post, we will take a closer look at the insurance industry, its processes and challenges, and how OCR and IDP can help insurers get the most out of their data and provide even better customer service.
Whether clients are buying life, health, or auto insurance, each contract follows a similar principle. Insurance protects businesses and individuals from money-related misfortune. By buying insurance, an injured party transfers the cost of a potential future problem to the insurer. The insurer charges a premium in exchange for taking the risk and absorbs the financial burden, should something happen.
Despite those similarities, each insurance policy requires its own documentation and paperwork. As a heavily regulated industry, insurers face countless administrative procedures and verification to comply with local and federal laws. Paperwork is also involved in dealing with premium adjustments, payouts, and settlements.
Plus, insurance companies are more likely than other businesses to be taken to court in case their customers disagree with their assessments. In front of a judge, clear documentation becomes vital evidence to help argue the company’s case and bring legal problems to a close as fast as possible.
All these examples make it clear just how much to industry relies on administrative work and documentation. But is there a better way to take care of these essential elements of the business?
OCR and IDP are two of the key technologies primed to support the transition of the insurance industry. OCR, or Optical Character Recognition, allows a software product to recognize and isolate text within a digital image. It is vital for reading and analyzing scanned documents, for example. However, the capability of OCR is limited to converting images to machine-encoded texts. Intelligent Document Processing (IDP), although most use the two interchangeably, integrates OCR and other technologies like machine learning, natural language processing, and more to not only recognize texts trapped within images, but more importantly extracts and returns them in structured formats like JSON or CSV. The ending results can then be used by other software for data analytics or process automation.
Insurance companies and their teams stand to benefit in several ways from those technologies.
Using OCR wisely allows insurance companies to outperform their competition. At a time when businesses in all sectors are in different stages of digital transition, that can lead to a significant advantage for those in the lead.
By analyzing insurance documents with the help of OCR, insurers can extract information that helps them customize their products to better meet customer needs. Aligning products and services to existing clients improves customer retention, which is generally more cost-effective than attracting new clients.
Moreover, OCR helps your organization win more clients, too. Insurers can simply use basic information supplied on requests for quotation to tailor their response. Of course, underwriters and other employees could read the documents and do the same. The critical difference, though, is using technology saves human time and associated costs.
Processing documents slowly may harm the overall customer experience, for example, when it comes to processing claims and issuing payments. Delays cause clients to lose their trust in the insurer, and they may question whether a particular insurance company is the best choice for them. Once this trust has been eroded, it will be hard – if not impossible – to win it back.
We started this post by noting just how important data is for the entire insurance industry. Data storage is one of the key advantages of digital over paper-based systems. Information that is available digitally is simpler to organize, keep safe, search, and retrieve as needed.
Retrieving meaningful data from paper files and archives is time-consuming, impractical, and often simply impossible. On the other hand, extracting high-quality data from documents using OCR is straightforward and cost-effective. This data can become the backbone of your organization’s future planning.
OCR helps streamline data acquisition and administration, as well as make insights available with a few clicks. As a result, businesses will find it easy to plan based on real-time data rather than outdated or incomplete records.
Like all businesses, insurance companies are constantly looking to increase their profit margins and customer service delivery without compromising on quality. Eliminating manual administration processes and replacing them with technologies like OCR or IDP helps achieve just that. By combining OCR with other AI technologies, IDP can automate date extraction and minimize human errors.
OCR and AI together create a great starting point for businesses looking to initiate their digital transformation. Automating administrative procedures with those tools saves time and resources, including employees. By reallocating those resources, companies become more efficient and profitable.
Accuracy and speed is critical to ensuring customer satisfaction in the insurance industry. Errors like receiving an incorrect quotation or waiting for too long can damage the customer relationship once and for all. No matter how many corrected proposals the client receives, they may have lost trust in the insurer and start considering competitors.
If that happens with one customer, it may not be problematic. However, if errors are repeated and result in a substantial number of customers switching, they can soon damage the insurer’s bottom line. Using OCR and IDP can prevent those problems. By automating the collection of customer information, your organization avoids manual errors in the first place. Based on the information provided, the team can then develop custom-tailored quotes that match clients’ needs.
Transitioning from an analog to a digital business model comes with unique challenges. Here is a closer look at the considerations that come with implementing insurance automation.
Start by analyzing your organization’s current situation to identify the areas where automating data extraction or other processes via OCR, IDP or even RPA would be most beneficial. Once those areas become clear, align them with the company’s overall business goals.
Once your team has completed this step, you can consider methods of automation. Utilizing technologies like AI and OCR does not replace human expertise and input. Instead, these technologies can augment what humans do and improve the accuracy of data processing, for example.
Once your team understands the benefits of automation, it is easy to get carried away and become almost too enthusiastic about your organization’s transformation.
Rather than trying to change every process at once, it is often more beneficial to decide where the need is greatest and where you can reap benefits quickly. In most cases, the ultimate goal will be to automate as much as possible. Developing a flowchart or a roadmap for an insurance company’s automation helps select areas of higher priority and streamlines the entire process.
Employee buy-in and engagement are critical for a successful, smooth transition to digital operations. Employees may feel threatened by the idea of their job being done by a piece of software. They may also be unsure whether they can get used to a different way of working. Digital transitions can be daunting.
In-depth communications and training help break down barriers and mitigate potential resistance. Keeping employees informed and offering step-by-step training and familiarization accelerate the transition.
With that kind of support, employees soon become advocates and see the benefits behind the transition. Robotizing and automating workstreams can drive entire teams toward focusing on the most essential tasks. Employees will spend less time completing tedious administrative tasks and instead be able to devote time to tasks that require human intelligence, creativity, and input.
It is not enough to kick off the insurance automation process. To ensure a successful transformation, organizations need to monitor progress and be ready to make changes. The digital transformation of an insurance company is a process rather than a static list of tasks that can be completed without adjustment.
Throughout the transformation, the team driving the process needs to check outcomes as well as communicate with frontline employees to get first-hand insights and feedback. This information is invaluable to help iterate the process to deliver industry-leading outcomes that put your organization ahead of the competition.
In order to automate manual processes in the insurance industry, you must first get the necessary information. Manual data entry, however, can be time-consuming, error-prone, and most importantly quite inefficient.
FormX has helped insurance companies automate data extraction via OCR, machine learning, image optimization, and more so that insurance companies can use the extracted data to automatically process different claims, allow clients to accumulate membership points by scanning their reports or documents, and deliver excellent customer services to build life-long relationships with them.