Claims processing is an obligation by insurance companies that involves receiving, investigating and acting on a claim filed by an insured. The process consists of multiple administrative tasks and customer service layers, which include reviewing various documents.
These documents often need to go through various steps such as verification of authenticity, data extraction, and data recording. Next to that, someone has to do database checks, payment approval, or denial of the claim.
When this process is performed manually, data accuracy and consistency issues are likely to evolve. Inefficiencies and human errors can lead to economic losses, long turnaround times, and documents piling up on your desk. Luckily, there’s plenty of space and opportunity for improvement.
As for many other processes, automation can be the saving grace for insurance companies. With technologies such as Optical Character Recognition (OCR) and Artificial Intelligence (AI), it is possible to automate your claims processing.
In this article, we will dive into how OCR and AI can automate all document processing in insurance claim procedures
What does manual claims processing look like?
It’s apparent that claims processing can be a long process and there are several reasons why. The process often follows several steps, with some steps taking more time than others. Let’s take a look at the steps involved:
- Receipt of the filed claim
- Claim verification and investigation
- Damage assessment
- Payment processing
1. Receipt of the filed claim
The process starts with receiving the claim and collecting information. Clients must provide documents and the necessary details and evidence to support the submission of the claim. Once the insurance company receives the information, they will start the investigation process.
2. Claim verification and investigation
The claim verification and investigation begin when the claims clerk examines the matter and sees the extent of the damage suffered. In this step, the responsible parties are identified and the insurance policy coverage for the damages is assessed.
This is also the step in which documents are reviewed and verified by the claims clerk. After reviewing documents such as invoices, identity documents, insurance cards, and any other additional evidence supporting the claim, data must be recorded in the database. After that, the clerk needs to review the insurance policy to check what it does or doesn’t cover, and possible deductibles that must be paid.
3. Damage assessment
The claims clerk may hire engineers, contractors, and adjusters to examine the extent of the damage. The adjuster can recommend a list of professionals to hire for repairs, which could help save money during the claims process.
4. Payment processing
After a thorough evaluation, if the claims clerk approves the claim, he/she will process the insurance application and proceed with the payment. The processing time for payments may vary depending on the case. It can be a quick payment of a medical invoice or, in the case of repairs or replacements, depending on the severity level. If the claims clerk does not approve the claim, the claim is denied and the client should be informed about the decision.
Documents are the main source of evidence in a claims process, which is why insurance companies need to filter accurate data out of all the evidence presented. To get accurate data from the documents and automate manual tasks within the claims processing, companies can incorporate data extraction technology.
Let’s have a look at how this automated process works with such a technology.
Claims Processing Automation with OCR & AI
Nowadays, there are many new technologies to automate time-consuming document-related processes such as claims processing. One of these technologies is Optical Character Recognition (OCR). It is a technology that converts images to text and can help to automate data extraction from scanned documents or images of documents.
Automating data extraction is handy, but it does not entirely help with your claims processing. This is why OCR is often coupled with AI. Together with AI, OCR software can convert that extracted text into the desired format (PDF, CSV, JSON, or XML), classify the document type, anonymize sensitive data, verify the validity of the data, and send it straight to your database.
Below, you can find an example of the steps involved in automatically extracting data from documents with OCR and AI:
- Upload documents – The first step is to provide a picture or PDF file of a document to the OCR software. Usually, this is done from a mobile app, email, FTP, or web application.
- Image to text conversion – When the picture or PDF is sent, it is automatically converted to a text file by the OCR software. All text from the document is extracted, but not yet processed and structured.
- Conversion to structured output – In the last step, the text file is converted into structured data using machine learning and AI. From this point on, it’s easy to process the document in your database.
Using these technologies brings various benefits to claims processing workflows. The next section will provide you with insights into these benefits.
Why you should automate claims processing
Many benefits come with using the combination of OCR and AI in claims processing. These benefits can impact your organization’s productivity, and therefore your bottom line as well.
Take a look at the four key benefits we have listed below:
- Reduced processing time
- Prevent fraud
- Improved Employee satisfaction
- Reduced costs
Reduced processing time
Claims processing involves a significant amount of paperwork, which translates into a high amount of hours spent on manual data entry. One of the main benefits of using OCR and AI technology is reducing the time that insurance agents spend on manual data processing.
Documents can now be easily uploaded or sent to the software and all the data required can be instantly available, searchable, and ready for further processes. This way, your back office can process many more documents within the same time it would take to manually enter the data into the system.
There are always criminals looking to find a way to take advantage of anything. In the insurance industry, that’s not an exception. A good example is invoice fraud, which occurs when an insured intentionally modifies the invoice to receive a higher amount or changes a date to make it eligible.
In other words, the insured tries to get money back that he/she didn’t pay, or modifies the date to fit in the timeframe according to the insurance policy.
Fraud cases with false claims like these cost $308.6 billion in 2022 in the U.S. alone.
Fortunately, some OCR software with AI can prevent the scenario mentioned above and help your organization detect possible fraud and irregularities that occur in claim processes.
Improved Employee Engagement
Claims process automation lets you eliminate the most annoying aspects of the claim process. According to a report from Gallup, 80% of employees surveyed are not engaged at work. Shockingly, the global economy suffers US$8.1 trillion in costs each year due to the lack of engagement of employees. There is a great chance that your organization is also suffering from it.
Luckily, OCR software is one solution that can improve employee engagement. As it is designed to automate manual data entry, employees will have more time to complete meaningful and fulfilling tasks.
As mentioned before, the claims processing time can get delayed by manual document processing. Saving time saves you a lot of money as well. There’s no general formula as your case may be different from others, but automation typically results in cost savings of 40% to 75%, with payback periods ranging from several months to years.
Ready to claim the benefits of automation and take your claims processing to the next level? Let’s have a look at how Klippa can help you!
Automate your claims processing with Klippa
By now, it’s hopefully clear that document automation is the way to go when it comes to claims processing. With Klippa DocHorizon, you can do that and more!
Klippa DocHorizon is AI-embedded OCR software that enables organizations around the world to automate document-related workflows. It doesn’t matter which documents you need to process, the software can be used to automate data extraction, which eliminates all manual data entry tasks in your claims processing workflow.
Next to that, it can identify documents based on their characteristics, as well as detect possible alterations made to the documents through document fraud with EXIF data analysis.
With this intelligent software, you can prevent fraud, reduce the turnaround time, and save money in your claims processing.
Are you up for improving your organization’s bottom line while making your employees’ life easier?
Book a free demo below to see how our software can help you, or contact one of our experts for more information.