Hollywood depictions of Artificial Intelligence include everything from C-3PO in “Star Wars,” to the intelligent robots programmed to assist humans in “I, Robot,” to the infamous HAL 9000 sentient computer character in “2001: A Space Odyssey.”
In real life, Artificial Intelligence (AI), which is the theory that a machine can imitate human intelligence, is a little less thrilling, but still deeply impacting with potential applications in nearly all business sectors. In the insurance industry, AI/cognitive computing is beginning to affect areas across the insurance value chain, and in particular, claims management, making them more automated and efficient. In fact, AI-enabled technologies are having the biggest impact in improving claims and automating claims processes, from First Notice of Loss (FNOL) to adjudicating the claim.
For the consumer, dealing with a significant loss is stressful enough without having to manage an unwieldy insurance claims process. For the insurer, this period is the critical “moment-of-truth” that could make or break a client relationship. It is imperative that an insurer’s adjudication is streamlined to be quick and accurate. This is where AI comes in, by using cognition to make the claims handler’s workload more productive and adjudicating claims faster. Additionally, there is the benefit of preventing claims leakage via early fraud detection and prevention.
AI Driving Claims Processing Efficiency
Some products are designed to make the claim handler’s work more efficient, with AI even taking over the handler’s administrative functions, thus freeing up time to concentrate on investigating, evaluating and negotiating.
Examples in this space include Elafris, Inc., which has an AI-powered virtual insurance chatbot that makes it easy for a customer to view the history of submitted claims, including status for current claims and payment information. Customers may also submit a claim over the app after answering a few questions, including clicking on the damaged areas in the car drawings. Once the claim has been submitted, the chatbot indicates that a claims adjuster will follow up with the customer. It also shares a list of local repair shops for the customer to get an estimate. Within minutes, the FNOL is complete without involving a claims adjuster.
Lemonade, a start-up property and casualty insurance company currently operating in New York, California, and Illinois, also uses chatbots to interact with their policyholders. In this case, the customer captures images of the home loss/damage/theft via smartphone camera. Next, the user lists the items (including cost) that have been damaged or stolen. The claim is then submitted through the app. Simple claims are usually quickly approved, some within minutes of submitting the claim. The user is also notified when/where the payment is being sent. In this case, AI has taken care of every step of the claims process leading up to settling the claim.
AI Driving Cost-Effectiveness Through Settlement Accuracy
Other AI products help drive down insurer costs by figuring out the most accurate claims settlements. UK-based Tractable has an AI review program that checks repair estimates and flags unnecessary repairs, not only freeing up adjusters’ time, but preventing/minimizing claims leakage as well. Tractable’s other AI solution, “FNOL Triage” (currently under development) analyzes photos of the damage sent by the policyholder and determines if the car needs repair, salvaging, or appraising. The claims handler will make the final determination, but won’t have to spend time doing the initial analysis.
AI’s Impact Across the Claims Value Chain
Other companies currently have products that have an impact across the claims value chain.
HeavyWater, a provider of cognitive automation, offers a virtual assistant that organizes, reads, and reviews documents and then prepares them for secure storage, access, presentation, and sharing. It can also handle high volumes. By automating what is a very manually intensive and error-prone task, insurers can expect significant savings.
Shift Technology’s SaaS solution uses AI to flag potentially fraudulent claims, preventing claims leakage and increasing efficiencies within fraud handling teams.
Even core technology providers are throwing their hats into the ring. When Guidewire acquired Eagle Eye Analytics, a provider of predictive analytics products, it was able to use machine-learning algorithms and predictive analytics to score claims in real time. Now renamed Guidewire Predictive Analytics, this software assesses claim severity, routes and assigns claims, and identifies claims that may require litigation or subrogation.
Insurers Not Far Behind
While InsurTechs garner most of the attention for developing innovative AI solutions, traditional insurers aren’t far behind. For example, Japan-based Fukoku Mutual Life Insurance made waves in December when it announced that 34 claims FTEs would be replaced with an AI system based on IBM’s Watson Explorer that is designed to read medical records and other documents necessary to determine payment.
However, most insurers aren’t yet following in the footsteps of Fukoku, instead focusing on creating AI solutions that complement the work of current employees. Many of them (XL Catlin’s XL Innovate, MetLife’s Lumen Lab, Aviva’s Digital Garage, etc.) have homegrown innovation labs. Liberty Mutual’s Solaria Labs has an API developer portal to crowdsource data on traffic and other driving patterns. Its potential future apps include one where auto owners could use their smart phone cameras to take pictures of their vehicle’s damage and then get immediate estimates for repair. The AI would be based on thousands of car crash photos.
The Biggest Benefit to Incorporating AI into Claims
In the short time it has been around in the insurance industry, AI has increased efficiency and decreased labor costs in insurance claims processing. Ultimately, any measure taken by an insurer has to have one end goal—attract new customers and retain existing customers by delighting them with world-class service across all customer touchpoints. AI-infused claims processing is enabling insurers to achieve this goal.
Michael Carroll is Vice President and Global Insurance Services Leader at Capgemini Financial Services SBU. He is an Insurance Claims Professional with more than 20 years of industry experience in both commercial and personal lines of business. The views in this article are the author’s and do not reflect the views of Capgemini. Nor does any company or service mentioned represent an endorsement.