It could be argued that effective claims management is key in fostering the insurer–customer relationship. For insurance customers, it’s the critical “moment of truth,” where a bad experience during the claims process can make them flee quicker than any other interaction in the insurance value chain.

This, along with claims leakage caused by human error or fraud, affects profitability. For these reasons, claims auditing is one of the crucial tasks that insurers must undertake to maximize efficiency in claims management. Today, emerging technologies such as robotic process automation (RPA), robotic desktop automation (RDA), and cognitive document processing (CDP) can completely transform the claims audit process to improve productivity and efficiency while decreasing costs.

What is claims auditing?

Whether it’s due to consumer complaints registered with state regulators or simply a matter of internal corporate governance, all insurers routinely perform claims audits. Claims auditing tends to be very manually intensive with mountains of paperwork to process. The audit team spends hours rigorously poring through large files, typically with a checklist of questions in hand. Some of the questions are simple (e.g., how fast was the response to the first notice of loss?), while others are complicated (e.g., how much money was paid to settle a claim? If a payment was made, was the deductible taken? Was there a lawsuit?)

Answering simple, traditional audit questions is not an efficient use of a claims auditor’s time. Auditors are better served answering complicated questions that require judgment and analysis. With RPA or RDA, auditors can do just that. These robotic automation tools can answer more than 50% of the questions, allowing skilled auditors to focus on value-added activities.

What are RPA and RDA?

RPA is a process automation technology that combines preset “rules” with workflow execution tools and is programmed to follow predetermined actions around the clock. Its rules-based nature allows for easy completion of repetitive tasks. It is also easy to adjust the number of robots (bots) in a short time-span, making scalability easy to achieve.

RDA is “attended” RPA in the sense that it requires human intervention to determine what to automate and when to start the process.

In a claims audit, where auditors answer numerous questions regarding issues such as customer service, coverage, investigation, evaluation, negotiation, or reserving, RPA and RDA can eliminate the inevitable human error made while going through paperwork to get answers to some of the more manually calculated questions.  Examples include: “Was first contact made?” “If a police report was available, was it ordered?” “Was the collision deductive taken?” “If witnesses existed, were statements taken?” “Was deprecation taken?” and “Did UCP letters go out in a timely manner?”

But while RPA and RDA can automate the process of answering the more straightforward calculated questions, there are times when someone still has to go through a claims file and sort and review dozens of documents, just looking for a simple sentence, such as: “made first contact and explained the process.” But what if technology could handle that too? This is where CDP comes in.

What is CDP?

CDP is AI-powered software that can organize, read, and review documents. In a claims audit, CDP can scan through claims files, categorize them, and create a table of contents. It can identify critical points from the files such as customer service touch points. CDP helps increase operational efficiency, reduce costs, and offer enhanced agility since it can react quickly with changes in volume of data or documents being added.

Let’s take a look at potential scenarios with and without automation. Within the customer service phase of the claims audit, there is usually a question regarding whether first contact was made with the insured according to the carrier’s service level agreement (SLA). In this example, the SLA was first contacted via phone within two hours of adjuster assignment.

  • Without automation:

The auditor would go into the claims system, look at the time the claim was captured, and then the time when it was assigned. Next, he or she would look in the adjuster notes of the activity log to find an entry from an agent or representative, such as: “I contacted the insured and explained the process. The insured had no questions and I said I’d follow up.” The auditor would then calculate the hours from assignment to first contact and ensure that the process was explained. In this example, the answer would be “yes.” If the answer was “no,” the auditor would dig deeper to figure out the reason.

  • With automation:

First, a connection would be enabled between the audit template and the claims and policy systems. Then, RPA “bots” would interface with the template and systems to answer questions. The bot would pull the capture and assignment to adjuster time, read the record of contact in the claims system, and then simply do the math to answer “yes” or “no.” If the answer was “no,” the next question would probe the reason it took longer than two hours, at which point the auditor would step in to answer the question. But in many cases where the bot answered “yes,” the auditor would not even need to get involved in that phase. CDP would also aid in reading the record of contact.

In the second scenario, automation found the information, read it, and answered the yes/no question. In that time, the claims auditor can focus on tougher questions. With RPA/RDA/CDP, an insurer can halve the number of audit questions they must handle, thereby increasing operational efficiency and decreasing costs.

Smart technologies such as RPA, RDA, and CDP can help make claims auditing more productive and efficient. Every phase of the audit template, including coverage, investigation, evaluation, negotiation, settlement, re-service, litigation management, and diary management all include the types of questions that lend themselves to RPA, RDA, and CDP. In addition, the scalability and speed of automation may allow insurers to increase the frequency and accuracy of audits, helping shift a loss economic opportunity (LEO) into a loss avoidance opportunity (LAO). Ultimately, with these types of benefits, insurers are sure to improve their claims management, leading to more savings and happier customers.

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.