Applying AI to claims data solves complex challenges

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Editor's Note: This is part of a series that examines the use of AI in the claims space.

Insurers are looking at ways that AI can modernize their claims operations, and how to implement AI for claims functions without creating new issues for themselves.

The claims challenges insurers want to solve using AI tend to revolve around data – as do the challenges that AI could create. Insurers and insurtechs can use AI to better manage data, third-party administrators, liquidity and customer service.

Damion Walker of Gallagher
Damion Walker, managing director, technology, Gallagher.

Where insurers want to use claims information to be more accurate in underwriting decisions, AI can be applied to data that previously was sorted manually, according to Damion Walker, managing director of the technology practice at Gallagher. "It's more of an administrative assist, but it streamlines the whole process and makes it more accurate," he said. 

AI can increase operational efficiency for insurers, according to 64% of executives surveyed in a recent Digital Insurance report.

Bob Valliere of CSAA Insurance Group
Bob Vallliere, executive vice president of insurance operations, CSAA Insurance Group.

CSAA Insurance Group, the California-based home, auto and personal lines insurer, chose to apply AI technology to claims before any other operational areas, according to Bob Vallliere, executive vice president of insurance operations. It uses a virtual claims assistant (VCA), not for claims decisions, but to respond to plaintiff attorney demand packages, check on the quality of claims before paying policyholders, and prioritize claims actions for the carrier's adjusters, according to Valliere.

CSAA handles about 550,000 claims per year, paying $5.35 billion to policyholders each year, he added. The VCA improves accuracy, customer service and productivity, Valliere explained. 

Curt Hess of Vitesse
Curt Hess, U.S. executive president, Vitesse.

When an insurer uses a third-party administrator to pay claims, that adds complexity, according to Curt Hess, U.S. executive president at Vitesse, a payments provider serving insurers. Coordination with third-party administrators, brokers or banks delays claims payments, 78% of 200 senior U.S. and U.K. insurance industry executives recently surveyed by Vitesse said.

Applying AI to the liquidity of claims payments can point out ways to better manage cash through third-party administrators, Hess explained. "Where an insurer may have funds with one of these third parties, utilizing AI, you could lessen the amount of cash potentially trapped in one of these third parties, to maximize the overall returns for an insurer," he said. "That's an aspect of AI – using what's learned from all data that we collect, and providing that information back to the insurer for them to utilize."

Having accurately sorted data about claims payments on hand can help an insurer's underwriters better see trends and risks, according to Hess. Applying AI to claims can also boost customer service, he adds.

"The claim side is the last mile. That is a real big aspect for a policyholder in their time of need," Hess said. "If you don't get that equation right, then you're going to have issues with your customer satisfaction as well as your retention. It's always easier to retain a customer than it is to get a new customer."

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Artificial intelligence Claims Insurtech Property and casualty insurance
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