Consumers of the modern age want instant gratification from the brands they interact with. As a result, the insurance industry needs automation powered by artificial intelligence to boost their workflow efficiency and help them deliver a better claim experience. Thus, straight-through processing (STP) is the most viable solution to help insurance companies gain greater accuracy and a competitive edge.
Besides, when integrated with claims processing, this automated method can help insurers keep up with the dynamic demands of modern-day consumers. Hence, it’s high time for the insurance sector to start implementing the STP claims engine and leverage the overall business.
What is the Importance of Straight-Through Processing Claims Engine for the Insurance Industry?
Insurance companies need to deal with large volumes of documents for claims processing regularly. So, having an intelligent system like STP that can process financial transactions electronically without manual intervention is beneficial.
Adopting this digital system results in shorter cycle times, reduced errors, and improved customer experience.
So, here are the various factors contributing to the significance of STP claims engines in the insurance industry.
Enhances Claims-Related Processes
Using STP in primary claim activities such as first notice of loss (FNOL), customer interactions, payments, subrogation predictive analytics, fraud analysis, and document management can eliminate manual intervention and speed up claim processing, making it more efficient and productive.
Aids Fast Track Claims
Integration of the STP in fast track claims helps insurance companies migrate some major automation-related elements such as customer notifications, automatic segmentation, and auto reserving for all claim types. Thus, it increases standardization, reduces expenses, enhances customer experience, and boosts overall efficiency.
Reduces Human Error
Automating claim processing and payment disbursement through STP reduces the need for human intervention, leading to a significant reduction in manual errors. Also, overhead costs get reduced. Although total human intervention cannot be eliminated, replacing repetitive manual tasks in claims processing with automation ensures better accuracy and speed.
Improves Customer Experience
STP reduces turnaround times and speeds up transactional processes. So, claims verification and settlement processes can be quickened, and the errors in the same can be easily eliminated, allowing insurers to improve their end-user experience. With more customers demanding faster results, STP would make a huge difference.
How to Build an STP Claims Engine?
Straight-through processing involves several processes and technologies, with data collection and artificial intelligence being the basic yet crucial phases.
So, the steps of building an STP claims engine are as follows.
Provision for Data Collection and Management
Genuine information of policyholders needs to be gathered in the database for validating them before claims processing. So, to collect and store data properly, the following technological elements must be integrated into the STP claims engine.
OCR Software: Optional character recognition enables the conversion of physical documents to digital copies and scans them to extract adequate data, which can then be fed to the downstream systems.
Digital Signing Module: This technology can be used to digitally obtain consent and approval from the policyholders to use their details, eliminating the need for paper form filling.
Reconciliation Tools: Insurance companies must ensure that their database is well-synchronized with real-time data upload and updates taking place across the system. And for doing so, they must incorporate effective reconciliation tools into the STP.
Integration with Artificial Intelligence Capabilities
Although AI is a must-have technology in almost all insurance-related processes, adding its elements to the STP can render hassle-free claims processing. So, ensure that the following AI-driven components are integrated into the STP.
Workflow Tools: While building the complete STP system, insurers can define specific business rules. These pre-defined rules will enable the system to route documents automatically during claims management.
Monitoring and Analysis Tools: AI-driven viewing, monitoring, and mapping tools can enable insurance companies to view, monitor, and map claims-related data from various points across the STP system. As these tools come with prediction and analysis capabilities, the system helps in automated, fraudulent claim detection, claim document verification, claim amount calculation, etc.
Electronic Payment Module: The AI-powered STP system will automatically initiate electronic funds transfer on successful claims document verification, facilitating the digital disbursement of payments to policyholders while eliminating cumbersome manual payment processing mechanisms.
As per reports , the Indian insurance industry registered a growth of 17% in 2021 due to digitization. It shows that adopting automation will be indispensable for all insurers shortly. Hence, immediate implementation of the STP claims engine can be helpful for companies in the long run.