Real time challenges in claim settlements faced by the insurance eco-system

While we keep highlighting the importance of insurance and the financial cushion it provides to people, the real essence of insurance lies in seamless claim settlements. Buying an insurance policy is meaningless if claim settlements pose a challenge to consumers. In the offline branch-led model, claim settlements, even today, lead to the biggest test for consumers’ patience. It is also one of the key reasons, why people are still reluctant to invest in insurance, despite the gradual rise in its awareness.

According to reports, 38% of health insurance companies settle claims within 5 business days on average; but further delays cannot be ruled out. As per IRDAI stipulations, insurers should settle claims within 30 days of documentation, if no further investigation is necessary. A huge amount of Covid claims is yet to be settled.

At the time of filing claims, there is a simple process to follow and if any steps are missed, that may adversely affect the entire end to end process. Some of the most common challenges that can throw the process into an endless spin:

Submission of unsupported/incomplete claim forms- When filling out the claims processing forms, one should attach all the necessary bills, doctors’ transcripts, copies of insurance cards and other relevant documents, along with it for submission. Without proper supporting documentation, the claims cannot be validated. Consumers face huge challenges at times, due to non-clarity on the necessary documents that need to be submitted. Especially, in the case of hospitalization, when the patient and his/her family are already anxious, missing out on the submission of a few documents/s is a very common scenario; this leads to last moment claim settlement issues. The manual process is one of the main reasons for such lags; in an AI-driven insurance landscape, tech can easily flag incomplete forms and get adequate information before the process is underway, thus eliminating errors as soon as they are made.

Disclosure of wrong information at the time of insurance product purchase: Some people don’t realize the importance of submitting accurate information at the time of buying insurance while others willfully ignore this fact simply to get a low premium. Either way, this step maximizes the chance of such claims being rejected. Transparency of crucial information is key to buying a valid policy that will not court claims rejection.

Delay in filing claims: A delayed claim works out expensive for both the insurer and claimant since the former has to spend more time and effort in the claim’s investigations, while the latter may have to settle for a lower claim amount in the absence of adequate supporting data. There have been instances where policyholders have not been able to file the claims because of their internal situational challenges and they realize later that the timeline for filing a claim is already over. It is best to file for claims as soon as possible because that gives insurers the opportunity to adequately access the damage.

Lapsed policy: If there is a policy lapse, there is little doubt that the claim request will be turned down. Due to their busy schedules, consumers many times, forget to renew their policies or share the necessary information for renewal. The significance of policy is understood when consumer files for claims and realize that their policy had lapsed.

Technology to the rescue
Technology has been seen as a catalyst to meet customers’ expectations and remove bottlenecks related to the claim settlement journey. Virtual assistants, chatbots, and artificial intelligence have been increasingly helpful in simplifying claims settlement and providing relevant data to make the underwriting process seamless for claims. AI not only cuts down human intervention and chances of human error but also fastens the settlement process. It allows customers to have a better user experience, check their claims history and stay updated on the payment. With technology, insurance companies now can access real-time data of the consumers which reduces the annual claims and helps in fraud detection, risk prevention, and ultra-safe cross-border payments. Many people are also using wearables today for tracking their health which is helping the insurance sector in gauging real-time health data for their customers, this again helps in detecting fraud and offers customized premium pricing and flexible rates based on a wealth of location and health data.

Insurers today can focus more on risk avoidance rather than risk mitigation. From achieving cost efficiency to managing consumers’ expectations, bringing transparency in the process, and taking care of every parameter needed in a claim settlement process, technology is making the entire end to end process seamless for the whole value chain in insurance.



Views expressed above are the author’s own.



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