AI-driven Claims Processes Can Ensure Smoother Settlement During Natural Disasters

By February 13, 2019 March 15th, 2019 Blogs
The world is changing, it is not our place to say for better or for worse, but we as people like to think that we are moving forward and participating in progress. However, the one change that is definitely alarming, almost all of alike is the increasing frequency on natural disaster [1]. The California Camp and Woolsey wildfires of 2018 have caused an unprecedented amount of damage to life and property. These incidents are not aberrations. Just look at the last few year’s list of natural catastrophes and you will see cyclones, tsunamis, wildfires, typhoons, famines, and other devastating natural events littered across the globe, claiming hundreds and thousands of lives and damages to property and livelihood. While the loss of a single life is irreparable the loss on such a massive scale delivers a catastrophic blow to the economy as well. The insurance industry is one of the top industries that faces the maximum impact of such disasters. A global-scale natural catastrophe means a massive claims settlement process. According to an article published by Property Casualty 360 [2], the estimated damages from insured losses during the California wildfires are between USD 9 billion and USD 13 billion. Policymakers and regulators have passed bills to ensure that people are not denied insurance. Even the insurance industry would not like to deny insurance to those who need it. For people who lose their homes, vehicles, property, and loved ones, the claim amount may not ease their grief, but it is certainly the first step towards rebuilding their lives.

Claims settlement during disasters

The claims settlement process has its own set of challenges. Add to that the stress of mass claims settlements, and the process becomes automatically overwhelming. When a natural disaster strikes, insurance companies and their employees go into an overdrive to settle claims. However, they are often caught between their obligation to follow the due process and the need to show compassion to the survivors. Any delays or denials during such a stressful time, only results in more pain and resentment. Leveraging historical data, which insurance companies already have, and by analyzing the behavior patterns of customers, it is possible for AI solutions to settle claims accurately, quickly, and even automatically. These solutions can follow the risk assessment and underwriting guidelines and over time can learn from the data patterns to become more and more adept at determining the right claim payout and also dispensing it.

The benefits of investing in developing an AI-driven claims settlement process:

  1. Reduction in the cost burden: Faster insurance claims settlement also reduces associated costs, which will ease the burden on the insurance companies and also help the consumers in the long run. When insurance companies make such massive payouts, some of the cost gets transferred indirectly to the customers in form of increased premiums.
  2. Increased customer satisfaction: When the insurers come through for their customers in a timely manner, they earn tremendous good will. Unnecessary delays and erroneous denials of claims are really harmful for a company’s business long-term.
  3. Reduced risk of errors: Insurance companies are typically risk-averse and are slow to embrace anything new, especially technology. If insurance companies deploy an AI-enabled solution, they will be better prepared to tackle any future mass claims situation. They will have the time to train on the data and the carriers also test the solution. By using AI-based solutions to settle claims, the carriers can significantly reduce the error rate during stressful times and regular times as well.
While it is not possible yet to predict natural disasters with any reasonable accuracy, it is definitely possible to ease the hassle of insurance customers by realigning inefficient processes. Like most industries across the world, insurance industry, too, has embraced AI and the technologies under its umbrella. AI technologies like machine learning and deep learning are already being used to in claims settlement processes and these AI-driven solutions have already started delivering results. It’s now time to embrace the AI and deep learning technology at a much broader and faster pace that can help make the lives better for the consumers. When the next disaster strikes, the company will be prepared for faster and cheaper claims settlement process and would be one less thing for everyone to worry about.

Citations: 1. https://www.iii.org/fact-statistic/facts-statistics-us-catastrophes 2. https://www.propertycasualty360.com/2019/01/03/another-historic-wildfire-season-leads-insurers-la/

Mohit Dilwaria

Mohit Dilwaria

Mohit is an accomplished IT leader who brings in over 17 years of experience in Data & Analytics (Big Data Analytics, Advanced Analytics, Business Intelligence) & AI (Machine Learning and Deep Learning). As the Associate Director of Professional Services, Mohit looks after the strategic growth and directions of teams for expanding clients use of InsurAnalytics.ai Cloud Platforms through Consulting Implementations and Education Services. He is responsible for delivering complex deployments of critical Data & Analytics solutions to InsurAnalytics customers globally. He is an advocate of the agile delivery model and has led many large system and transformational programs in Data & Analytics. Read More Posts

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