By Srinidhi Shama Rao
Traditionally, life insurance claims processing has been a complicated process. While dealing with an emotional crisis, nominees were expected to do follow-ups and produce multiple documents to support a claim. Nominees wanted the claims settlement process to be hassle-free, requiring minimal documentation, and a quick settlement. Meanwhile, the insurer wanted to make sure there weren’t any fraudulent claims.
First wave of digitisation
To begin with, insurance companies started encouraging the nominees to file claims online and upload all supporting documents to their portal. But it still involved claims teams manually going through the documents, following up on any additional ones, etc.
As the technology developed, companies started using Optical Character Recognition (OCR) and related technologies to process the documents faster and more reliably — after all, an algorithm can identify a fake document more reliably than a human being. While this was a big step forward, many of the challenges and customer frustrations with claims remained.
AI and behavioural analytics
Today, life insurance companies are using a combination of AI and behavioural science to create this win-win for customers as well as the company. These include using a combination of data from multiple sources and sophisticated algorithms running on them to identify fraud at source — right at the time of underwriting — so that these checks, related hassles, and delays can be avoided at the claims stage.
A lot of behavioural analytics also goes into identifying fraudulent intent during the purchase journey. Fraud can be caught more reliably at the time of underwriting. We are also using various nudges using behavioural sciences to make sure the insured person identifies the right nominee at the purchase stage and keeps it updated as and when any changes happen in their life.
The next wave
The next generation of claims experience improvement would see proactive settlement. Most government repositories of births and deaths can now be connected through APIs. Integrations can be built with these repositories so that the moment an insured person dies, the insurance company would get to know about it instantly/on the same day, and a claim can be registered automatically. With the advent of blockchain and associated technologies, the repository would be further centralised, making it easier for insurance companies to get reliable information. This would enable an automated, proactive claims settlement process: with zero-documentation, zero-operations, and zero-hassle at the moment of truth.
The writer is chief strategy officer, Aegon Life Insurance.