Climate change could wreck insurance. How intelligent document processing can prevent disaster

Jun 09, 2022 by Automation Hero

Climate change will impact every aspect of society, including insurance. Here’s how intelligent automation can help

In 2020, the United Nations reported a “staggering rise” in natural disasters since the turn of the millennium — especially as a result of climate change. From 1980 to 1999, there were only 4,212 natural disasters recorded around the world. However, over the next two decades, this number climbed dramatically to a record 7,348 extreme weather events around the globe — killing 1.23 million people. What’s more, the number of natural disasters explicitly caused by climate change increased by 83% after 2000.

This increase spells trouble for the insurance industry, and it’s imperative companies find ways to not only minimize their costs but also allocate resources to process the increasing number of claims each year. Could intelligent document processing (IDP) be the key to offsetting the impact of higher claim volume?

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How does climate change impact insurance companies?

As the volume and severity of natural disasters increases, so do the costs of each disaster. A report by reinsurance company Munich Re found that natural disasters caused damages in excess of $210 billion in 2020. That’s more than the entire annual revenue of some P&C insurance providers.

Many companies are looking for ways to modify their business models to protect from increasing annual payouts, but this only addresses part of the problem. More disasters also increase the volume of claims to process, creating immediate issues with labor use, resource availability, and customer service. To address the bigger issues climate change creates for their industry, insurance companies need to quickly increase their efficiency.

How intelligent document processing can save catastrophe claims processing

No one can prevent natural disasters; we can only control how we respond. Claims adjusters are among the first people to be contacted in the event of property damage, so it’s incredibly important to respond compassionately — and efficiently. Unfortunately, many companies have not fully embraced the potentials of intelligent automation, contending with labor-intensive manual processes instead. As a result of this inefficiency, the high volume of claims after a natural disaster can dramatically increase costs and cause significant delays. Here’s how intelligent document processing platforms like Automation Hero help expedite claims processing, even in a disaster:

Automate data extraction from claims documents

Processing insurance claims is an incredibly document-heavy process, with many forms to review and file and a lot of information to verify. Intelligent document processing platforms use AI to automatically read, categorize, and capture data about policyholders, the damage they’ve incurred, costs, and more. This capability not only slashes document review times but also virtually eliminates data entry.

Streamline claims triaging

One of the biggest issues with manual processes is that high-risk claims don’t make it to the top of the pile for claims adjusters to resolve, leading to lost customers or even lawsuits. This is where the categorization capabilities of intelligent document processing platforms can help insurers more quickly and accurately prioritize incoming claims according to risk and urgency. AI can automate the claims triage by automatically reading email attachments so adjusters can focus on service or provide a valuable fail-safe to catch claims falling through the cracks of existing processes.

Respond more quickly to policyholders

Intelligent document processing platforms use AI to process common customer requests, so adjusters can focus on more complex issues. AI platforms like Automation Hero use email intent detection to prioritize the most sensitive customer requests. This focuses expert claims adjusters on the most urgent claims, rather than wasting their time on those that aren’t immediately vital to customers’ health and safety.

Scale to any disaster

As climate change causes higher volumes of natural disasters at unpredictable times, appropriate staff sizes can be incredibly difficult to maintain — either overhire and lose profits or underhire and increase risk. Outsourcing or hiring temporary contract claims processors creates major hassles and internal culture clashes for management teams and leads to customers being unsatisfied by less knowledgeable staff. AI, on the other hand, helps claims processing departments keep up with demand without dramatically altering the workforce.

The insurance industry has a long road ahead to figure out exactly how to respond to climate change. All of these intelligent automation capabilities dramatically reduce costs, so companies have more leftover to reinvest in strategies to minimize increasing risk. That’s why Automation Hero already has established a track record of increasing profits for insurance companies. Read our e-book to learn more about what our end-to-end solution can do for you.

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Learn how we helped Markerstudy reduce its claims processing time by 40%. Additionally, learn how we reduced total claim processing time by 80% for another multinational insurance partner — cutting down manual tasks from 10 minutes to just two minutes per claim.