A.I. At The Moment of Truth: Advances In Life-Insurance Claim Settlement
Srinidhi Shama Rao, Chief Strategy Officer, Aegon Life Insurance
Data, Technology, and Artificial Intelligence (A.I) are changing everything we do in the world today and have brought in a new era of efficiency and customer experience. In the life insurance industry, arguably the most important job is helping bereaved families and settle an insurance claim. Over the years, life insurers have moved from the traditional document-heavy claims settlement process to new AI driven technologies that promise to usher in a new era of efficiency and customer experience. Rapid digitization and other advancements are helping organizations become more responsive and customer friendly.
Traditional Model of Claims Processing
Traditionally, claims processing has been a long drawn, complicated process that was often frustrating for the nominee. While dealing with an emotional crisis, they were expected to do follow-ups and produce multiple documents to support a claim. Nominees wanted the claims settlement process to be easy and hassle-free, requiring minimal documentation, and a quick settlement. Meanwhile, the insurance company wanted to make sure there wasn’t fraud involved in the first place, for example, a sick person being insured just before death or an unrelated person posing as a nominee.
First Wave of Digitization
To begin with, insurance companies started encouraging the nominees to file claims online and upload all supporting documents to their portal, so an in-person visit to the insurance company could be avoided. 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 Behaviourial 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. Here, at Aegon Life, we are 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 itself. We use a 15-second selfie video of the applicant to assess his/her vital signs such as, resting heartbeat, breathing rate, and biological age, through facial analytics and computer vision. This has enabled us to identify genuine insurance buyers and issue policies immediately, without the need for any physical medical tests. There have been cases, where fraudsters have purchased insurance policies on behalf of terminally ill or dead people and have claimed the insurance amount.
A lot of behavioural analytics also goes into identifying fraudulent intent during the purchase journey. It has been found that fraud can be caught much more reliably at the time of underwriting. Additionally, we are also using various nudges using behavioural sciences to make sure the insured person identifies the right nominee right at the purchase stage and keeps it updated as and when any changes happen in a customer’s life. This has proven to be a very effective way to create the right experience for the customer as well as efficiency for the insurance company.
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 passes away, 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 capability would enable an automated, proactive claims settlement process: with zero-documentation, zero-operations, and zero-hassle at the moment of truth.