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How can Artificial Intelligence settle Insurance Claims in five minutes?

Originally published on medium.com

If you’ve ever been in the position of having to file an insurance claim, you would agree that it isn’t the most pleasant experience that you’ve likely ever encountered.

In fact, according to J.D. Power’s 2018 Insurance Customer Satisfaction Studymanaging time expectations is the key driver of satisfaction — meaning, a prompt claim settlement is still the best advertisable punch line for insurance firms. Time-to-settle satisfaction ratings were found to be 1.9 points lower even when the time frame was relatively short and insurers still missed customer timing expectations.

So what should an established insurance company do, to be at par with the customer’s desires of modern service standards? The question becomes even more pertinent when the insurance sector is still lagging behind consumer internet giants like Amazon, Uber who are creating newer levels of customer expectation. Lemonade, MetroMile and others are already taking significant market share away from traditional insurance carriers by facilitating experiences that were previously unheard of in the insurance trade.

Today, Lemonade contends that with AI, it has settled a claim in just 3 seconds! While a new era of claims settlement benchmarks are being set with AI, the industry is shifting their attitude towards embracing the real potential of intelligent technologies that can shave-off valuable time and money from the firm’s bottom-line.

How AI integrates across the Insurance Claims Life Cycle

For this entire process to materialize — from the customer filling out the claim information online, to receiving the amount in a bank account within a short amount of time, and have the entire process be completely automated without any interference, bias, or the whims of human prejudice.

How does this come about? How does a system understand large volumes of information that requires subjective, human-like interpretation?

The answer lies within the cognitive abilities of AI systems.

For some insurers the thought that readily comes to mind is — Surely, it must be quite difficult to achieve this in real-world scenarios. Well, the answer is — NO, it isn’t!

Indeed, there are numerous examples of real-world cases that have already been implemented or are presently in use. To understand how these systems work, we need to break down the entire process into multiple steps, and see how each step is using AI and then passing over the control to the next step for further processing.

How It Works
For the AI-enabled health insurance claims cycle, there are a few distinct steps in the entire process.

Analysis and abstraction

The following information is first extracted from medical documents (diagnosis reports, admission & discharge summaries etc.)

  1. Cause, manifestation, location, severity, encounter, and type of injury or disease — along with & related ICD Codes for injury or disease in textual format.
  2. CPT Codes — procedures or service performed on a patient, are also extracted.

There are in essence two different systems. The first one (described above) processes the information that is presented to it, while the other looks from the angle of genuineness of the information. The latter is the fraud detection system (Fraud, Abuse & Wastage Analyzer) that goes into critical examination of claim documents from the fraud, abuse and wastage perspective.

Fraud, Abuse & Wastage Analyzer

Insurance companies audit about 10% of their total claims. Out of which around 4–5% are found to be illegitimate. But the problem is that the results of these audit findings are available much after the claim has been settled, following which recovering back the money already paid for unsustainable claims is not that easy.

This means that companies are losing big sums on fraudulent claims. But is there a way by which insurers can sniff out fraud in real time while the claim is under processing?

With Cognitive AI technologies available today, this is achievable. All you need is a system that analyses hundreds and thousands of combinations of symptoms, diagnoses and comes up with possible suggested treatments. The suggestions are based on the learnings from past instances of cases that has been exposed to the AI system.

The suggested treatments’ tentative cost — based on the location, hospital, etc., is compared with the actual cost of the treatment. If the difference suggests an anomaly, then the case is flagged for review.

Automated processing of medical invoices

Now if your Fraud Analyzer finds no problem with a claim, how can you expedite its processing? Processing requires gathering information from all medical invoices, categorizing them into benefit buckets, and then finalizing the amount allowed under each head. Advanced systems can automate this entire process, ruling out manual intervention in most of these cases.

Recent AI systems have the capability of extracting line items from a scanned medical invoice image. This is achieved through a multistep process, outlined below.

  1. Localizing text on the medical invoice. This gives the bounding boxes around all texts.
  2. Running all localized boxes against a Scene Text Decoder trained using a LSTM and a Sequence Neural network.
  3. Applying Levenshtein Distance Correction for better accuracy.
  4. Mapping each line item against an insurer specific category.

Each line item is iterated over and looked up against the policy limits to get its upper limit. Each line item amount is aggregated to finally get the final settlement amount.

If the final settlement amount is within the limits set for straight through processing and no flags are raised by the Fraud, Abuse & Wastage Analyzer, then the claim is sent to billing for processing.

Moving Ahead With AI Enabled Claims
Today, AI transforms the insurance claims cycle with greater accuracy, speed and productivity, at a fraction of the cost (in the long run) — while delivering enhanced decision making capabilities and a superior experience in customer service. While, in the past, these innovations were overlooked and undervalued for the impact they produced — the insurers of today need to identify the proper use cases that match their organization’s needs and the significant value they can deliver to the customers of tomorrow. The cardinal rule is to — start small through feasible pilots, that will first bring lost dividends back into the organization.


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[Interview] Mr. Alex Jimenez | Digital Customer Experience in Covid-19 Times

7 minutes read

The COVID-19 pandemic has brought upon an unprecedented change in our daily lives and routines. Consumer behavior is changing constantly. Lockdowns and social distancing have led to huge losses for businesses across industries. The world is heading towards an economic slowdown. Under these circumstances, organizations are facing many challenges to keep their businesses going. Insurers too are facing similar issues. Some insurance lines such as motor, travel, home have suffered a business loss due to low demand.

To understand the impact of this crisis, especially in the USA, we interviewed Mr. Alex Jiminez, Strategy Officer at Extractable from California, and learned more about creating better digital customer experiences in these testing times. 

Extractable is a strategic consulting, design, and data analytics agency focused on the future of financial services. His other recent experience includes leading technology strategic planning for the office of the CIO, at Zions Bancorporation, and managing Digital Banking and Payments Strategy and Innovation at Rockland Trust. Alex has been named to several industry influencer lists in the areas of FinTech, RegTech, Blockchain, InsurTech, Innovation, and Digital Marketing. He has been featured in the Irish Tech News and the Independent Community Bankers of America’s (ICBA) Independent Banker.

Connect with Mr. Alex Jimenez – LinkedIn

The excerpt from the interview:

The impact of COVID-19 pandemic in the financial services industry

What is the impact of COVID-19 pandemic in the financial services industry, and how is the industry responding to the ongoing crisis in the US?

In the wake of the current crisis, organizations are more focused on keeping the operation going, trying to set-up work stations for remote working, dealing with customers and working with them over digital platforms. But very few are focusing on the future which is preparing for the after-effects of this pandemic on the economy. 

In-person communication is still an important mode of interaction with customers in the US banking sector. But now the issue is how to provide good services to clients? Some of our customers are going to experience digital models for the first time. 

Organizations that have well-defined Digital Strategies and Customer-First approach will be able to provide good support to their customers. Organizations that are late into this space are more likely to face problems in the future.

[Related: The Impact of Covid-19 on the Global Economy and Insurance]

Changing customer preferences

How can companies reach out to their customers in this New Normal world?

We have already started to move towards a digital-centric world which is just going to accelerate. We will see businesses who have earlier ignored their digital capabilities will now build more on them. 

The first video call was invented in the 60s and was not so appreciated as everybody thought it was expensive and complicated. Today we have FaceTime, Zoom but adoption has not happened on a larger scale. But this will soon accelerate. Customers will be comfortable dialing into a video chat with their Insurance agent. 

I don’t believe there’ll be a New Normal. For example, in the US after 9/11 people thought that life will never get back to normal but except for rigorous security screening at the airports, there hasn’t been much change in the behavior. 

In Israel, amidst all the constant disturbance, people in Tel Aviv and Jerusalem are living normal lives. There’ll certainly be some specific changes post the pandemic such as more adoption of digital technologies, more focus on customer needs but I believe there won’t be an entirely new world with a drastic change in consumer behavior.  

The need for personalization

What are some Attention hacking lessons for Insurers operating in ‘the New Normal’?

We are moving towards the personalization of products in general. Generally in Life Insurance, we insure people based on their date of birth or medical history. But what if we insure people based on their behavior? If we did that, would people change their more risky behavior to get a better rate? A non-smoker can be given a better rate as opposed to a smoker. If we get down to individuality, saying that this is your individual (your own) rate; it makes a difference. 

There is a lot of data available and AI is needed to mine that data and derive analytics. Just by building a relationship with customers, we are not doing a great job with personalization. It’s important to apply a human touch to the communication which makes customers feel like you know them. Thus, retaining their attention.

Digital customer experience in Insurance

For the insurance industry, what steps can help in delivering the right digital customer experience in terms of UX and visual design?

A lot of organizations practice Design Thinking but Financial Services don’t. They are of the opinion that they know what is needed as they themselves are customers and they have data from the surveys. But that’s a wrong approach. Design Thinking is about empathy. It is important to get into the shoes of your clients to design better solutions.

To enhance digital customer experience, Insurers need a thorough understanding of users — who are the ultimate clients, their needs, what they expect from this experience, etc. After comprehending how they engage with technology and financial services, start venturing into the solution and test the solutions with actual users.

Innovations in the financial services industry

What technology-based innovations are being explored within the financial services industry? And, do you see AI playing a role in the short term? 

AI has already affected Financial Services in a positive way and will make it better. In insurance, IoT has been very impactful and will continue to be. Some applications have already been applied in reality like sensors in cars to detect speed and ensure that you are under the speed limit. This helps in getting reduced premiums. 

However, some basic processes are still done in the old school way of shuffling papers. Straight though-out processes have not yet happened. Now RPA is being applied to this but it is more like a band-aid. What is more important is how we can build processes through true automation with AI.

[Related: 5 Insurance Front Office Operations AI Can Improve]

Adoption of AI in Insurance

Speaking about more adoption of technologies, do you think there’ll be more investment in AI now?

Absolutely! We have already seen that investment in technologies like AI, cloud computing, quantum computing has been ramping up. Businesses will invest much more in AI than before. It might be for better decision making, underwriting, understanding the behavior of clients, etc. Also, from a marketing standpoint, financial services have never focused much before but will now invest in AI for this area too.

[Related: How is AI extending customer support during COVID-19 pandemic]

In your recent article in Extractable – “Deploying third-party financial service technology to mitigate crisis” you talk about what tech vendors are doing wrong. Please expand on how to encourage resources to be innovative change agents?

There were two points that I made in the article-

First is about what companies are doing incorrectly when it comes to innovation. Risk management is consulted only after developing the product. The product release is stalled until the legal compliances are adhered to. Instead, companies should involve the risk management at the beginning of the process (while defining the problem and solution). Involving risk management at every step of the innovation process will make it much easier to push out innovation.

The second was about vendor management. Many small vendors such as tech vendors, InsurTechs want to sell solutions to financial service companies but are often surprised by the tedious vendor management process. There’s a lot of documentation. Once the first process of selling is done, vendors should package the documentation in a way that when the next prospect asks for it, the due diligence package is ready to offer. 

Read article – Deploying third-party financial service technology to mitigate crisis 

Wrapping up

Alex shared interesting insights on how Design Thinking and Visual Design can create better digital customer experience. The design vertical at Mantra Labs too believes in the same and has designed UX for various applications for its customers. Here’s an article to understand the role of Customer Experience (CX) and User Experience (UX): Creating Amazing Digital Customer Experiences

[Also read: [Interview] Mr. Andrew Warburton | The New Normal in Insurance]

AI is going to be essential for Insurers to gain that competitive edge in the post-pandemic world. Check out Hitee — an Insurance specific chatbot for driving customer engagement. For your specific requirements, please feel free to write to us at hello@mantralabsglobal.com. 


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