First notice of loss (FNOL)

What is FNOL?

The First Notice of Loss (FNOL), also known as the first notification of loss, is the first notification by a policy holder of an asset’s loss, damage, theft, or injury, which informs their insurer that they have cause to make a claim. The FNOL is generally the first step in the formal claims process lifecycle and takes place before any formal or official claim is filed.

There is generally a process that consumers and companies follow when creating an FNOL. The insurance claims process involves a series of procedures from the time the insurer is alerted to when a settlement is made.

The FNOL usually requires the customer to provide the following information: policy number, date and time of theft or injury, location of the incident, police report number, a personal account of how the incident occurred, and information on the insurance details of the other party where required.

In the case of auto insurance, the insured driver informs the insurance company of an incident involving a vehicle and is matched with a claims adjuster whose role is to decides the extent and severity of the car damage suffered by the policyholder, and determine fault and the amount of settlement. The adjuster determines the nature and severity of the damage to the policyholder’s car, relying on a police report, the other driver’s testimony, witness accounts, a medical examiner’s report, damage done to the insured car, etc.

The FNOL process can lead to unfavorable outcomes in the claims process, for example, the adjuster could receive different accounts of the event happened, resulting in an unfair settlement judgment, or the investigations could take several weeks, delaying the final settlement.

Automated, AI-based FNOL technology can improve the process, and increase accuracy, for example, using the Internet of Things of Telematics to send automatic notifications of incidents to the insurer in real time. This technology provides all the required information, which the insurer can regard as a FNOL, and the adjuster receives accurate and consistent information.

How does Five Sigma make the FNOL process simpler and more efficient?

Five Sigma exposes APIs for insurers and third-party applications to capture FNOL data and embed it into our system. The data received via the insurers or third-party digital channels is embedded automatically into our workflows, stored in the database per the relevant data modeling, and is readily available for the next step in the process. Each insurer may implement the FNOL process in a different way. Some claimants do not use digital forms and open a claim by calling the insurer, so our system also supports voice call information collection via simple screens and workflows for the insurer’s customer support. The FNOL information collected is used to automate two kinds of processes: automatically generated correspondence with the claimant via our embedded communication module and automated triage and adjuster assignment.

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