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Navigating Insurance Operations with the Power of Straight Through Processing


5 MIN. READ

Straight-through processing, or STP, is revolutionizing the way businesses operate. It’s an ingenious automation tool that transforms sluggish and error-prone manual tasks into swift, flawless, and highly efficient automated workflows. This remarkable concept was pioneered by James Karat in the 1990s, initially to enhance equities trading. Since then, STP has evolved, finding its place in reshaping and streamlining insurance sector operations by enabling complete claims process automation for financial transactions.

Alternatively referred to as claims automated adjudication, STP is a streamlined and automated approach to handling transactions from initiation to settlement. It eliminates the need for manual intervention and expedites the entire process.

Adopting straight-through processing can lead to operational excellence, cost reduction, and customer experience enhancement. Today, STP is emerging as a key enabler for underwriting claims and payment processing in the insurance industry.

Maximizing Operational Efficiency Through STP in Insurance

Straight-through processing leverages the power of data and predictive technology like artificial intelligence (AI), machine learning (ML), and algorithms to create automated workflows. This enables the insurer’s system to underwrite claims or disburse payments with minimal to zero inputs or human intervention. In essence, it achieves operational excellence by:

Streamlining Policy Issuance and Claims Processing With Increased Speed and Accuracy

Straight-through processing allows for the processing of high-volume, low-value claims in a highly efficient manner. Since it is a technology-mediated process, automated claims adjudication provides speedy and accurate execution of client requests.

A series of APIs heavily guide the self-starting process. It commences when the client uploads or shares medical records on any digital medium or accesses data from internal sources. The data goes through intelligent document processing, resulting in the automatic adjudication of claims.

Robust straight-through processing can auto-approve claims and disburse payments almost instantaneously.

In other words, it allows for automating repetitive manual tasks that are time-consuming and effort-intensive. This helps insurers improve turnaround times, ultimately boosting productivity and allowing for the reallocation of human resources to more complex, strategic functions.

Minimizing Manual Errors and Operational Expenses

STP uses data-driven automation technology to optimize insurance operations, processing complex data sets in record time.

Reducing manual handling minimizes the likelihood of errors, ensuring a higher degree of accuracy and consistency in policy issuance, claim processing, and overall customer service. It also reduces the processing and operational costs per transaction, improving the bottom line.

Boosting Customer Satisfaction With Expedited Services

Delays in claim processing adversely affect your client’s experience. Adopting straight-through processing automates claim adjudication, saving crucial time in the claim lifecycle.

On-time servicing drives customer satisfaction. The happier the client, the easier they are to retain, and the better it is for your business.

Elevating Data Accuracy and Regulatory Compliance

Straight-through processing is an end-to-end process that involves data capture, validation, and processing. During the validation stage, data received from customers or internal systems is subjected to strict validation guided by predefined algorithms.

The validation process is a sanitation check for captured data, ensuring accuracy and compliance. Since compliance is non-negotiable in claims handling, implementing STP minimizes the likelihood of errors and affords a higher degree of accuracy.

Critical Elements of Straight-Through Processing in Insurance

Whether implemented in-house through APIs or facilitated by a specialized service provider, the successful adoption of STP hinges on a comprehensive understanding of process automation elements. It is a turnkey solution that works by:

Implementing Automated Data Capture and Validation Systems

STR relies on automated data capture techniques like optical character recognition (OCR), intelligent character recognition (ICR), and intelligent document processing. Data from the source storage is processed using the state-of-the-art data capture systems mentioned above before being extracted and validated.

So, implementing straight-through processing begins with deploying automation and robotic computation solutions.

Harnessing the Power of Digital Technologies for Integration

Straight-through processing is powered by automation and artificial intelligence application programming interfaces (APIs). As the building blocks of digital technology, APIs facilitate all the stages of STP.

Insurers must make APIs one of their core competencies to leverage straight-through processing.

Enhancing Efficiency With Workflow Automation and Decision Support Tools

Workflow automation tools that streamline repetitive tasks, eradicate silos, and facilitate data-driven decision-making will lead to tangible, measurable efficiency gains.

Straight-through processing in insurance covers intricate tasks like triage and adjudication. Handling tasks like processing claims documents or payments requires advanced automation and decision support solutions.

Overcoming Obstacles in STP Deployment

Migrating from a legacy system to automation-driven processing is challenging. It calls for a systematic overhaul of existing processes and minor changes. For a successful transition, insurers must focus on:

Addressing Challenges of Integrating Legacy Systems

Instead of attempting a complete replacement, insurers should consider creating a functional STP model using API-based solutions to build on top of existing structures. It’s easier to execute and reduces implementation time.

Managing Data Quality and Security Concerns

Stored data should be fully extracted and structured using data processing tools. It can be integrated into a centralized storage system protected by multilayer encryption. Aggregated data loss protection (DLP) solutions must be implemented before migrating to the straight-through processing setup.

Strategies for Effective Change Management and Staff Training

Insurers must create a comprehensive environment that facilitates and nurtures the transition to STP. Custom training modules, complemented by a doubt redressal system and assessment protocol, can be put in place to streamline change management. Like any change, the process should not be rushed.

Adopting Straight-Through Processing in Insurance Operations

STP allows easier, seamless, accessible, and hassle-free execution of claim adjudication and payment processing. Highly effective for low-risk claim processing, STP still has a long way to go before it can be deployed for end-to-end claim management.

As insurance evolves, the adoption of STP emerges as a pivotal strategy with the potential to reshape the industry’s operational dynamics. Widespread implementation will also propel the industry into an efficient and responsive future.

Insurers who take advantage of STP will not only position themselves at the forefront of technological innovation. They will also gain a competitive edge by delivering faster, more reliable services in an industry where time and precision are critical factors.

Ready to revolutionize your insurance operations? Take your first step toward operational excellence by leveraging the power of STP. To get started, request a demo with Five Sigma today.

Sources:

  1. Straight-Through Processing (STP): Definition and Benefits
  2. Straight-Through Processing (STP) – Overview, How It Works, Pillars
  3. What is Straight Through Processing (STP)?
  4. Why Straight-Through Processing Is Important for Insurers | FormX.ai
  5. Significance of Straight-Through Processing in Insurance
  6. Straight-Through Processing in Underwriting and Claims – Datos Insights
  7. 5 ways to simplify and reinvent your insurance enterprise
  8. Streamlining insurance operations with straight-through processing | Vertafore
  9. Data accuracy: Enhancing Data Accuracy through Straight Through Processing – FasterCapital
  10. Straight Through Processing (STP)
  11. Technologies That Are Driving Turnkey Straight-Through Processing For The Wealth Management Industry | HubSpot
  12. Addressing Insurance Industry Challenges – Send
  13. Methods of Data Capture
  14. PARASCRIPT KNOWLEDGE BASE Your Definition Reference Library – Straight Through Processing
  15. What are the Training Strategies for Effective Change Management? – Hurix Digital
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