The landscape of insurance is changing. A wide variety of cutting-edge technologies and trends are creating new risks that need to be insured—developments such as drones, cyber risks, scooters, and even downtime for cloud infrastructure. As a result, the types of claims that today’s claims adjusters handle differ significantly from the traditional world of insurance.
As insurance carriers adapt to this new reality, much of the necessary innovation in terms of the underwriting, distribution, and pricing of insuring today’s new risks is being driven by insurtech. Meanwhile, claims managers find themselves frustrated as the claims software that they know and are used to has never adapted to this new world. Written before drones existed, it has never changed enough to handle today’s new lines of business.
That presents a dilemma for insurtechs that have plenty of technological talent and know their business very well: License software that is inadequate to their line of business and way of work, or develop their own, in-house software to handle cloud-based claims?
That is precisely the question that many insurtech professionals find themselves asking. But in 2023, this is no longer the critical question they need to be asking about today’s crossroads in the use of innovative insurance technologies. Instead, they should be asking whether they can entirely avoid the tradeoff between inadequate software and a massive technology undertaking—and if so, how?
Why innovative claims technology is the (necessary) solution to novel challenges
Why is the choice between licensing outdated software and developing new solutions in-house such a problem for insurtech? In part, it’s because the realm of claims handling is far different from other parts of the insurance value chain: It’s heavily regulated, it can involve a great deal of interaction with customers, and it demands nuanced processes. And it’s particularly challenging at this point in time, as many claims leaders are finding that outsourcing claims is no longer a viable option for them – heightening the need for a platform that suits these companies’ intelligence claims-processing needs.
So, can insurtechs and insurance carriers avoid this tradeoff? Can licensed software offer these companies the flexibility they need to streamline their claims management? And can this software also minimize the risk of claims leakage?
To address this challenge, it’s important to keep in mind that the world of insurance will undoubtedly need to continue innovating and offering new types of coverage in the future. To streamline the process of adapting to innovations that we can’t yet predict—and to provide real-time insights and guidance to employees regarding novel types of insurance—insurance companies and insurtechs will need to rely on AI-powered software that will continue evolving as their needs do the same.
How we know intelligent claims software can meet this evolving need
The types of technologies that can make this type of software a reality are already out there. Offering a licensed software solution to meet the ever-changing needs of claims processing is largely a matter of bringing today’s most advanced cloud and machine learning-based technologies to the realm of insurtech.
We at Five Sigma understand that, because this is exactly what we’ve done in building our platform – a claims management solution that leverages new technologies like SaaS, microservices, and artificial intelligence to provide unprecedented flexibility.
At Five Sigma, Microservices with open APIs enable new software to tap into a huge ecosystem, making it easy to adjust that software to match operational processes demanded by new lines of business. AI (specifically machine learning) further makes this process automated and adaptive. On top of that, continuous deployment with seamless, weekly release cycles allows our rapidly growing and constantly evolving customers to make sure that the software we provide will always match their needs.
This is one of the reasons we at Five Sigma are so excited about the future that claims management holds and the opportunities we can address with our unique platform. Built from the get-go with AI and microservices architecture in mind—and specifically tailored to the world of claims management—our platform is uniquely positioned to help specialty carriers get the best of all worlds.
Frequently Asked Questions
What is the purpose of claims management?
Claims management aims to resolve insurance claims in a fair way, so that insured customers get the money that they’re entitled to while insurers avoid overpaying. Claims management plays a critical role in determining the overall profitability of an insurance company.
How can claims management be improved?
Improving claims management is largely about increasing the accuracy and reliability of the work done by insurers’ claims adjusters, while also boosting their speed and efficiency. Raising the level of customer service is another key component of improving claims management.
What can AI do for the insurance industry?
Artificial intelligence (AI) can improve claims management by providing data-driven just-in-time guidance to help claims adjusters reach well-informed decisions quickly and reliably. In other words, it offers an efficient way for claims adjusters to improve both the speed and the quality of their work.
