7 MINUTE READ
The insurance industry is at a pivotal moment. While claims processing remains a crucial component of the insurance value chain, inefficiencies continue to plague operations—60% of claims handling still relies on manual workflows, resulting in increased costs, slow resolutions, and policyholder frustration. But AI is rapidly changing this landscape.
In a recent webinar, Michael Krikheli, Co-founder & CTO of Five Sigma, joined industry experts from Sutherland (the webinar host) and Everest Group to share insights on AI in claims management. The panel discussed how AI and automation are revolutionizing the claims lifecycle—from FNOL (First Notice of Loss) to settlement.
Here are a few insights from the webinar:
The State of Claims Management in 2025: A Changing Landscape
The claims industry is evolving, with insurers prioritizing technology and customer experience to drive efficiency and reduce costs. A survey conducted by Everest Group found that insurers are focusing their investments in two major areas:
- Better technology for adjusters, supervisors, and claims operators.
- Enhanced customer experience to ensure faster and more transparent claims handling.
Beyond operational improvements, there’s a growing shift toward a preventative approach in claims – leveraging AI to assess risks before they turn into losses. Reducing claims costs, rather than just managing them more efficiently, is becoming a top priority.
Integrating AI into Legacy Systems: The Crawl-Walk-Run Approach
One of the biggest challenges insurers face is integrating AI into legacy claims management systems without causing major disruptions. The panel emphasized the Crawl-Walk-Run approach as a structured way to introduce AI into claims processing:
- Crawl: Start small—use AI for document reading, summarization, and data extraction to reduce manual work.
- Walk: Embed AI into claims workflows to optimize adjusters’ efficiency, shifting their roles from processors to decision-makers.
- Run: Scale up AI-based automation with end-to-end claims handling, allowing adjusters to focus only on complex cases.
Good news for insurers still using legacy systems—AI does not require a complete system overhaul. Modern AI products like Five Sigma’s Clive™, the insurance industry’s first AI claims adjuster, can wrap around existing workflows and leverage unstructured data to add AI, automation and data-based insights.
Straight-Through Processing (STP) in Claims Management
Many insurers talk about Straight-Through Processing (STP) as an ideal state where claims flow automatically from FNOL to settlement without human intervention. But how close are we to achieving it?
Everest Survey Insights
Barriers to STP
- Legacy systems with non-standardized processes.
- Fraud concerns that require manual oversight.
- Regulatory and compliance challenges.
- Data limitations—STP depends on high-quality structured data.
Despite these hurdles, AI is driving significant automation, even in complex claims scenarios. Technologies like natural language processing (NLP) and machine learning allow AI to process unstructured claim data, helping insurers bridge the automation gap.
AI Augments Human Decision-Making in Claims Management
A common concern with AI is whether it will replace human adjusters. The reality is that AI acts as a digital assistant, allowing adjusters to work faster and better, augmenting their work.
AI’s role in claims adjustment
- Automates repetitive tasks (e.g., summarizing medical reports, extracting data from PDFs, data entry).
- Identifies trends and insights from claim history to guide decision-making
- Provides real-time recommendations to adjusters, enabling faster and more accurate claim handling.
AI enhances adjusters’ expertise rather than replacing them. It allows them to focus on customer service and complex negotiations rather than administrative tasks.
Clive, Five Sigma’s AI Claims Adjuster
One of the key innovations driving AI adoption in claims is Clive, the insurance industry’s first AI claims adjuster, developed by Five Sigma. Michael Krikheli explained how Clive is designed to support adjusters, automating repetitive work while keeping humans in the loop for decision-making.
Michael described Clive as a digital worker that sits within Five Sigma’s claims management platform, but also functions as an independent AI layer on top of any claims management system (CMS). He emphasized that Clive enables insurers to leverage AI without disrupting their existing workflows:
Drawing the Line between Full Automation and Human Oversight
While fully automated claims handling is the ultimate goal, human oversight remains essential, particularly for complex cases that require judgment and expertise. AI enables instant FNOL processing, damage assessments, real-time fraud detection, and automated payments for simple claims. However, certain aspects of claims handling still demand human adjusters, such as liability determination for complex cases, negotiation and litigation handling, and ensuring compliance and fairness.
Some of the most advanced AI implementations today allow insurers to process claims in seconds instead of days, significantly reducing costs while enhancing customer satisfaction. The future of claims management lies in a hybrid approach, where AI streamlines workflows and automates routine tasks while human adjusters focus on critical decision-making and customer interactions.
Compliance and AI Governance in Claims: Ensuring Transparency and Fairness
As insurers deploy AI, governance and compliance are non-negotiable. Regulators are increasingly scrutinizing decision made by AI to ensure fairness, transparency, and accuracy.
Key compliance considerations
- Auditability: Insurers must be able to trace AI-driven decisions.
- Bias prevention: AI must ensure fair treatment of policyholders.
- Regulatory adherence: AI must comply with state and federal insurance laws.
AI in claims must build trust—not just with policyholders but also with regulators and internal compliance teams as well.
Measuring the Success of AI in Claims
For insurers investing in AI, measuring success goes beyond just cost savings. The panel outlined a three-dimensional framework to evaluate AI benefits:
Experience
- Faster claim resolution times.
- Higher customer satisfaction scores.
- Improved adjuster productivity.
Efficiency
- Reduction in claim processing time.
- Lower operational costs.
- Improved fraud detection rates.
Effectiveness
- Higher STP rates.
- Optimized indemnity spend.
- Increased claims accuracy.
Successful AI implementation should streamline workflows, reduce costs, and enhance customer experience, without compromising compliance and quality.
Final Thoughts: The Future of AI in Claims
The conversation around AI in claims is no longer about whether insurers should adopt AI—it’s about how quickly they can implement it while ensuring compliance, accuracy, and customer satisfaction.
AI is not just about automating tasks—it’s about transforming the role of claims teams and making insurers more proactive, customer-centric, and efficient.
AI allows insurers to process claims faster and more accurately, reduce fraud, improve underwriting, and optimize indemnity costs – shifting claims handling from a cost center to a strategic advantage.
The industry is on the cusp of an AI revolution, and at Five Sigma, we’re leading the charge. Insurers that embrace this transformation will be better positioned to reduce operational costs and build stronger relationships with their policyholders.
Everest Group is a leading global research firm dedicated to helping organizations solve complex business challenges through bold insights and practical guidance. With deep expertise across diverse industries and capabilities, Everest Group empowers business leaders to make clear, confident decisions that drive operational efficiency, embrace emerging technologies, and achieve lasting impact. Leveraging fact-based methodologies and forward-thinking strategies, Everest Group delivers tailored solutions that inspire innovation, accelerate growth, and position organizations for long-term success in an ever-evolving business landscape.
