Again workplace automation for insurance coverage firms: A hit story

The Indian motor insurance coverage market is at the moment valued at round $13.19 billion and is projected to achieve $21.48 billion by 2030. Whereas the trade continues to develop steadily, regulators have additionally issued sturdy mandates to insurers to enhance their turnaround occasions and supply higher buyer experiences.

For considered one of India’s largest personal insurers, which prided itself on a excessive declare settlement ratio, this meant discovering new methods to streamline its back-office processes and cut back handbook errors. Nevertheless it wasn’t straightforward. They course of greater than 350,000 circumstances yearly— every file comprises over 10 kinds of paperwork, various codecs and constructions, 30+ line gadgets, and a number of ingestion channels. They’d a backend staff of 40 knowledge entry clerks and vehicle consultants manually inputting data from restore estimates, invoices, and supporting paperwork into their declare administration system

This inefficient, unscalable workflow could not meet the regulator’s turnaround time mandates, forcing a re-evaluation of their motor declare processing strategy. Let’s discover how they went about it.

What modified in motor declare processing in 2024

In June 2024, IRDAI, the Indian insurance coverage regulator, issued new tips aimed toward bettering motor insurance coverage declare settlement processes. 

The important thing adjustments included:

• No arbitrary rejection of motor insurance coverage claims resulting from lack of paperwork — insurers should request all required paperwork upfront throughout coverage issuance
• Insurers should allocate a surveyor inside 24 hours, get hold of the survey report inside 15 days, and determine on the declare inside 7 days of receiving the survey report
• Obligatory buyer data sheet (CIS) to supply clear coverage particulars and claims course of
• Restrictions on coverage cancellation, permitting it solely in circumstances of confirmed fraud with 7-day discover
• Requirement to reveal the insured declared worth (IDV) calculation methodology

Because the insurer’s enterprise grew quickly, these regulatory challenges made dealing with near 30,000 claims month-to-month turned greater than only a processing problem. It uncovered basic operational constraints that threatened their means to scale and ship worth to prospects.

Let’s discover how these adjustments affected the insurer’s enterprise:

1. Couldn’t scale their operations with out including head depend.
2. Unable to fulfill IRDAI’s obligatory declare settlement timelines – risking regulatory penalties for violations
3. Getting poor critiques and damaging suggestions from prospects
4. Vehicle consultants spending invaluable time on knowledge entry as a substitute of price evaluation

These challenges made it not possible for them to justify premium will increase primarily based on precise declare prices and danger profiles.

Why handbook declare processing was sophisticated

Let’s first try to perceive what the insurer’s declare processing workflow used to appear like.

1. When an accident happens, the shopper can both name up the insurer’s toll-free quantity to register the declare or use their proprietary cellular app to finish the declare kind.

2. Throughout this, prospects shall be requested to share coverage quantity, car particulars (make, mannequin, registration quantity, and so forth.), accident or injury particulars, and police report (if relevant).

3. The shopper is then requested to take the car to one of many insurer’s approved community garages for inspection and restore. They should submit the required paperwork to the surveyor assigned by the insurer.

4. The surveyor would examine the car and put together a report, which might then be submitted to the claims staff.

5. The claims staff would then assess the surveyor’s report and the paperwork submitted, evaluating elements like car identification, half numbers, unit pricing, and general declare validity.

6. After the evaluation, the staff would manually enter the related particulars into the claims administration system.

7. The declare would then undergo a number of layers of approval earlier than the settlement quantity could possibly be disbursed to the shopper or the storage (in case, the shopper opts for cashless mode)

The backend staff, consisting of 40 knowledge entry clerks and vehicle consultants, manually inputs all the important thing particulars from the declare file into their proprietary declare administration system. This included capturing data from completely different doc sorts, similar to estimates, invoices, registration certificates, driving licenses, and extra.

Keep in mind that these paperwork are issued by completely different sources. As an illustration, a driver’s license issued in a single state could not observe the identical format because the one issued in one other state.

The staff would meticulously overview every line merchandise and half quantity to make sure accuracy earlier than the declare could possibly be additional processed and accredited. One other problem was the inconsistent naming conventions for components throughout completely different garages and producers – the identical element would have completely different names relying on who submitted the doc.

As an illustration, what seems as a entrance bumper on one estimate is likely to be listed as a bumper cowl on one other. Equally, the element referred to as a boot in paperwork from UK and German producers would present up as a deck or trunk in producers from different nations. With no standardized database, these variations created fixed confusion.

Mismatches in car identification or half numbers, incorrect unit pricing, or lacking paperwork would trigger the declare to return to evaluation. This complete course of might take anyplace from 15 to 30 days, falling wanting the brand new regulatory timelines. 

When claims prolonged past IRDAI’s mandated settlement durations, the implications have been each regulatory and industrial. On the regulatory facet, the insurer confronted financial penalties and present trigger notices. Commercially, these delays broken their market popularity and prompted formal buyer complaints, which require vital time and sources to resolve. The prolonged processing drove up operational prices, as claims wanted extra touchpoints and extended dealing with, additionally leading to buyer dissatisfaction.

The insurer rapidly realized that this inefficient workflow couldn’t sustain with the rising enterprise calls for and the stricter regulatory necessities.

How the insurer automated its declare processing workflow

The insurer knew they needed to step up their recreation. Among the opponents, particularly the totally digital-first insurers, had already began rolling out zero-touch declare processing.

They explored a number of OCR options, however rapidly realized such instruments gained’t minimize it. These instruments have been closely depending on format and construction consistency. This led to formatting errors and inconsistent extraction, and extra handbook interventions. And to make issues worse, they might solely feed sure doc codecs into the system, leaving a good portion of the declare information untouched.

The insurer found out they wanted a format-agnostic answer that would deal with all doc sorts, extract the correct data, and combine seamlessly into their present claims administration system. After evaluating a number of AI-powered doc processing platforms, they selected to go along with Nanonets’ Clever Doc Processing (IDP) answer.

Right here’s why:

• Simplicity of the PDF extraction workflows
• Line merchandise extraction accuracy
• API and system integration capabilities
• Capability to deal with all doc codecs, together with handwritten and semi-structured paperwork
• Multi-lingual capabilities

We at Nanonets labored with the insurer to create a tailor-made doc processing answer that match their particular claims workflow. The implementation targeted on incremental enhancements reasonably than an entire in a single day transformation.

The staff started by tackling probably the most vital paperwork within the claims course of: estimates, invoices, and pre-invoices. These paperwork comprise the important details about car damages, required repairs, and related prices. 

The preliminary part targeted on:

• Configuring OCR fashions to extract line gadgets from restore invoices and estimates
• Creating techniques to tell apart components from labor prices
• Constructing validation guidelines to flag potential knowledge inconsistencies
• Integrating with the insurer’s software on their proprietary declare administration system by way of API

The workflow was simple. Right here’s what it regarded like:

1. Declare initiation and doc assortment: When a declare occasion happens, policyholders provoke the declare kind by the insurer’s consumer interface or customer support. The declare kind collects fundamental particulars together with important paperwork together with restore estimates, invoices, and supporting documentation.
2. Doc submission to Nanonets: As soon as uploaded to the insurer’s system, these paperwork are routinely routed to Nanonets by way of API integration. Beforehand, a staff of 40 backend staff would manually overview and enter data from these paperwork into their system.
3. Clever doc processing: Nanonets processes the paperwork utilizing specialised fashions to:
   • Classify every doc sort routinely (bill, estimate, registration certificates, and so forth.) and route it to the correct knowledge extraction mannequin
   • The mannequin extracts structured knowledge from each standardized and non-standardized codecs
   • Learn and arrange line gadgets from restore estimates and invoices
   • Distinguish between components and labor costs utilizing key phrase recognition
4. Components database validation: Extracted half data is validated towards a complete components grasp database that:
   • Standardizes various half names throughout completely different garages (bumper vs. cowl)
   • Identifies potential little one half replacements (similar to door pores and skin versus whole door meeting)
   • Categorizes supplies (plastic, glass, steel) for correct price evaluation
5. Knowledge integration: The extracted and validated data is distributed again into the insurer’s system as a customized JSON file, routinely populating the suitable fields within the declare evaluation interface.
6. Exception-based overview: The backend staff critiques the populated knowledge, focusing solely on flagged exceptions or uncommon circumstances.
7. Approval and settlement: Claims that move validation proceed to approval and settlement, with considerably diminished handbook intervention.

The preliminary implementation targeted on core paperwork (estimates, invoices, and pre-invoices), with plans to increase to supporting paperwork like driving licenses, registration certificates, journey permits, health certificates, and tax paperwork.

The influence of automating insurance coverage claims processing

It’s been solely three months for the reason that implementation, however the brand new workflow has already proven promising indicators for the insurer. 

Let’s check out the influence:

• 1.5 million pages processed in three months, nearly double the earlier quantity of 760,000 pages
• Standardized naming for about 600 widespread components that cowl 90% of claims
• Systematically establish alternatives for little one half replacements (like a door pores and skin at ₹5,000 versus a whole door meeting at ₹20,000) – saves a ton of price
• Allow workers to spend much less time on knowledge entry and extra on doc overview and exception dealing with
• Simpler to fulfill IRDAI’s regulatory timelines, which require declare selections inside 7 days of receiving the survey report
• Customized JSON integration permits seamless knowledge circulation between Nanonets and the insurer’s declare administration system

Proper now, the main focus is on the core paperwork — estimates, invoices, and pre-invoices — because the staff will get comfy with the brand new course of. After that, we’ll cowl the remaining doc sorts like driving licenses and registration certificates within the subsequent part — this could minimize handbook work by 50%.

What’s subsequent

The subsequent part will increase doc processing to incorporate supporting paperwork like driving licenses, registration certificates, journey permits, health certificates, and tax paperwork. Moreover, we’re working with the identical insurer, automating their medical claims processing workflow. 

In case your insurance coverage firm is struggling to cope with mounting paperwork and lacking regulatory deadlines, we may also help. Nanonets works together with your present techniques to ship actual enhancements with out turning your operation the other way up. Able to see it in motion? Schedule a demo at this time.