The State of Play in Automating Insurance Claims

SOURCE:  James Taylor

Talking about claims and using Decision Management to improve claims I recently caught up with Donald Light of Celent. Donald recently wrote a new report for Celent – Claims Systems Vendors, North American P/C Insurance 2011. This is the most recent update of the Celent study that evaluates vendors in the claims processing space. The report ranks core systems (in this case claims systems for P&C insurance) on 4 different dimensions and does so every 2 years.

Obviously these core claims processing and adjudication systems have various levels of workflow and rules built in (as well as standard features like support for reserving, claims adjuster desktops). According to Donald there is a definite trend for these core systems to now come with some kind of rules-based capability. Some of them are reasonably robust and sophisticated (though not on the level of a dedicated BRMS), others much less so. Most of this rules capability is focused on claims validation and routing but there is a growing interest by insurers on automating certain decisions and workflows, but not the entire end-to-end process. True straight through processing (STP) or auto-adjudication is focused currently on simpler claims (like windshields in auto for instance) and slowly moving up the complexity curve.

In my view, for now it seems that organizations wanting to auto-adjudicate a lot of claims will need to be thinking in terms of adding their own decisioning capabilities to these core systems – combining business rules with analytics (to detect fraud and abuse) to get high rates of auto adjudication without creating the opportunity for fraud.

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