Complaints relating to motor and buildings insurance have reached their highest level in five years, recent data from the Financial Ombudsman Service shows. Meanwhile, travel insurance complaints doubled in a year – increasing from 504 complaints in the first quarter of 2022/23 to 1,101 in the same quarter this year.
Across every insurance line, most of the complaints were related to insurers delaying in paying out on claims.
Our latest research report, AI and Claims Processing: What Customers Really Think, showed that customers put a high value on claim processing speed – only prioritizing fair outcomes more highly.
However, while AI delivers faster claims processing and cost savings, gaining customer trust in the use of AI remains a challenge.
Insurers need to educate and reassure customers about the fairness and effectiveness of AI. Transparent communication and demonstrations of AI’s capabilities in ensuring equitable, efficient processing are crucial in bridging this trust gap. We discussed ways to do this in our last post.
AI’s integration into claims processing is inevitable. It’s a question of when, rather than if. It’s important to help customers understand AI can help deliver the speed and fairness they expect. This blog will explain how it does that.
Rising premiums
This rise in complaints coincides with escalating insurance premiums, especially for motor insurance customers. Data from confused.com’s car insurance price index shows that the average annual car insurance premium soared to a record £776 in the second quarter of 2023, a 40 percent increase from the previous year. A report by EY anticipates a continued rise in car insurance prices, projecting 11% jump in 2024.
This state of affairs is unsustainable. A recent survey revealed that 28% of motorists feel that the rising costs of insurance are making cover unaffordable. Furthermore, 29% are cutting back on essentials like heating to afford insurance policies, and 8% are considering reducing the number of vehicles in their household to manage insurance costs.
Some factors causing these delays and spiralling costs are difficult for insurers to control.
Contractor availability has impacted on the speed of repairs, as has the ability to source materials. Inflation has raised the prices of materials and labour. Post pandemic, there has been a surge in claims as people return to the roads and resume travelling.
Changes in the legal landscape, especially related to personal injury claims, have increased costs for insurers. The ongoing issue of insurance fraud exacerbates this, leading to inflated premiums to cover these losses.
While insurers can’t directly resolve shortages in materials or contractors, artificial intelligence can mitigate other factors causing delays.This is particularly true for insurance lines such as travel, health or pets, which don’t require the insurer to source parts or repairs.
Traditional claims processing methods, often sluggish and outdated, contribute to delays in handling claims. With handlers often focused on getting through stacks of claims documents, they have little time for customer support, further fueling dissatisfaction among policyholders.
AI can reduce claims processing times from weeks to seconds
While insurers struggle with external factors like material and contractor availability, AI can help alleviate other factors causing delays. This is particularly true for insurance lines not dependent on sourcing parts or repairs, like travel, health, or pet insurance.
Here at Sprout.ai, we use AI to process claims related to any line of insurance at a significantly faster rate than traditional methods – often in seconds. By automating the data extraction and analysis process, claims can be processed and resolved in a fraction of the time it would take manually.
AI delivers fair pricing
By automating data extraction and analysis, AI can process claims more rapidly, reducing the backlog that leads to customer dissatisfaction. Advanced algorithms ensure that claim valuations are precise and fair, reducing unjustly declined claims and the administrative burden of appeals and disputes.
AI enhances customer satisfaction
AI’s integration into claims processing isn’t just about speed. It’s also about enhancing the accuracy and fairness of claim assessments. This not only leads to increased customer satisfaction but also reduces the administrative burden of handling disputes.
AI reduces operational costs
Automating the claims process can lead to significant operational cost savings, which can, in turn, be passed onto consumers in the form of lower premiums. This offers a solution to the public’s concern over rising insurance costs.
Conclusion
Insurers that embrace AI will find it easier to tackle current and future challenges. AI goes beyond replacing human tasks. It enhances accuracy, efficiency, and fairness in claims processing. However, for insurers to fully capitalise on these benefits, they need to build consumer trust in AI. Through transparent communication and demonstrating the effectiveness of AI in ensuring fair pricing and efficient processing, insurers can bridge this trust gap.
To learn more about how Sprout.ai can help you reduce claims processing from weeks to seconds, book a call with the team.
