Insurance is an industry that has to process an enormous amount of documents on daily basis. Human resources is a core aspect of the insurance industry due to the lack of automation at various levels in an insurance firm. Straight Through Processing (STP) is one such processing automation layer/characteristic that will allow insurance organizations to improve their business processes.
Research by one of the top management consultancies revealed that 68% of the insurers would like to see improvement in customer experience in the insurance industry. In the same survey, 59% of insurers also pledged to spend more on Artificial Intelligence (AI). The research provides a clear indication that the insurance industry is ready to move towards tech-based solutions to enhance its operations.
Straight Through Processing for Insurance Industry
Straight Through Processing enables end-to-end document processing to be automated without any human intervention. This has become thanks to revolutionary innovations in the space of AI and Machine Learning (ML) technology. These technologies enable self-learning of the technology and therefore can assure smooth processing of various types of documents for the insurance firms.
Straight Through Processing in Personal & Commercial Lines
STP is becoming quite common in insurance underwriting and processing claims, especially for life, medical and personal insurance policies. Such insurance policies offer very thin profit margins for insurers and therefore, automation can help eliminate unrequired labour costs and earn more revenue while spending less.
It has been noticed that the adoption of STP for commercial lines has been relatively lower compared to personal lines insurance policies. Marine insurance, cargo insurance, and other commercial line insurance policies are usually sold directly through an agent and broker. Apart from that, commercial line insurance policies are usually complex in nature. There are various different clauses that need to be mixed & matched and customized for the clients of insurance firms.
Although commercial lines is a complex insurance product, there are still worker’s compensation policies and small commercial lines policies that can drive direct sales. These insurance policies can be facilitated through STP.
Straight Through Processing for Claims Processing
On average, nearly 60% of insurers have not implemented STP when it comes to processing claims. About 10% of claims are processed through STP. However, this trend is gradually changing.
Claims for personal and individual lines of insurance policies such as health, life, car, bike etc. are being processed through STP. These coverage policies are relatively low when compared to commercial line policies. Automating and making use of advanced technology will ensure faster process times while keeping the cost low.
Insurers have achieved a significant amount of automation in digital claims payment thanks to STP. One-third of the insurers are processing payments digitally.
Many insurers are finding ways to reduce the physical paper load for settling claim processes and payments. STP, along with smart data extraction and intelligent document processing, can help in achieving sustainable means to process claims.
Need for Straight Through Processing(STP)
STP is the most effective way of processing documents when:
- Risks associated with the business or transaction are crystal clear
- Data is accessible and easily available
- Revenue or profit margins are thin
These are some of the many factors on which the need for STP can be evaluated by the insurers. This will allow them to add various data validation criteria that will help process claims and policies that match the particular set of criteria in order to achieve STP.
Insurance firms are making their headway towards the digital revolution and STP will bring efficiency and enhance productivity to boost the customer experience of policyholders. Reputation management will be therefore an added intangible benefit that STP can bring to the table.
Future of STP for Insurance Industry
Complete human intervention cannot be removed in the insurance sector. There are various complexities involved in the industry that the technology that we have to date cannot fulfil. Having said that, documents and claim process automation, at least for the personal and individual line of insurance policies is something wherein STP can be useful.
Manual data entry work can lead to many errors. This can lead to a costly affair for the organization. Time taken to process claims and handling paperwork manually is a cumbersome task as well. STP, with the help of self-learning AI technology, can provide a huge advantage to insurance firms in the future to improve accuracy rates and reduce physical paperwork.
The KlearStack Advantage
KlearStack AI will enable your insurance firm to automate the entire documentation process. Using advanced OCR technology and state-of-the-art document automation solutions, KlearStack AI can remove human intervention when it comes to processing documents.
Our experts can guide you to implement and automate your business processes so that you can focus on growing your insurance firm. If you would like to know more about our automated document processing solution, click here.