AI is a technology that can perform tasks that normally require human intelligence. Insurance companies use AI to process claims, which are requests for compensation or reimbursement from policyholders who have suffered a loss or damage covered by their insurance policy. AI can provide faster, more accurate, and more secure claims processing, which can benefit both insurance companies and their customers.
Claims processing is a core function of insurance companies, as it directly affects customer satisfaction, operational efficiency, and profitability. However, claims processing can also be complex, time-consuming, and prone to errors and fraud. Therefore, insurance companies are looking for ways to automate and optimize claims processing using AI.
One of the main benefits of using AI for claims processing is that it can speed up the process and provide customers with fast payouts. AI can do this by using chatbots, natural language processing, and machine learning to interact with customers, collect relevant information, and assess the validity and value of the claim. For example, Lemonade, an insurance company that uses AI, claims that users can tap a button on their mobile app to start the claims process and chat with a bot named Jim, who can approve the claim in seconds if it is not too complex.
Another benefit of using AI for claims processing is that it can improve the accuracy and consistency of the process and reduce human errors and biases. AI can do this by using computer vision, image analysis, and deep learning to analyze images, videos, sensors, and other data sources to evaluate the extent and cause of the damage. For example, Tractable, an AI vendor, claims that its AI can analyze photos of car damage and estimate the repair costs in minutes.
Fraud Detection and Prevention
Another benefit of using AI for claims processing is that it can detect and prevent fraud, which is a major challenge and cost for insurance companies. AI can do this by using anomaly detection, data mining, and predictive analytics to compare the claim with historical data, third-party databases, and other sources to identify any suspicious patterns or discrepancies. For example, Shift Technology, an AI vendor, claims that its AI can score the fraud risk of each claim and provide a detailed explanation of why the claim is suspicious.
Legal Issues Surrounding AI in Health Insurance
A class-action lawsuit, filed on December 12, alleges that health insurer Humana used an AI model called nHPredict to wrongfully deny medically necessary care for elderly and disabled patients covered under Medicare Advantage — a Medicare-approved plan run by private insurers. Another lawsuit, filed last month, alleges United Healthcare also used nHPredict to reject claims, despite knowing that roughly 90% of the tool’s denials on coverage were faulty, overriding determinations by patient physicians that the expenses were medically necessary.
A Humana spokesperson said the company uses “various tools, including augmented intelligence to expedite and approve utilization management requests,” and “maintains a ‘human in the loop’ decision-making whenever AI is utilized.” The spokesperson added that Humana does not comment on pending litigation.
The Future is Uncertain
In conclusion, AI is a powerful technology that can transform the insurance industry by automating and optimizing claims processing. However, AI also has some limitations and challenges, such as ethical, legal, and social implications, data quality and availability, and human-AI collaboration. Therefore, insurance companies need to carefully evaluate the potential and pitfalls of using AI for claims processing and adopt a balanced and responsible approach.