Can AI save carriers from supply chain woes? | Insurance Business America
New Gallagher Bassett insight shows that the answer is ‘yes’ partly due to better claims processing
Insurance News
By
Bennett Richardson
Supply chain challenges continue to prove a key problem for carriers due to the cumulative impact of disruptions on claims management processes.
A new survey by Gallagher Bassett, released as part of The Carrier Perspective: 2024 Claims Insights report, reveals that 62% of carriers worldwide reported challenges in 2023 around managing end-to-end claims resolution due to global supply chain problems, with 56% in North America seeing related disruptions to claims.
“Global supply chain challenges, including rising inflation, geopolitical tensions, and energy prices, have significantly impacted carriers’ ability to resolve claims promptly. These challenges have disrupted the supply chain, leading to delays and complications in the claims resolution process,” said Joe Berrios, Managing Director – Carrier Practice at Gallagher Bassett.
Berrios sees the impact that supply chain snarls have on claims processing as underscoring the need for innovative solutions. Luckily, one is at hand.
A significant leap forward with AI
Enhanced digital capabilities, including generative AI solutions, are proving a timely and valuable tool in addressing the problem.
“The integration of AI into the workforce is positioned to yield substantial advantages across the insurance sector, including end-to-end visibility in claims processing,” said Berrios.
“Implementing AI tools offers numerous possibilities to enhance operational efficiency across various carrier domains; Gallagher Bassett is currently exploring use cases that enable our people to spend more time on delivering exceptional service for our clients.”
AI is already impacting many parts of the value chain of insurance. The Gallagher Bassett survey shows that in 2023 a significant majority of 57% of carriers in North America used AI in customer service, with 40% already using it for claims processing.
Strategies to cope have room for improvement in North America
The adoption of AI in claims processing and other areas by some forward-thinking firms isn’t surprising given the impact that supply chain pressures have on efficient claims management.
Nevertheless, there is room for improvement in strategies to cope with supply chain disruptions in North American compared to the rest of the world.
While carriers worldwide are tackling the issue to varying degrees, the implementation of solutions generally lags in North America. Carriers here are implementing digital claims processing at a rate of 47% versus 54% globally. Likewise, 31% of carriers in North America have moved to strengthen or repair supply chain networks versus 34% globally.
“In North America, less than half of surveyed carriers are prioritizing technology solutions (47%), notably below the global average,” said Joe Powell, Senior Vice President of Analytics at Gallagher Bassett.
There is also less focus on establishing cost-saving measures (47% versus 53%) and diversifying supplier bases (37% versus 44%) among North American carriers than globally.
“The balanced emphasis on instituting cost-effective measures and integrating technological solutions indicates a cautious approach regionally to technology investments,” said Berrios.
Benefits outweigh concerns when implementing AI solutions
Of course, there are concerns around AI solutions and how it might affect processes at insurance firms – and only some of these are about whether AI will outsmart us into irrelevance.
At the early stage of implementing any new technology, there are always worries about how it will work in parallel with existing systems and conventional methods.
The primary concern among 41% of North American carriers revolves around the seamless integration of AI into business operations. Managing data privacy and security (23%) in the implementation of AI is the next major concern, while 20% of carriers are apprehensive in terms of ensuring compliance.
“Easing concerns over the integration of AI and establishing best practices in everyday operations is pivotal for the industry’s future,” said Berrios.
“In order to securely realize the opportunities presented by AI for claims processing, a bespoke approach toward facilitating AI needs to focus on data privacy and ease of use. With our private and secure general-purpose AI model, Gallagher Bassett looks to optimize the potential benefits of AI while addressing specific business needs and challenges.”
This includes prototyping AI applications in targeted areas, including litigation management and settlement, first notice of loss (FNOL) scanning for risk signatures, claims assignment, investigation, and the refinement of existing Waypoint models through an intensified utilisation of unstructured data.
To this end, Gallagher Bassett has a dedicated cross-functional team that focuses entirely on carriers’ unique goals and objectives.
“We strive to build an integrated claims management program that is aligned and tailored to each client’s specific business goals and internal operations.”
This approach also includes the human side of the equation. As more people become familiar with using AI, the need for a human ‘pilot’ becomes better understood. This is especially true for complex claims.
“There is a need for the human element to understand the nuanced and sometimes subjective aspects of a claim. Furthermore, data interpretation requires more than just algorithms; it needs human intervention to uncover hidden patterns, identify contextual factors, and exercise critical thinking,” said Berrios.
One thing is certain – AI is going to surprise the insurance world, and partnering with an experienced claims professional positioned at the forefront of the changes taking place will be key.
“As the insurance sector continues to grow and transform, resilience, agility, and a forward-thinking mindset will be the keys to success in the coming year and beyond. The ability to adapt swiftly, anticipate market trends, and enhance digital capabilities will be more crucial than ever for carriers to position themselves as industry leaders in the years ahead,” said Berrios.
“By staying proactive and adaptable, carriers can navigate through these changes and position themselves for success in the evolving industry.”
Gallagher Bassett (GB) is North America’s leading provider of claims and risk management solutions for insurance carriers. GB is committed to providing solutions that reduce risk, improve efficiency, and deliver superior outcomes.
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