In an industry shaped by challenge and change, professionals in claims, insurance, and workers’ compensation make a business of staying ahead of future events. What if something goes wrong? What happens when you’re faced with an outcome you don’t expect? For the many individuals providing services in insurance, disability, or workers compensation, the claims space is about the ‘what ifs’ in life—and the best ways to plan for them. 

The insurance industry has been around since Ancient Babylon, when rudimentary insurance policies were written to guarantee loans for merchant ships potentially lost at sea. Human civilization has been looking for ways to mitigate physical and financial risk for most of recorded history. In an industry as old as this one, it’s especially interesting to think about the future. 

How does one of the world’s oldest professions adapt to one of the newest? And what is the potential for when it does?

The future of the insurance industry: AI, machine learning, and the end of a long wait

Insurance is broader than it seems. The nonlife insurance industry was a market valued at $844B in 2022, and the smaller field of medical claims processing is a $5B market by itself. While the Great Resignation may be waning, job shortages are expected to continue for years to come, and insurance providers already trying to stay on top of paperwork backlogs now face an aging population and a rise in complex claims. 

Healthcare professionals, lawyers, insurance companies, IMEs and administrators expend  significant time and resources administering a claim. Unfortunately, delays in the process leave claimants in limbo: according to a document prepared by the AARP, the average disability applicant waits more than two years for a final decision, with over 10,000 of these claimants dying before they receive an answer. 

Providers in the claims space are feeling the pressure. Inflation, increasing numbers of catastrophic weather events, and an aging population (as well as other factors, like cyber risk and increased litigation) have led to a $3.5B underwriting loss among US insurers. Despite charging higher premiums, insurers are paying out more than they earn—which may be why so many analysts predict ‘seismic’ industry change.

Technology is driving the shift. Research suggests automation can reduce the cost of the claims journey by 30%---and even if some components of underwriting losses (like litigation fees or per case compensation) can’t be reduced, automating other parts of the claims process go straight to the bottom line. 

Shaping the future with AI

Whether it’s through automating the underwriting process or reducing the manual, labor-intensive task of filing, organizing, and handling a claim, all signs point to innovation. In the past, the unstructured nature of medical documents made it difficult to create a fully automated claims process. It wasn’t until the introduction of artificial intelligence tools that the use of technology became more widespread. Paperwork heavy workflows are no longer feasible in an industry struggling to fill roles, and new processes need to be put in place in order for this to change. 

Although medical experts and insurance professionals (among other knowledge workers in the industry) remain involved, AI is increasingly being used to sift through the vast quantities of data needed to evaluate and process a claim. It’s used to investigate fraud, assess risk, and increase productivity, as well as add high-quality human touchpoints to automated processes and make better use of employee time.

AI tools can process about 750 pages of medical documents in an hour, as well as assist with indexing these documents and preventing duplication. Since experts in the medicolegal industry (like physicians and lawyers) bill by the hour, organizing data in less time can mean big savings, as well as more time for higher value activities. AI tools that process documents up to 70% faster have made it so even smaller IMEs can scale. With this in mind, the industry is likely to increase the use of technology like AI in coming years. 

Insurance industry shifts: What investors think

At the end of 2022, healthcare providers were already planning to spend more on software. Healthcare IT solutions were a top 3 priority for almost 40% of industry executives, and in the top 5 for nearly 80%. Over 50% of insurance providers plan to increase their spending on technology in 2023, with the biggest focus being on modernizing their existing stack. Among these providers, 40% suggest that they are planning to increase the amount they spend on AI and machine learning over the next year. Although 2022 wasn’t the banner year 2021 was in terms of investment, investment in insurtech was still predicted to reach $9.6B during 2022. 

When patients facing life-changing moments are able to access support faster and organizations help workers make the most of their time, everybody wins. Industry decision makers are seeing the value of upgrading their processes, and investors are benefiting from companies who make the most of these trends—which means the future could indeed be seismic.

The full version of this whitepaper delves deeper into the industry landscape, going deeper into the digital revolution happening in claims—and the untapped potential it represents. 

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