Claims handling the number one target for human led AI integration

Over two-thirds of insurance industry professionals view claims handling as one of the prime business areas for artificial intelligence (AI) augmentation, with faster processing, cost reduction and fraud detection among the perceived benefits.

This is according to a set of surveys of industry professionals from insurers and MGAs, commissioned by insurance technology provider RDT, and conducted between 16 October and 8 November 2024 and 8 January and 31 January 2025 respectively.

RDT said the polls aimed to gauge the industry’s opinions on the benefits, drawbacks and barriers to the adoption of AI technologies – and assess the aims and progress of firms wishing to utilise it.

Optimism for AI proved to be high, with a strong consensus among respondents that the insurance industry will adopt AI in a manner that fully benefits both customers and brokers. Indeed, some 34% of respondents were “very confident” this would be the case, with a further 40% “confident” – only 26% of respondents rated their confidence as neutral or less.

That conviction was reflected in respondents’ views on digital transformations at their firms. Some 53% rated digital transformations as “extremely important” for maintaining a competitive edge and 26% as “important”.

Despite this, only 13% of surveyed professionals said their firm had completed a digital transformation and only 6% said their transformation would be complete within one year. This figure rose to 27% for completion within three years, with the remaining 54% forecasting it would take three years or longer.

Wide range of benefits

For those planning to develop their technological capabilities, there are a wide range of potential applications to consider.

Surveyees were asked: “Which areas of the insurance value chain do you think could benefit the most from collaboration among insurers, insurtechs, and other ecosystem participants?”

Claims handling led the way, cited in 67% of responses. Fraud detection (60%), underwriting (47%), customer engagement (40%) and policy administration (27%) also scored highly.

Commensurate with its perception as an area ripe for development, respondents cited a wide range of primary benefits for AI-driven claims processes.

Some 81% expected to see faster claims processing as a result of AI technology, while 69% expected to see cost reductions. Improved fraud detection (63%), enhanced data accuracy (56%) and better customer satisfaction (38%) were also highly expected outcomes.

Claims handlers weigh in

To further investigate AI’s potential impact on claims handling, RDT produced a survey solely targeting claims handling professionals.

Among them, support for AI-guided working practices was high, with 86% of respondents believing that automation would lead to an overall improvement in the customer experience by providing faster and more accurate claims resolutions.

That general positivity extended to more specific areas, with 81% of surveyees feeling moderately positive or better about automation’s impact on timesaving, 74% agreeing that automating repetitive tasks would allow them to focus on complex decision making and 67% being confident or higher that automation could address all the current issues in motor claims processing.

And indeed, the proliferation of automation in claims handling has grown, with 62% of respondents saying their firm had partially automated some of its claims handling processes. The depth, however, of automation is low, with only 9% of surveyees reporting fully automated processes and 27% saying processes were either minimally automated or not automated.

Concerns around AI adoption mostly centred around the human side of operations, with over-reliance on technology, lack of control over decision-making, loss of human touch in customer interactions and job security all cited in 40% to 50% of responses.

As Insurance Times previously reported, many industry experts feel that balancing technology and talent is the key to embedding claims automation.

Indeed, 92% of surveyees cited maintaining human oversight as essential, very important or important to addressing exceptional cases in claims handling, or when dealing with customer vulnerabilities – highlighting the importance of human expertise in successfully embedding automation in the claims handling process.