The insurance industry is rooted in risk: anticipating it, managing it, and mitigating it.
Take workers’ compensation insurance as an example. Today’s workforce and work environment look drastically different than they did a decade ago, let alone before the COVID-19 pandemic. The seismic shift to remote work coupled with employee turnover and an aging workforce — to name a few changes — each plays a part in workers’ compensation reporting and premium costs.
Additionally, several states have enacted legislation and executive orders expanding workers’ compensation coverage for specific industries (e.g., health care workers and first responders).
While workplace developments have yet to trigger an overwhelming influx of workers’ compensation claims, the current trends indicate that one may well be on the horizon.
Looking Ahead: Emerging Trends in Workers’ Compensation
The following trends cause concern for workers’ compensation insurers as they indicate higher levels of complexity and cost associated with claims in the years ahead.
Aging Labor Force
The U.S. Bureau of Labor Statistics predicts that the number of employees over the age of 55 will increase to nearly 25% by 2024 (from 21.7% in 2014). This is notable given that the cost of workers’ compensation claims generally increases as employees age.
Inexperience Breeds More Claims
According to the 2021 Bureau of Labor Statistics report, the overall turnover rate is 57.3%, compared to 45.1% the year prior. While that number drops to 25% when considering only voluntary turnover and 29% when considering involuntary turnover, the dynamics come at a cost for employers in two ways: the price of training and the price of inexperience.
According to Employee Benefit News, it costs 33% of a worker’s annual salary to replace them if they leave. Work experience takes time, and the trade-off often means a spike in claims. Workers with less than five years of experience accounted for 43% of reported workplace injuries.
Prioritization of Mental Health
Mental health has been at the forefront of employers’ minds since before the pandemic, even more so as we enter its third year. Prior to the pandemic, 10% of the workforce reported depressive conditions. Today, that number stands at 40%, according to Mental Health America. Given that mental and physical health conditions are inextricably entwined, it introduces a new level of complexity in understanding and honoring claims.
Rise in Comorbidities
While the long-term mental and physical effects of COVID-19 remain to be seen, there is recognition of its potential to impact claims well into the future. The psychological and physical strain from the pandemic has contributed to a rise in individuals who present with comorbidities. This higher incidence is likely to translate into more claims.
Increase in Remote Work Claims
Working from home has its privileges…and its risks. Though the idea of “remote work risk” appears strange, health care professionals are reporting a higher incidence of back, neck, and shoulder injuries related to less-than-ideal home office setups such as working hunched over at the kitchen table or slouched on the couch. One case has even set a precedent for future claims regarding the morning “commute.”
Companies where remote work continues to be the norm, can expect to pay on similar claims as the scope of commuting expands. The recent precedent established by the 2nd Senate of the Federal Social Court in Germany determined that a remote worker who fell between his bed and desk was injured while “commuting.”
What’s Needed: Claims Automation
Claim review is primarily a manual process that requires significant time and attention to detail. With claims becoming more complex, varying in type, and growing in volume, insurers need a solution that simplifies and accelerates the review process.
Currently, the data leveraged throughout the claims process is both copious and siloed as policies, claims and medical reports typically reside in separate systems. As a result, claim handlers often struggle to find what they need to make a timely and informed decision on a claim.
If insurers are to handle the anticipated growth in workers’ compensation claims, handlers need easy access to all information. Beyond access to the information, they need to understand it. Claims are nuanced, so the information will not always be black and white. With these capabilities, insurers can revolutionize the claims process.
Claims Automation Demands Knowledge
Automating the claims process is critical, but it cannot be overstated how important it is to do it right the first time. Part of doing it right means rooting your model in knowledge. After all, it takes expertise to process a claim.
Your traditional machine learning-based automation can help you process documents quickly at a basic level, but it cannot understand them the way a claim handler can. When you are dealing with complex documents that include terminology specific to both medical and insurance domains, accuracy is critical.
There is too much risk involved in the claims process to leave to inference. Thus, keeping a human in the loop is critical to validating automated results and making appropriate final decisions on claims. Not only does this ensure greater accuracy, but it builds in a necessary element of explainability to the model.
Only a rule-based approach to AI can embed real human knowledge and expertise in a language model. This knowledge is necessary to deliver the results insurers long for. But what really elevates the possibilities of a claims automation model is a hybrid approach.
Improve Outcomes with Hybrid AI
Expert.ai’s claims automation solution brings a hybrid approach to the claims process, enabling insurers to transform a manual, slow and subjective workflow into one that delivers reliable and predictable outcomes.
With deep embedded knowledge and domain expertise, users can process critical documents quickly and extract the information necessary to evaluate a claim. This not only helps to turn around claims faster, but it also improves the customer experience in several ways.
The benefits of claims automation are clear. Now, the question remains, is your organization ready for AI? With the right set of guidelines, it can be. Discover the best practices for automating your claims process.
