Insurance Document Processing: A Comprehensive Guide

Insurance document processing encompasses various functions, from memos and reports shared internally, creation of new policies, to claims made by customers. It would be fair to say that handling and processing documents is a key part of any insurance company’s daily operations.

Efficiency is the name of the game when it comes to document processing in insurance. Many providers have short service level agreements (SLAs) in place that require quick processing of claims. This can become a hassle if documents aren’t appropriately managed. Similarly, efficient document processing calls for automation, so mundane and repetitive tasks can be automated.

The insurance industry is huge, and there are several segments within it. The most prominent ones include health, life, home, auto, and travel insurance. While some companies focus on a particular segment, others are jack of all trades, offering insurance for everything through partner companies or subsidies. All these factors lead to complexities in their operations, ultimately creating document processing challenges.

In this article, we’ll discuss those challenges and how to address them with best practices and the right technology. We’ll also cover how MST’s solutions can help insurance enterprises process internal and external documents, and enjoy benefits like increased productivity and fewer errors.

The Importance of Efficient Document Processing in Insurance

The insurance industry is, by default, document-centric, meaning many of the operations and processes rely on documents. While much of the document workflows have been digitized, there’s still some reliance on paper-based documents. From claim forms to marketing brochures, the industry hasn’t quite said farewell to analogous documentation.

Insurance companies often work with both digital and physical documents. Document processing can significantly impact overall performance when their operations rely on documents.

Here are a few reasons why document processing in insurance is so critical:

Handling High Volumes of Documents

Consider this: health insurers adjudicate and process over three billion claims annually in the US.

Insurance companies handle many different documents. Some are internal, while others originate from outside and are processed by the organization. For instance, health insurance companies may receive bills from healthcare providers for their customers.

There are all sorts of documents an insurance company may process (depending on its niche). Some commonly used documents in the insurance industry include:

• Policy applications
• Policy documents
• Claims forms
• Medical records
• Accident reports
• Inventory lists
• Proof of identity documents
• Correspondence
• Financial statements
• Legal documents

With such a large volume of documents, any insurance company would need proper document management practices aided by tools that streamline different document-related workflows.

Here’s an example: a health insurance company receives a bill from a hospital for a patient’s treatment. The bill includes the patient’s information, diagnosis, procedures performed, and costs incurred. Automated document processing systems, such as OCR, can extract data from the bill, such as the patient’s name, policy number, and treatment details.

This data is then compared against the policyholder’s information and coverage benefits. If the treatment is covered under the policy, the system can automatically calculate the reimbursement amount and generate a payment.

Compliance and Regulatory Requirements

In the insurance industry, document processing must be efficient and secure. It’s a heavily regulated industry, and while some regulations target financial practices, others outline how insurance companies should handle information.

Insurers deal with documents containing their customers’ personal data. They must comply with data protection and privacy regulations and safeguard these documents within their ecosystem. Otherwise, they may be liable to pay fines, not to mention at risk to blemish their reputation.

Many insurers in the US must comply with California’s Insurance Information and Privacy Protection Act (IIPPA), as well as NAIC’s Consumer Privacy Protection, which sets the standard for collecting, using, and disclosing people’s personal information. This regulation also dictates that companies take reasonable precautions to safeguard their customers’ information. So, any documents containing customers’ personal data must be protected with proper security measures. For example, insurance companies may employ role-based access within document processing.

Impact on Customer Experience

Efficient document processing significantly improves response times and customer satisfaction in the insurance industry. Insurance companies can process claims and other documents much faster by automating tasks such as data extraction, verification, and routing. This leads to quicker claim settlements, policy updates, and overall customer service interactions.

It’s not farfetched to conclude that customers who receive timely responses to their inquiries or claims are more likely to be satisfied with the insurance company’s service and continue to extend their policy.

Moreover, efficient document processing enables insurance companies to honor their SLAs more consistently. SLAs are commitments made to customers regarding the speed and quality of service. Companies can meet or exceed these SLAs by streamlining processes and reducing processing time. This can also give them a competitive edge over rivals who may struggle to deliver a timely service.

Cost and Time Efficiency

Efficient document processing and reliable management also translate into financial benefits. Insurers can reduce operational costs by optimizing how documents are created, collected, handled, and shared. Switching to document digitization can lower costs by reducing expensive paper usage.

Similarly, efficient document processing in insurance may increase productivity. According to an old study by McKinsey, workers spend 1.8 hours a day looking for information. It suggested that making files and documents digital can significantly reduce this time.

For instance, an insurance company that receives paper-based copies of customer ID, financial statements, or any other document can greatly benefit from digitizing them. This way, they can be accessed digitally from anywhere and by different stakeholders within the organization.

Common Challenges in Insurance Document Processing

Whether it’s creating, receiving, storing, sharing, or disposing of documents within an insurance enterprise, there are several challenges to tackle. The good news is that thanks to technology and policy shifts, it’s easy to address these challenges.

Here are four common challenges enterprises face with regard to insurance document processing and management:

Data Accuracy and Integrity

Documents contain information that employees or systems may need to use. This information can relate to customers or internal operations. Either way, there’s no room for errors. If the data in documents is inaccurate, it can cause many issues.

For example, claims processing can get delayed, policy discrepancies may occur, and incorrect data may be used in decision-making.

Data accuracy and integrity may be compromised due to security incidents, outdated methods, and human errors. Since insurance providers have to comply with regulations, these inaccuracies can even result in bigger issues.

The solution to this challenge lies in automation. For example, automation in insurance claim document management can detect and notify errors early on. The software can read information from scans or images of documents and compare it with data in the system to verify that information related to a claim is correct.

Document Security

Security is another big challenge. Insurers need to safeguard their data, which also comprises documents (both digital and digitized). Unfortunately, cyber threats are only becoming more sophisticated and damaging. Recently, an insurance broker became a victim of a data breach that impacted over 1.5 million individuals’ data.

Document security should be addressed as part of the company’s broader digital security strategy. But more specifically, insurers need to combine policy and reliable tools to implement document protection and confidentiality. Here are some ways to do that:

• End-to-end encryption of files when sharing within and outside the organization
• Role-based access control to limit access only to authorized persons
• Backup and recovery provisions to ensure quick recovery in case of an attack or mistake
• Comprehensive policy regarding document management, outlining stakeholders, workflows, and responsibilities
• Compliance with data security and privacy regulations

Integration with Existing Systems

The insurance industry is notorious for relying on legacy technology. According to PriceWaterhouseCoopers (PwC), some insurance companies spend 70 percent of their IT budgets maintaining legacy systems. Not all tools may readily integrate with old systems, which can create hurdles for modernizing document processing.

There are two ways to handle this challenge. The first way is to upgrade legacy systems to the latest offerings, which is expensive and complex. The other option is to acquire tools that can be integrated with legacy systems via APIs.

While it’s possible to write APIs, it’s best to choose tools that provide APIs for such integration. Still, some technical expertise may be necessary.

Handling Multiple Document Formats

Another common challenge document-dependent insurers may face is format incompatibility. This happens when dealing with multiple formats. Some systems may require certain file formats. Dealing with so many different formats can be overwhelming and result in delays.

This is a fairly easy challenge to tackle with the right tools and some policy changes. For starters, standardizing formats to specific workflows or processes can eliminate the problem of having different types of files. For instance, standardize the use of JPG for images.

Secondly, document conversion tools can resolve this issue, allowing employees to convert a file quickly into the desired format. Depending on the system and its capabilities, this can even be automated.

Best Practices for Effective Insurance Document Processing

Insurance document processing includes numerous individual processes and tasks. The following best practices can help make it more effective:

• Automation and Workflow Management: Implement document workflow automation to streamline processing. This can give direction to specific workflows, like claim processing or policy reviews. More importantly, automation eliminates bottlenecks that result in delays.
• Optical Character Recognition (OCR): Use OCR technology to convert paper documents into searchable digital formats. Capture documents with scanning technology and turn them into usable digital files like Word or PDF. This can even work with images, not just text documents.
• Document Indexing and Classification: Efficiently categorize and index documents for easy retrieval. Create standards for their classification with the file format specification and naming convention. Also, clarify storage location for specific document categories/types. This practice is all the more critical for large insurers with multiple repositories.
• Document Comparison: Easily comparing changes with policies over the years are helpful when informing and describing the current policy, benefit changes, and premiums to your customers.
• Digital Signatures and Verification: Eliminate the need for ink signatures on paper documents for approvals from adjusters. Incorporate digital signatures for secure and compliant document management. This way, documents can move digitally without the need to print, sign, and scan them.
• Regular Audits and Reviews: Conduct periodic audits to ensure compliance and optimize processes that involve files. Review the various internal policies concerning document management to identify problems and areas for improvement. Ensure they comply with data privacy regulations.

How MST Solutions Optimize Insurance Document Processing

MST’s tools are perfectly positioned to help insurance companies improve document processing. Whether capturing paper documents and digitizing them or comparing two versions of files, MST offers a wide range of capabilities to enhance document workflows.

Regardless of their niche, insurers can take advantage of the eViewer HTML5 and the Batch Converter.

The eViewer is a comprehensive document-sharing and viewing solution built with a security-first approach. Here’s how insurance providers can use it:

• Securely share files with end-to-end encryption.
• Set access limitations on sensitive files based on roles within the company.
• Digital sign documents with the eSignature feature.
• Convert scans of paper documents and images into searchable, editable digital files in DOC or PDF format.
• Easily highlighting changes within two versions of the document using document compare feature.
• Secure redaction of personally identifiable information (PII) when sharing files with other parties and comply with regulations.
• PDF form filler to allow users to fill and submit various forms digitally.

Furthermore, MST’s tools readily integrate with existing systems through APIs. Sync these tools with your insurance enterprise’s content management and document management solutions.

Case Study

AON, a large-scale insurance brokerage and consulting firm, faced the challenge of dealing with various document formats. This challenge was exacerbated by their reliance on proprietary IBM formats (AFP) generated from the brand’s legacy systems.

The company turned to MST’s solution, Batch Converter SDK, to solve both problems. This SDK integrated with their existing system via APIs and converted large batches of documents into PDF and TIFF formats, retaining critical metadata of the files. Moreover, they could use the tool during off-peak hours to process large volumes without significantly impacting server performance.

Conclusion

Document processing is the lifeblood of insurance operations. Both paper and digital documents are frequently used in a wide range of workflows. The business relies on document-centric services such as providing policies and taking claims. Proper document management and workflow automation are necessary to ensure efficiency, cost-effectiveness, compliance, and, most importantly, enhanced customer service.

MST provides tools for efficient insurance document management and processing. It can streamline processes like claims and underwriting.

Contact MST to adopt its solutions for document automation.