Blog
June 10, 2025
by
Achim Kohli
Innovations are reshaping efficiency, operational effectiveness, and the very nature of the claim adjuster's role.
The landscape of claims adjusting is undergoing a radical transformation, driven by technological advancements that are no longer just concepts but present-day realities.
These innovations are reshaping efficiency, operational effectiveness, and the very nature of an adjuster's role. This shift is fundamentally about augmenting the capabilities of skilled professionals, empowering them to deal with increasing claim complexity and meet heightened customer expectations more effectively.
For leaders in the insurance sector, understanding these changes is key to strategic enhancement and competitive positioning.
Key Takeaways
- Technology, particularly artificial intelligence (AI) and its associated applications, dramatically accelerates claims processing. This leads to significant cost reductions and notable improvements in accuracy.
- These technological advancements empower claims adjusters by automating routine, time-consuming tasks. This allows adjusters to redirect their expertise towards critical decision-making, the management of complex cases, and providing empathetic customer interaction.
- For insurance providers, embracing these innovations is no longer a discretionary upgrade but a strategic imperative. It is essential for maintaining competitiveness, improving customer satisfaction, and achieving sustainable growth.
Claims Adjusters' Biggest Challenges
The traditional claims adjusting process, while foundational to the insurance industry, is full of persistent challenges that directly impact profitability, customer satisfaction, and employee morale. These issues are often heightened by demographic shifts within the workforce, such as the retirement of experienced adjusters and difficulties in attracting new talent.
Addressing these pain points through technology is crucial not just for immediate efficiency gains but for the long-term health and sustainability of the claims function. Insurers consistently rank improving processing efficiency as a top priority, with 72% citing it as a key goal.
Challenge 1: The Burden of Manual Processes and Paperwork
A significant portion of an adjuster's time is consumed by manual data entry, reviewing extensive documentation, and various administrative tasks. Claims handlers often spend around 30% of their time on such low-value work, including reviewing documents. This reliance on time-consuming and frequently error-prone manual workflows involves many repetitive tasks.
This manual burden is a primary driver of operational latency. Claims are inherently document-heavy, involving policy documents, incident reports, medical records, and more. Manually reviewing and extracting data from these documents, many of which are unstructured, is a slow and meticulous process. The sheer volume frequently creates backlogs, delaying the entire claims process and directly translating to higher labor costs per claim and slower settlement times, which can negatively impact customer satisfaction. The shift away from tools like "colorful pencil claims, highlighters, and index markers" signifies a move towards more efficient digital processes.
Challenge 2: Ensuring Accuracy and Consistency Amidst Complexity
Maintaining high accuracy and consistent decision-making presents a significant challenge, particularly when handling complex claims, diverse and often unstructured data sources, and different regulations. The vast majority of claims data is unstructured, which makes traditional rules-based automation insufficient for comprehensive analysis. This can lead to a risk of inaccuracies in claim evaluations.
Settling an insurance claim, for instance, for an automobile accident, involves a complex series of steps and decision points: assessing the severity of the damage, determining if there were injuries, detecting potential fraud, and deciding whether a vehicle should be repaired or replaced. This complexity is compounded by data often residing in disconnected systems, creating bottlenecks.
The inability of traditional systems to holistically analyze all relevant information can lead to errors, missed insights, and inconsistent outcomes. This lack of a unified, intelligent view increases the risk of errors in liability assessment, reserving, and settlement amounts, impacting both loss ratios and customer trust. Platforms that analyze the entire case file, not just isolated medical records, aim to provide greater precision to combat this.
Challenge 3: Combating Fraud and Managing Rising Costs
Claims fraud remains a persistent and costly issue for the insurance industry. Approximately 10% of property and casualty claims are estimated to be fraudulent. Simultaneously, insurers face mounting pressure from increasing operational and settlement costs. The industry cost of settling claims has been rising significantly faster than general inflation. In 2019, claims costs were growing at a rate of 6% above the Consumer Price Index, and by 2023, they were on track to reach 11% above.
These issues of fraud and rising costs are often worsened by the inefficiencies and inaccuracies inherent in manual processes. Sophisticated fraud schemes often involve subtle patterns across multiple claims or data points that are difficult for humans to detect in isolation. Manual processes and data overload can make it easier for fraudulent claims to slip through.
Consequently, an inability to effectively combat fraud directly contributes to higher overall costs, making advanced analytical tools essential for identifying anomalies and flagging suspicious activity.
Technology Involvement
A suite of key technologies, with Artificial Intelligence (AI) at the forefront, is revolutionizing claims processing. These tools are not just automating tasks but are providing deeper insights and enabling more sophisticated decision-making. AI can quickly review claims documents within the context of other available data and then generate a summary of its findings alongside a recommendation for moving the claim forward.
Key Benefits
The adoption of advanced technologies in claims adjusting delivers a wide array of tangible benefits, fundamentally improving how insurers operate and serve their policyholders. These advantages span efficiency, cost reduction, accuracy, customer experience, and fraud detection.
Efficiency and speed see dramatic improvements. AI-powered workflows can lead to an 84% boost in adjuster productivity. Case studies demonstrate these gains: one travel insurer achieved 57% automation in claims handling, reducing processing time from weeks to minutes. Similarly, Aviva successfully cut the average time needed to assess liability for complex cases by 23 days. Another documented instance showed a 30% increase in claim handling efficiency through automation for complex employer liability claims.
Significant cost reductions are another major outcome. Technology helps lower overall operational costs and reduce claims leakage. Some platforms have demonstrated the potential for a 10% reduction in claim payouts while ensuring fairness. Automation also leads to reduced manual labor costs, allowing for more effective resource allocation. Industry analysts estimate that generative AI alone offers the potential to reduce loss-adjusting expenses by 20-25%.
Why Adjusters Are Still Important
Despite the transformative power of technology, the role of the human claims adjuster remains indispensable. Technology is designed to augment and enhance their capabilities, not to replace them. AI excels at data processing and automating repetitive tasks, but it cannot replicate the uniquely professional skills that are critical in claims management.
Adjusters bring essential human-centric skills such as empathy, negotiation, critical thinking, and ethical judgment to the table. Claims, particularly those involving significant loss or personal injury, can be stressful and emotionally charged events for policyholders. In these moments, the human touch, offering reassurance, building trust, and providing personalized support, is invaluable.
By automating the paperwork and routine analysis, technology frees adjusters to focus on the most important parts of their job: complex problem-solving, managing distressed claimants, intricate liability discussions, and making final judgment calls on borderline cases that require intuition and experience. The role evolves to become more strategic, customer-focused, and potentially more fulfilling. This shift can also make the profession more attractive, helping to address talent shortages by emphasizing higher-value work.
Smart Insurers Must Adapt to the Latest Advancements
In the current insurance landscape, adapting to the latest technological advancements is no longer a matter of choice but a competitive necessity. Failing to adopt new technologies quickly enough poses significant risks, including loss of market share to more agile, tech-savvy competitors, higher operational costs due to continued reliance on inefficient manual processes, and increased customer dissatisfaction. Tech-first startups are actively disrupting the industry with lean, efficient, AI-driven operations, putting pressure on established players.
Embracing AI and automation is about seizing a transformative opportunity to enhance efficiency, elevate the customer experience, and secure a competitive edge for 2025 and beyond. Companies that successfully integrate these technologies will establish a distinct advantage through reduced costs, greater operational efficiency, and happier, more loyal customers.
The Path Forward
The integration of technology into claims adjusting is an ongoing evolution, and the path forward promises even greater accuracy, efficiency, and innovation. The market for AI in insurance claims processing is experiencing robust growth, projected to expand from USD 514.3 million in 2024 to USD 2.761 billion by 2034, reflecting a compound annual growth rate (CAGR) of 18.30%. This signals a strong and sustained commitment to leveraging AI across the industry.
Future trends point towards the deployment of more sophisticated intelligent automation platforms, moving beyond basic robotic process automation to systems capable of more complex reasoning and decision support. Hyper-personalisation, enabled by AI, will allow insurers to tailor claims experiences more precisely to individual policyholders' needs and preferences, thereby enhancing satisfaction and engagement. It is anticipated that most low-severity, high-frequency claims will eventually become fully automated, allowing human adjusters to focus on complex, high-value cases that require their unique expertise.
For insurers, fostering a culture of continuous learning and agility will be paramount. Adjusters will require ongoing training and development to work effectively alongside new AI tools and to hone their human-centric skills. Strategic workforce planning will be essential to cultivate the right blend of tech-savvy individuals and professionals skilled in empathy, negotiation, and critical thinking. The ultimate goal is a claims function that is not only more efficient but also more predictive, personalized, proactive, and profoundly human-centric, where it matters most.
FAQs
Will AI completely replace claims adjusters?
No, AI is not designed to replace claims adjusters but to augment and enhance their capabilities. Technology automates repetitive, data-intensive tasks, allowing adjusters to focus on complex decision-making, negotiation, customer empathy, and managing nuanced situations where human judgment is irreplaceable. The future is one of collaboration, where AI handles the data processing, and humans provide critical thinking and the essential empathetic connection.
What's a practical first step to leverage these tech solutions?
A practical first step is to identify the most significant pain points in your current claims process. Are these primarily data entry bottlenecks, issues with accuracy, or slow cycle times? Once identified, explore scalable, cloud-based Software-as-a-Service (SaaS) solutions, such as AI-powered claims intelligence platforms. These can address specific challenges without requiring massive upfront infrastructure investment. Look for modular solutions that offer out-of-the-box capabilities and allow for incremental feature implementation, enabling a phased approach to adoption.
How exactly does technology help improve customer satisfaction in the claims process?
Technology significantly enhances customer satisfaction primarily by delivering faster claim settlements. Processing times can be reduced from weeks to days or even minutes for simpler claims, addressing a major pain point for policyholders. It also increases transparency through real-time status updates and easier communication channels, such as AI chatbots, for instant query resolution. Furthermore, improved accuracy driven by technology means fewer errors and a smoother, more reliable experience for the policyholder during what is often a stressful time.
https://riskandinsurance.com/how-ai-is-changing-the-claims-landscape-speed-accuracy-and-a-human-touch/
https://ae21.com/blog/2025/01/21/the-growing-role-of-ai-in-claims-adjusting-transforming-insurance-and-empowering-adjusters/
https://market.us/report/ai-in-insurance-claims-processing-market/
https://riskandinsurance.com/insurance-industry-accelerates-ai-technology-adoption/
https://www.theclm.org/Magazine/articles/five-challenges-facing-claims-adjusters-today/3230
