The insurance industry is in the midst of a tech-driven shift. With data and analytics capabilities becoming table stakes for P&C insurers, accelerating the claims process through automation and advanced technologies is a key area to drive improvements in and streamline workflows. Particularly during the claims triage process at First Notice of Loss (FNOL)/ Electronic Notice of Loss (ENOL), straight-through processing (STP) has seen major growth over the last few years - while table stakes in underwriting, it is becoming more common in personal lines transactions.
Still, according to Aite-Novarica’s 2023 report, less than half of insurers are using STP in personal lines transactions, with an STP rate of 7% - relatively similar to the firm’s findings back in 2021.
STP adoption can be challenging for organizations within which legacy systems are embedded. There’s also a limitation for STP that can come from a lack of reliable or available data.
But when customer experience and speed are differentiators in an increasingly connected and digitized insurance ecosystem, implementing STP for insurers only makes good business sense. Technology advances are opening up new opportunities for insurers to implement STP with minimal disruption to their existing processes, while speeding up triage and processing at FNOL. Here, we’ll discuss the value of implementing STP at FNOL, and how you can leverage technology to implement STP.
What is straight-through processing (STP) in insurance?
Straight-through processing (STP) in insurance is the ability for insurers to automatically process transactions without manual intervention.
Systems take in data digitally and complete the transaction in a process handled by automation and algorithms (this could be predictive models, for example) rather than people. STP can apply to underwriting and first-notice-of-loss in claims as just two examples.
The benefits of implementing STP at FNOL: Improving Operational Efficiency
The overarching benefit of implementing STP at FNOL is solving the familiar issue of claims handling efficiency. The claims handling process has traditionally been slow and labor-intensive, requiring significant time and resources.
However, with straight-through processing, insurers can process claims quickly and efficiently, often within minutes of receiving the initial notification of loss. This saves insurers time and money and ensures that policyholders receive prompt and effective service.
In addition to improving efficiency and accuracy, STP has helped insurers reduce costs associated with FNOL processing. By automating routine tasks and streamlining workflows, insurers can reduce the need for adjuster involvement, which can be costly and time-consuming. This, in turn, can help insurers reduce their overall claims processing costs, improving their bottom line and enabling them to invest in other business areas.
#1 – Reducing severity
Straight-through processing at FNOL can significantly reduce severity for insurers with its ability to reduce errors and inconsistencies during the FNOL process. With automation, claims data is captured and processed in a more consistent and standardized process, reducing the risk of errors or omissions.
When automating the many manual tasks involved in the claims process, insurers can reduce the need for human involvement from call center agents, adjusters, legal, and SIU, which can be a significant cost saver. In addition, STP can help insurers spot fraudulent or exaggerated claims more efficiently, lowering their overall claims costs.
#2 – Increasing scalability
Implementing STP at FNOL has been a game-changer for insurers looking to scale their FNOL capabilities. With the power of automation, insurers can easily handle higher volumes of claims while reducing manual tasks and freeing up resources to focus on more complex claims. This has allowed insurers to improve customer service, providing faster and more accurate claim resolution even during catastrophic events.
For example, Clearspeed Surge was developed to help insurers quickly and confidently process large claim volumes during catastrophic, weather-based events. During a “surge” event, call volumes can increase more than 50x, with the risk of opportunistic claims fraud growing exponentially for insurance carriers. Clearspeed Surge provides short, simple, and automated voice questionnaires that detect risk with greater than ninety-seven percent accuracy.
#4 - Reducing fraud exposure
One of the key benefits of STP is its ability to reduce errors and inconsistencies during the FNOL process. In addition to improving the accuracy of claims data, STP at FNOL also helps insurers identify potential fraud or other issues early on in the process.
El Roble Seguros, the largest auto insurer in Guatemala, implemented Clearspeed to help facilitate STP at FNOL to enhance their claims process.
