- Presently, working comp insurers are facing several challenges (increasingly complex claims, the arrival of new workplace safety challenges, the increasing compliance, and more) that create a need for automating their business processes.
- Claim Management is heavily influenced by an insurance provider’s geography. Also, implementing several functions, like a document parsing capability and the ability to attach docs and photos, is a must.
- AI and ML are capable of solving several major Workers Comp challenges, like identifying at-risk claims or coping with a shortage of highly qualified claim-processing experts.
- AI and ML have the capacity to vastly improve fraud protection, application and data security, and compliance.
Introduction to Workers Compensation Claims Management Software Development
Despite employers’ and public organizations’ best efforts to the contrary, working environments worldwide are still not immune to risks that result in employees suffering injuries.
A vast number of production environments are still not safe enough, and those working in them are exposed to health hazards of sorts. These health hazards become a reason for job-related illnesses that require corresponding compensation. Investigating work accidents, keeping track of the related leaves, processing of the related claims, and making the related payouts becomes difficult without automation.
Workers compensation insurance software automates the entire process of providing wage replacement and medical care to an employee, who has suffered a physical or emotional injury in the line of duty, or is suffering from an occupational disease. Such applications allow managing all the aspects in the processing of a workers’ compensation insurance claim. This includes medical certificates, accounts, correspondence, rehabilitation, liability, return-to-work plans, and insurance premium payments. In addition, workers compensation insurance applications can include functionality that allows managing compensation in favor of relatives and other beneficiaries in the case of those workers, who have succumbed to accidents in the line of their duty.
While automating a complex business process and enabling many insurers to encompass one more important business niche, workers’ compensation insurance apps help ensure compliance. They also cut overpayments and prevent work accidents as such.
This article will tell you about some of the opportunities workers’ compensation claim management applications open and the things to pay attention to while developing one.
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Understanding Workers’ Compensation Claims Management
As we’ve already mentioned, workers’ compensation insurance (also frequently referred to as “workers’ comp”) is a type of State-mandated managed insurance that is intended to provide benefits to those employees, who fall ill on the job or as a result of performing their work duties.
A sick employee’s entitlements under workers’ compensation insurance basically include their wages for the period that they are sick and medical and rehabilitation expenses. These benefits can also vary quite a bit depending on the regulations applicable to the corresponding geography (which is, incidentally, the case for the different U.S. states). For example, as an option, they can include only partial wage replacement, reimbursement for the medical and rehabilitation services, and occupational therapy.
Notably, in terms of workers’ compensation insurance, not all professions and occupations are equal. For example, there are separate federal workers’ compensation programs for Energy sector workers and coal miners and their dependants. Simultaneously, some of the U.S. states do not mandate workers’ compensation for SME employees, while the State of Texas does not mandate workers’ compensation insurance for any sector, profession, or occupation whatsoever.
In the U.S. the amount due under workers’ compensation does not typically exceed ⅔ of the employee’s regular income. Also, none of the payouts are taxable.
Usually, all workers, who agree to workers’ compensation waive their right to sue their employer for misconduct or negligence. However, in some of the U.S. states this has been overruled and one can still file a suit in certain cases. The latter may well be the case in other geographies outside the U.S.
The process of providing workers’ compensation insurance is becoming increasingly complex for insurers because of an array of factors. These factors create challenges that are hard to deal with using conventional means and manual, paper-based business processes.
Among others, such challenges include medical price inflation, increasingly complex claims (in particular, those related to mental health), the need to prevent claims from becoming litigious on time, the arrival of new workplace safety challenges, comorbidities, an increasing number of the coverage requirements, increasing compliance, and others.
All this creates the need for robust and sophisticated automation. More specifically, this automation must span the following stages of the Claim Management process:
- Making the first notice of loss (FNOL).
- Fully registering a claim.
- Performing claim verification.
- Performing medical evaluation.
- Making claim calculation.
- Registering the decision on the claim.
What exactly should the solution you need to efficiently handle workers’ compensation insurance consist of?
The Key Features and Functions of Effective Claims Management Software
As the process of filing a workers’ compensation insurance claim starts with submitting the first report of injury, your Claim Management software for workers’ compensation must enable automatically creating this document. This must be done taking into account the regional requirements and specifics.
Next, any Claim Management solution must enable the intake and registration of an insurance claim. For this purpose, the application must provide a set of GUIs that can be used by the different process actors, who can potentially file a claim. Usually, these project actors can include a claim adjuster, and intermediary, or the end client.
Each of the project actors must be able to attach any relevant documents to the claim they are filing. Importantly, the documents one can attach should include photos of accidents with the ability to write over the attached photos or add comments to them. It is essential to provide the ability to attach x-ray shots. The functionality of a Claim Management application must also include a parsing capability to extract data from various documents (including photos), digitize this information, and send it wherever it may be required. It is possible and advisable to use Natural Language Processing (NLP) for this purpose.
The provided claim templates must include templates for those cases that involve interactions with 3d parties. Ideally, end clients must be able to both file a claim and share this claim with their insurance agent before submitting it to get their professional advice. When approached for advice, insurance agents must have the ability to edit a claim.
All the project actors must have the ability to monitor the status of their claim, and, possibly, subsequently add information to it, or otherwise edit it before the claim starts being processed. End clients should also have the ability to monitor a claim that has been filed on their behalf by an insurance agent.
The Claim-Handling functionality of the application can include such roles, as adjuster, risk manager, supervisor, and a healthcare professional. Each of these roles must have a separate user interface. End clients must be able to add documents to the file associated with a submitted claim at a later date.
Whenever a claim is initiated, a claim manager must be automatically notified about this. Virtually all the workflows and tasks (claim creation, assignment of a claim for underwriting, and others) can and must be automated. However, while the latter is overall also applicable to the due diligence-related tasks, this area remains, probably, the only one that must necessarily involve manual processing. Although it is definitely worth looking into using AI to automate and enhance all the due diligence-related research, the final review must still be made by a human employee.
Claim Management is associated with a number of reports, part of which can be custom-created reports that depend on the insurer’s geography and local regulations. Quite often, insurers and their providers may have difficulty in implementing and generating such reports due to the poor quality of their data. This problem may turn out to be quite a hassle to get rid of after your solution has gone live and when the required reports need to be generated quickly and correctly. To prevent this scenario, one should properly design the data infrastructure of your solution and implement the required Extract, Transform, Load (ETL) processes during the software architecture design phase.
Tips for Developing Workers Compensation Claims Management Software
The architecture and functionality of workers’ compensation solutions are shaped up to a significant extent by the regulatory environments of the geographies they serve. For example, while in some of the U.S. states clients are to receive a two-week notice about the forthcoming closure of their policy, in others they are to be notified 3 months prior to the closure. Someplace, clients may not be allowed to pay online and are obligated to pay by check from a brick-and-mortar post office. All these peculiarities need to be taken into account and properly addressed yet during the design of your solution. For instance, in the latter example, the online payment capability must be rendered unavailable to a client who is to pay by check.
One of the more frequent present-day challenges insurers have to deal with is identifying at-risk claims and preventing corresponding litigations. This is a challenge because telling such claims early enough takes quite a bit of working experience. The numbers of the processed claims and the average employee’s qualifications make it difficult for insurers to tell claims that are fraught with lawsuits. Although in workers’ compensation insurance the problem is mitigated by the no-fault clauses of the work agreements a significant percentage of employees sign, it may still be advisable to harness AI and ML to identify at-risk claims. Especially, if signing no-fault clauses is not the case in your geography and workers’ compensation is not the only line of business your solution is planned to cover.
By the same token, Artificial Intelligence can alleviate two more typical work comp challenges – those of medical price inflation and comorbidities.
With AI and ML, you can predict price fluctuations over the insured period and leverage this information in your insurance policy pricing.
Using AI and ML also allows predicting disease comorbidity. Comorbidities worsen the severity of workplace injuries, extend the recovery span, cause complications, and raise the cost of workers’ compensation programs. It is possible for AI to evaluate the various risks related to comorbidities (for example, those of complications arising) for individual employees. This can be helpful to insurers, provided using AL for this purpose is legal in their location.
Triaging claims is one more important task AI/ML can help with. It becomes possible to not only sort claims by urgency more quickly and efficiently, but also to refer them to those of your adjusters, whose experience fits a specific claim better.
Lastly, the dearth of highly qualified insurance professionals, and, in particular claim adjusters, along with the increasing workload on them is an enormous challenge for insurance providers. In this sense, developing a modern insurance application with robust and sophisticated AI functionality can be the best, if the only, solution.
User-Focused Design and UX
Just like in any other industry or business niche, in workers’ compensation insurance UI/UX matters quite a bit.
Insurance websites need to provide a great deal of information that is often hard to digest instantly. As a consequence, they tend to be cluttered with this information and baffle their audience. Moreover, unlike Insurtechs, many traditional providers are encumbered with product-centric approaches their legacy systems and business processes are built around. The latter affects the UI/UXIn very negatively: the digital experiences these companies’ web resources provide are not customer-focused enough.
In this sense, both Insurtech startups and well-established insurance businesses should try to make their digital experiences customer-centric and not user-centric. It is vital to analyze your audience’s needs and build your customer journeys around them. For example, in workers’ compensation insurance, SME customers don’t need to first read about a bunch of programs suited to big-time corporations, racking their brains over where they could fit.
One should also bear in mind that Insurance is one of those industries where the home pages are simultaneously sales landing pages. The rest of the website pages in insurance apps are often one’s primary brand ambassadors. To promote your brand, you need to do so at every touchpoint with the customer. Incidentally, a vastly useful feature and, simultaneously, an awesome marketing gimmick is real-time calculation functionality.
To avoid information clutter, wherever relevant, it makes sense to split procedures into a larger number of steps, represented by separate pages. The language used should contain the more common terms and as little professional jargon, as possible. A built-in glossary that can be accessed on all the pages that make up a user journey can help. Another great way to make an information-intensive customer journey better is to use AI Robo advisers.
Finally, it is vastly important to provide appealing mobile digital experiences. To ensure such digital experiences equally well on various mobile devices, one should use Responsive Design or Alternative Layouts.
Customization and Flexibility
At present, an insurance application that is not scalable enough is set to fail you from day one, and this may happen well before you can imagine. To survive and compete, an insurance software system must scale limitlessly both vertically and horizontally. One must be able to create and add any number of new programs and packages, configure their parameters, add new and modify the existing insurance policies, and so on.
To make an application customizable and flexible, one should first get a handle on the regional differences in the insurance policy management rules in your customers’ different geographies, for example, in the different U.S. states.
From our experience, one more area one should pay attention to is the insurance cost calculation rules and rates that may well vary geographically. In addition to making this functionality scalable and customizable, it is necessary to provide a function that would allow automatically adding and updating insurance rates – in all the existing formats and in accordance with any existing regional differences.
As to the ability of your insurance application to support a growing number of users, this need can be solved by using Load Balancing or Cloud Computing. If you want to be able to scale limitlessly in a more hassle-free manner, consider opting for Cloud Computing from the very beginning.
Security and Compliance
Just like in other industries, data security is of great importance in Insurance too. To secure the customer data at rest, one must use a strong encryption algorithm, like AES, Twofish, Blowfish, or RSA (or, for an even greater protection, even two algorithms simultaneously – RSA and one of the former three algorithms). It should be noted that using Cloud Computing allows you to solve many of the security-related problems, as in this case you can use your Cloud provider’s Cloud infrastructure that is usually well-protected by them.
For fraud prevention purposes, it is possible to use Biometrics (Iris Recognition, Fingerprint Scanning, and other techniques) and advanced Facial Recognition. Additionally, Artificial Intelligence and Machine Learning can allow you to detect fraudulent claims. For doing this, AI and ML can detect and analyze such signs, as a missing date, time, or location that the incident has occurred, the absence of proof of receiving medical services in relation to the bills paid, a lack of witnesses to the incident, the absence of specifics on the incident, a history of job-hopping, and multiple filed claims.
Although the fact that a claim has one or more of these signs doesn’t automatically mean the claim is fraudulent, it is definitely worth paying extra attention to it. AI/ML can identify such claims and raise a flag. Furthermore,they can assess the odds of a claim being fraudulent and inform your employee in charge accordingly.
To ensure compliance, you first need to comply with the local laws and regulations. In the United States, the first level of compliance is the compliance with the laws and regulations in the State where a company’s employees perform their work duties. Correspondingly, this may need to be reflected in the functionality of your insurance solution. To illustrate, in some U.S. states subcontractors and contractors are regarded as regular employees, and your solution must provide the possibility to include and indicate them as such and insure them.
Secondly, one must ensure compliance with various international compliance regulations, such as, for example, GDPR. Here, one should bear in mind that aligning your solution with the compliance regulations that are in place in your geography alone may not be enough. You may have to comply with the regulations that are applicable to the geography where your clients are based, for example, the way it happens in the case of GDPR.
Workflow Automation and AI
We’ve already touched upon several possible uses of AI in the Workers’ Comp insurance niche. However, there are several more ways you can employ AI/ML to improve your business processes, cut payouts, and raise profitability.
AI-enabled predictive analytics allow predicting the likelihood of a policy getting canceled. They expedite risk assessment by facilitating the due diligence. ML expedites claim processing by classifying claims into low- and high-class ones and allowing one to process them in accordance with different rules.
One can use AI to determine the best medical provider for a claim. The ability of NLP to analyze your adjusters’ conversations with injured workers can give you insights into theirse workers’ sentiment and help mitigate the litigation risks, if any. As far as one’s overall litigation risks are concerned, AI and ML can not only identify them, but also grade them. This enables employers to prioritize and address such risks and curb them.
Integration with Existing Systems
Insurance payments tend to create additional strain on a company’s workflows and complicate planning. Sizeable down payments are usually inconvenient, just like any end-of-year insurance expenses that crop up unexpectedly.
To avoid all this, one can implement pay-as-you-go workers’ compensation by integrating your claim management software with a payroll software system that enables this. In the latter case, insurance payments are split into installments that are paid as you run payroll.
To support your HR business processes, one can also perform integration with your HR software.
Real-Time Communication and Notifications
Having a strong ongoing monitoring for all one’s claims, including real-time and other notifications, is essential in workers’ compensation insurance solutions.
In particular, It is necessary to notify your claim adjusters in real time about any changes made to the claims assigned to them, any changes in the related data, any new documents added to the corresponding file, or the arrival of any new correspondence, pertaining to the claim. Besides, you need to implement notifications for all the important claim-related deadlines.
Also, AI/ML can help detect any of your claims turning litigious. When a claim with a possible attorney involvement is detected, your AI/ML functionality can generate an actionable alert for the corresponding adjuster.
It is also essential to provide reliable and secure real-time communication channels for the actors involved in claim-processing. The bulk of this need can be met through an integration with a feature-rich CRM, like, for example, SalesForce.
Data Analytics and Insights
Implementing powerful data analytics functionality in workers’ compensation software solutions is both an absolute must and a great boon. This functionality helps identify the drivers of accidents and then mitigate or eliminate them. It enables you to derive insights that allow identifying any potentially costly claims early enough to preclude them from becoming so expensive.
It becomes possible for you to identify the locations and occupations that generate most of your costs and to adjust your programs accordingly.
Some Technical Challenges and Pitfalls to Avoid
Implementing workers’ compensation claim management solutions can be impeded with several technical challenges that one can encounter while implementing virtually any other complex software solution.
Those traditional insurance providers that are digitally transforming are likely to come across problems created by their legacy systems. Frequently, legacy applications are difficult to integrate with modern Web apps, especially those that use new technologies, in particular AI and ML. To solve the problem, one should look towards microservice-based software architecture that often helps in this case. Also, it is advisable to gradually create digital versions of your legacy systems.
Being bug-ridden can be a major problem for insurance applications too. In this regard, as Insurance is an extremely user-centric and information-intensive business domain, one should pay more close attention to the collection and incorporation of customer feedback and end-user software testing.
Workers’ compensation insurance solutions enable, disrupt, and automate several key business processes of those insurance companies that provide Workers’ Comp. They speed up claim processing, enable advanced fraud detection, take claim analysis a notch higher, detect and signal possible litigations, and create significant time and cost savings.
To develop a workers’ compensation solution that can do all this efficiently, one should pay utmost attention to the solution’s scalability, flexibility, and use of Artificial Intelligence and Machine Learning. AI and ML will continue to be a growing trend that will greatly influence the future of Workers’ Comp automation.
One more of the future trends that are likely to be a significant influence in some industries (for example, the trucking industry, construction, mining, or some injury-prone industries like air transportation) is the use of iOT that can both provide insights into the circumstances of an accident and reduce the number of accidents.
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