What role will AI play in the automation of the complaints process in insurance companies?
Insurance companies face a challenge – although the number of insurance complaints on the Polish market has not shown a clear upward trend in recent years, demanding regulations and technological advances indicate that traditional management methods are becoming insufficient. Customers expect quick responses, while non-compliance with regulations can lead to serious consequences. Is there a way to improve the quality of service and meet legal requirements at the same time? Artificial intelligence (AI) offers break through solutions – by automating complaints processes, it helps insurers operate more efficiently, build customer trust and gain a competitive advantage.
Why is the number of complaints in insurance companies so high?
Despite significant investment in the development of customer service, the number of complaints in insurance companies remains relatively stable at a consistently high level:
According to the Annual Report 2023 Polish Insurance Association (PIU), complaints filed in the insurance sector most often relate to, among others:
- an incomplete or delayed response to a complaint;
- incorrect determination, refusal of reimbursement or unjustified premium collection;
- the malfunctioning of information and communication systems provided to customers or insurance intermediaries.
It must be concluded that such situation is due to several important factors:
- Customer awareness: customers are becoming increasingly aware of their rights and complaints procedures, which translates into higher expectations regarding speed and efficiency of service. When standards are not met, customers are more likely to file a complaint;
- Increase in the number of purchased policies: an increasing number of policies sold naturally leads to a higher number of complaints (a larger number of insurance products generates more customer interactions and potential problems that result in complaints);
- Regulatory actions: the number of complaints may also be a result of changes in legal regulations. For example, the implementation of the Insurance Distribution Directive (IDD) has increased transparency and customer protection requirements, encouraging them to report irregularities.
How do regulations impact the complaints process?
The insurance sector regularly faces regulatory challenges. The Regulation of the Minister of Finance of 22 August 2023 imposed an obligation on insurance and reinsurance companies to report detailed complaint data to the Financial Supervision Authority (FSA).
This requirement is intended to improve supervision of the insurance market and enhance transparency in customer service. Insurance companies are obliged to provide information as part of additional financial and statistical reports, ensuring more precise monitoring of complaint processes and potential issues related to complaints handling.
In practice, insurers must provide detailed data on each complaint, including information on:
- Reserves for complaints: In addition to the complaint itself, companies report on what part of the claim was accepted and what part was rejected. This means that the reporting process requires a precise breakdown of the financial aspects of each case.
- Detailed breakdown of complaint topics: In the case of a complaint involving several issues, each issue must be reported separately. This marks the end of the practice of reporting multi-threaded complaints as a single lead report. Each complaint topic is now individually recorded and included in a report.
In addition, complaints related to timeliness also require precise reporting:
- Exceeding statutory deadlines: If the insurance company fails to meet the statutory deadlines for the claim settlement, the customer will be entitled to statutory interest. In this case, the company is forced to accurately report delays and associated costs.
- Delays in Processing: Even if the statutory deadlines are not exceeded, the customer may file a complaint when they believe the process is taking too long. Although interest will not be due, the complaints adjuster is required to register such a complaint and estimate a reserve.
In such cases, insurance companies are forced to create estimated reserves, often without knowing the exact final amount. In order to comply with regulatory requirements, they can use average reserve values, ensuring reporting compliance.
How do regulatory changes impact the insurance industry?
In the insurance industry, new regulations impact the complaints process at multiple levels:
- Insurance companies: increased administrative burden. Insurance companies have to collect and analyse more detailed data, resulting in additional administrative work. IT systems have to be adjusted (where possible) and new reporting procedures must be implemented.
- Regulator: improved oversight and monitoring. Thanks to the detailed reports, the Financial Supervisory Authority has a better insight into how insurance companies handle complaints. Precise reporting enables the regulator to monitor timeliness and quality of service more effectively, which in turn aims to raise industry standards.
- Technology: the need for technological investment. In response to increasing regulatory demands and customer expectations, companies need to invest in the automation of complaint processes and in more advanced data analysis systems. While such investments involve additional costs, they ultimately have a positive impact on the quality and speed of service.
Automation of the complaints process in insurance
An increasing number of insurance companies recognise the value that artificial intelligence (AI) brings to process automation. According to the EY-Parthenon Insurance GenAI Survey, up to 84% of insurers that have not yet implemented AI teams plan to do so by 2025. Moreover, 82% of companies anticipate revenue increases of over 10% due to AI implementation in key areas such as sales, underwriting or complaints handling.
Why not use the potential of artificial intelligence to automate the complaints process?
The presented framework illustrates how artificial intelligence can replace manual handling at an early stage of the process, while enabling certain tasks of the complaints adjuster to be carried out entirely digitally, without their direct involvement. Key applications of AI include:
Email classification and data extraction
Artificial intelligence, using natural language processing (NLP) and optical character recognition (OCR) technologies, can automate the analysis of both the content of complaint emails and attachments.
- Email content analysis: AI automatically identifies key information within the email content, such as the policy number, customer details, type of complaint and other relevant details. This eliminates the need for manual processing and enables faster assignment of the complaint to the appropriate departments.
- Classification of the request: based on the recognised information, artificial intelligence can automatically assign the request to the appropriate business line or complaint category, e.g. concerning the amount of compensation, the timeliness of complaint processing or the quality of service.
- Data extraction from attachments: thanks to OCR technology, advanced AI mechanisms can generate, translate and interpret natural language. Finally, the data extracted from attached documents, such as forms, invoices or photos, is automatically entered into the system.
- Priority assignment: artificial intelligence can analyse the content of complaints to automatically prioritise requests based on their nature.
Multi-threaded complaints
AI’s capabilities also include the management of multi-threaded complaints, allowing for the automatic breakdown of requests into individual issues, each classified and recorded separately. This ensures that, in the case of reporting obligations, each issue can be accurately extracted and reported according to the obligations imposed by the regulator.
Customer interaction
AI can significantly improve the customer interaction process in a complaint by automating interactions on multiple levels:
- Reminders for missing documents: in the case of missing or incomplete information, AI can automatically send reminders requesting the necessary documents. Thus relieving the complaints handler of manual and often time-consuming handling;
- Proactive communication: AI can operate proactively, informing customers of the expected complaint resolution time, sending reminders of upcoming deadlines or providing additional explanations regarding procedural requirements;
- Personalised responses: AI systems can generate responses tailored to the customer’s specific request and situation;
- Multi-channel communication: AI-powered systems can be integrated across multiple communication channels such as email, SMS or WhatsApp, allowing the customer to receive updates through their preferred channel and at a time convenient to them.
Automation of reporting to the FSA
The automation of reporting to the Financial Supervision Authority simplifies complex processes:
- AI collects and analyses data in real time, enabling the creation of detailed reports on complaints, e.g. number of requests, processing time, accepted and rejected claims;
- Automated classification of requests according to FSA requirements ensures that every complaint, even a multi-threaded one, is reported in accordance with the regulator’s requirements. The systems provide detail and precision in reports;
- Automated transmission of reports to the FSA within the required deadlines eliminates delays and minimises the risk of errors, ensuring that all data is provided in compliance with regulations.
Summary
AI in complaints is not just an automation tool, but a strategic support that helps insurance companies meet high standards of service, regulatory compliance and gain a competitive advantage in the market. It changes the way companies can manage data, streamlines internal processes and, most importantly, builds customer trust, which in this industry is fundamental to success. Contact us and speak to an insurance industry expert to learn more about how AI can enhance your business processes.
Sources:
- Regulation of the Minister of Finance of 22 August 2023 on supplementary financial and statistical reports of insurance and reinsurance companies
- PIU Polish Insurance Association, Insurance in numbers 2023, insurance market in Poland
- PIU Polish Insurance Association, Annual Report 2023
- Financial Ombudsman, Report of the Financial Ombudsman on the activities and comments on the state of compliance with the law and interests of customers of financial market entities for the year 2023
- Gazeta Ubezpieczeniowa, Subjective about rising customer expectations and clarifying regulation
- EY Parthenon, Generative AI in insurance, May 2024
- HubSpot, State of Service Trends Report, 2024 Annual.
