Benefits of Using Power BI in Insurance Claims

Reasons for ineffective data analysis in the insurance industry

The average insurance company uses several different unconnected programmes that are involved in a single business process (for example, when submitting claims). This results in the industry’s data being spread across different systems, making it difficult to get a complete picture of the company or its sector.  

Even when access to data in multiple systems is available, these data often differ in format, making analysis and informed decision-making challenging. As a result, insurance companies’ responses to client claims may be delayed, resulting in customer loss. 

Thus, later in the article, we will demonstrate how to harness the capabilities of Power BI in insurance claims, not only by enabling users to create advanced reports, charts and analyses, but also by supporting customer communication and reducing manual work. 

Using Power BI in an insurance company

Users can use Power BI to monitor key performance indicators (KPIs), track claims-related data and conduct predictive analyses to detect potential fraud cases.

Marketing activities

Insurance companies can also use this platform to create customer profiles and segmentation, forming the basis for targeted marketing campaigns.

Trends and patterns

Furthermore, Power BI can streamline claims processing and management, effectively supporting insurance companies in improving customer experience, reducing costs and optimising operations. This is possible thanks to the fact that Power BI provides comprehensive insights into data, enabling the identification of trends and patterns.

Personalised Reports

Moreover, Power BI allows the creation of personalised reports and dashboards, enabling insurance companies to analyse data in detail to draw the necessary conclusions. Consequently, they can use Power BI to enhance decision-making and make better-informed business choices.

Benefits of Power BI for an insurance company

Power BI is a versatile tool that contributes to improving the insurance sector in various aspects:

• Customer recognition enhancement: With Power BI, insurance companies can delve into the needs and preferences of customers, allowing for an effective improvement in their experience;
• Cost reduction: Power BI helps identify potential areas of savings, contributing to efficient budget management;
• Operational optimisation: Power BI supports operational efficiency improvements by identifying process weaknesses and implementing enhancements, ultimately leading to overall workforce efficiency;
• Enhanced precision in processing insurance claims: Accurate claims processing is crucial for timely and correct compensation. Advanced analytical tools like Power BI enable precise analysis of claim costs and trends, resulting in more efficient operational oversight. This often leads to cost reductions and savings then passed on to customers. And as we all know, customer trust in insurance providers is critical to maintaining loyalty.

Challenges faced by insurance companies in claims processing

In the claims processing journey, insurers encounter various difficulties, including:

• Regulatory compliance: Insurance companies must comply with complex regulations, including data protection, privacy and transparency, requiring significant legal resources;
• Fraudulent claims: Detecting and preventing fraudulent claims involves costs and requires robust control systems and complex verification rules for the processed information;
• Customer experience: Customers are typically dissatisfied with the claims filing process in their insurance companies, starting from the unfortunate event itself. Lengthy resolution times and complex formalities are no help to customers under challenging circumstances, and can create problems and thus effectively discourage them;
• Data quality: Incomplete or incorrect data, policy discrepancies and inconsistent formats from different sources can disrupt claims assessment and settlement;
• Lack of resources: During periods of high demand, such as after a weather catastrophe, insurance companies may need more financial means and resources, which affects the efficiency of claims processing and resolution. This, in turn, can lead to delays and frustration for policyholders;
• Data management: Processing insurance claims involves handling large amounts of diverse, often unorganised data. Lack of proper organisation and data processing can lead to delays, errors and higher operational expenses during the assessment and settlement of claims.

How Power BI facilitates claims processing

By incorporating Power BI into the claims processing workflow, support is provided in the following tasks:

• Data analysis: Power BI aids in identifying and removing constraints and inefficiencies in the claims process by analysing claims data and metadata associated with the claims process;
• Real-time reporting: The program provides real-time reporting functionality for management, allowing the monitoring of the claims process, identification of delays and immediate action;
• Predictive analytics: Power BI utilises predictive analytics to forecast trends and potentially prevent delays in the claims process, enabling organisations to apply a preventive approach to potential issues;
• Identification of trends and patterns: The program assists insurers in determining which types of claims are more susceptible to fraud or require the most processing time. This information can then be used to develop focused strategies that enhance claims processing efficiency and reduce the risk of fraud;
• Creation of KPI dashboards: With Power BI, tracking key performance indicators (KPIs) in claims processing is possible. This is crucial for improving efficiency, accuracy and effectiveness, allowing organisations to make informed decisions and enhance the claims-handling process.

Monitoring Claims Processing Metrics

Let’s discuss some essential KPIs that are worth considering and analysing in the context of claims processing:

Claim amount analysis

This metric provides significant information regarding the frequency and weight of claims. Consequently, management can effectively assess risks and make data-driven decisions related to insurance pricing and guidelines. Additionally, it aids in identifying potential fraud cases or irregular claims, enabling the company to minimise losses and maintain financial stability.

Paid vs. denied claims

Insurance companies monitor the metric of paid pay-outs compared to denied claims, as it provides insights into their financial liquidity and risk management practices. Assessing this metric allows the company to evaluate the effectiveness of its insurance process and the accuracy of claims assessment. A balanced ratio of pay-outs to denied claims indicates a proper claims management system, contributing to sustainable business growth.

Average claim amount by policy type

This indicator helps identify trends in claim amounts for different policy types, allowing insurance companies to allocate resources efficiently and determine appropriate premiums.

Average claim resolution time

This is a crucial metric for insurance providers, directly impacting customer retention and satisfaction. Providers should aim for the shortest possible resolution time to build trust among policyholders. A lower measurement also indicates efficiency in claims processing.

Average Cost per Claim

A metric providing a clear picture of the financial impact of each processed claim. Tracking statistics helps insurance providers and managers better understand when claims become too costly, assess the effectiveness of their insurance procedures and make decisions regarding premium rates and policy details. Additionally, it aids in establishing reasonable reserves, controlling risk and ultimately ensuring the company remains profitable in the long term.

Loss factor

The loss ratio compares the total amount of paid claims with the total premiums collected within a specific period. This assessment evaluates an insurance company’s profitability and risk exposure, providing insights into its overall performance and financial stability.

Claims Settlement factor

The claims settlement ratio is a vital metric for insurance companies, as it compares the number of settled claims to the total number of claims reported. A higher claims settlement ratio signifies the company’s ability to meet contractual obligations to policyholders, promoting customer trust and confidence.

Real benefits of implementing Power BI in insurance claims

Among the benefits that insurance companies derive from investing in and implementing analytical support provided by Power BI are:

Fraud reduction

Power BI can serve as a support for insurance companies in identifying and reducing fraud. For example, Power BI can detect suspicious patterns in claims or flag claims that appear to be potentially fraudulent.

Improved customer communication

Analysing claims using Power BI enables agents to get an overview of claims and their status. This helps identify process constraints and allows agents to make corrections. Such an approach improves the customer experience, increasing customer loyalty to a company that handles their claims efficiently.

Increased transparency

Power BI enhances transparency in the insurance claims process by enabling real-time monitoring and analysis at every stage of the claims lifecycle. The program improves accuracy, reduces fraud and builds trust by providing comprehensive visibility throughout the entire claims lifecycle. This allows for informed decision-making and compliance with regulations.

Reduced manual work

With Power BI, information can be centralised, eliminating many manual procedures. This minimises errors, increases data availability and enables real-time analysis, increasing operational efficiency and customer satisfaction.

Report generation and analysis

Insurance companies can use Power BI to create reports and analyses that support identifying trends in claims data,and assist in making better decisions regarding claims processing.

Power BI in the daily work of insurers

As demonstrated, Power BI enables insurance companies to use data analysis and visualisation directly in their daily systems, allowing them to work to their advantage with data collected in various formats and from multiple systems.

The above article provides only a modest overview of the numerous benefits this tool can bring in the context of claims processing. Power BI assists in monitoring, tracking and analysing data related to insurance claims, providing a complete view of claims patterns, supporting fraud detection, effectively managing claims costs and enhancing decision-making processes.