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The Role of Straight-Through Processing in Insurance Efficiency

Jan 10, 2024
Straight-Through Processing

While straight-through processing (STP) isn’t new in the insurance world, it is revolutionizing how we approach underwriting, claims, and policy issuance. Anyone who’s ever applied for insurance or filed a claim knows how long and frustrating the process can be. Policyholders feel like they’re jumping through hoops, from underwriting to every step in between.

This is where STP helps. It automates workflows seamlessly without the need for repetitive, manual rekeying of data. But what is it that makes it so great? Let’s take a look.

Meet Growing Customer Expectations of Immediacy

Let’s face it. We live in a world of instant results. Customers are accustomed to quick and efficient services. And when they don’t get them, they switch to another company.

With STP, insurers can achieve a fully automated claims process. By automating claims and policy issuance, insurers accelerate processes and enhance accuracy, reducing errors that can lead to dissatisfaction. This aligns perfectly with the modern demand for prompt and efficient services.

More Streamlined Insurance Operations

As claims applications increase, insurers must adopt reliable processes to increase efficiency and empower their agents to support end-insured customers. STP streamlines insurance operations, offering connectivity benefits across the ecosystem. Reducing human involvement doesn’t just cut down on errors but also lowers overhead costs. While more complex claims may still require human intervention, essential claims benefit from the speed and efficiency of STP.

Allow for More Focused Customer Attention

Certain insurance claims require more attention and the rest that involve minor injury and minimal payouts can easily be automated using straight-through processing, which means faster processing times.

This frees up the underwriter’s time and attention to focus on more complex claims and helps maintain transparency and consistency throughout the process.

Greater Efficiency and Data-Driven Insights

The efficiency gains extend to faster underwriting and claims processing, with eligible policies approved immediately. STP doesn’t just automate; it provides a treasure trove of data-driven insights, crucial for strategic planning and staying competitive in the marketplace.

Data-Driven Insights

How Does Straight-Through Processing Work?

Now that you better understand the STP process, it’s time to put these best practices into action.

Some aspects of the insurance claims process are far too complicated for the current STP configuration. That’s why it’s important to start small and with the basics.

  1. Data Capture

Data is captured through various electronic channels, including online forms, mobile applications, etc. Customers can directly enter the data, or it can be generated from internal systems.

  1. Data Validation

Once the data is captured, automated validation processes assess accuracy and compliance based on predefined rules. Validation checks may include consistency, data format, and rule-based validations. If errors or inconsistencies arise, the system flags them for resolution or rejection.

  1. Routing and Processing

The transaction is automatically directed to appropriate systems or workflows for further processing after validation. This step involves integrating different systems, such as order management, payment processing, or inventory management, with minimal or no manual intervention.

  1. Exception Handling

Some transactions may necessitate manual intervention. Straight-through processing systems typically have built-in mechanisms to identify exceptions, either resolving them automatically or routing complex cases for human intervention. The goal is to minimize exceptions and keep manual involvement to a minimum.

  1. Data Enrichment

During processing, STP systems access external data sources to enhance transactional data. This may involve retrieving additional customer information, validating addresses, or performing credit checks.

  1. Integration and Reporting

Straight-through processing systems seamlessly integrate with backend systems like customer relationship management (CRM), enterprise resource planning (ERP), or accounting software, and payment data is seamlessly transferred, updating records. Real-time reporting and analytics capabilities further allow you to monitor transactional activity, generate reports, and gain insights for decision-making.

  1. Confirmation and Notification

STP systems generate confirmation messages or notifications following transaction processing to inform relevant parties. These may be sent to customers, business partners, or internal stakeholders, ensuring transparency and real-time transaction status.

Conclusion

While change can be difficult, straight-through processing means a simple business approach. Beyond streamlining daily insurance operations, it promises swift outcomes aligned with customer expectations.

Are you ready to get started with straight-through processing and explore its many benefits?

Connect with our experts today to learn more.

Let’s discuss your project. Connect with us.

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