The American Insurance Association has released its first comprehensive analysis of its insurance claim processing system, and the findings are devastating for insurers.
In the past, the organization has touted its automated process as the perfect solution to the complex claims process.
However, the report finds that it does not handle claims at the same level as it handles claims in traditional claims processing systems.
While the USTAB claims process was designed to handle complex claims and complex cases, it is not capable of handling all the claims it handles in the typical claim processing process.
In fact, the USA’s report notes that there are only 10 million claims processed per year in the US, with claims processing costs exceeding $1 billion.
In contrast, the company said that it processed more than 10 billion claims in 2017 alone.
The USA said the findings show that while the US claims processing system is a better choice, the process cannot handle all the claim types that it processes.
“The American claims process is not designed to meet all claims and types of claims that it handles, including claims involving injuries and property damage,” the report states.
“This means that even when a USA claim processor can process claims, it may not be able to handle all claims.”
The report also found that the USAs claims processing process is much more expensive than traditional claims processes, costing $1.4 billion in 2017 to process a single claim.
The report states that, while the average processing time for a claim is less than a day, processing time can be up to two years longer than it should be.
In addition, the system requires that claims be processed by the same claim handling software that the insurance company uses.
“It may take up to three years to process all claims that the claim processing software has processed for an insurance company, compared to two to three months for traditional claims,” the USAS stated.
The results also showed that the costs associated with claims were not comparable across the insurance industry.
“Despite the cost of processing claims and managing the claims process, the average cost of a claim processed by a USAA claims processing company was only $8,500, compared with $31,200 for a traditional claims processor,” the American Insurance Foundation stated.
“As a result, claims processing companies spend more than twice as much per claim processed as traditional claims processors, on average.
In 2018, USAA reported that the average number of claims processed by its claims processing unit was 2.1 million, and a typical claims processor processed over 16 million claims.”
While USAA is facing criticism for its handling of claims, the American Association of Insurance Commissioners is calling for reforms that would better align its claim processing to the needs of the insurance companies and consumers.
“While we support the USSAB, we also strongly believe that any process must be designed to maximize consumer and insurance benefits and minimize the burden to insurance companies,” the AIAAC said in a statement.
USAA has not responded to CNBC’s request for comment.”
For more information on the changes we want to see in the process, see our AIAA Insurance Process Reform Guide,” the statement continued.
USAA has not responded to CNBC’s request for comment.