Claims processing should balance improving efficiency and risk mitigation

Ask AI · How can the insurance industry balance claims efficiency and risk control?

The continuous upgrade of insurance claims services centers on strengthening technological capabilities and establishing the right service philosophy, finding a balance between speed and stability, data and security, intelligence and warmth.

The core value of insurance lies in loss compensation and risk coverage, and claims services are the most direct and concrete expression of this value. Recently, many insurance companies have disclosed their 2025 claims service annual reports, revealing profound industry changes.

Overall, the insurance claims service shows three major trends:

First, small-amount claims are moving online and becoming automated. Terms like “online reporting,” “remote investigation,” and “direct payment without advance deposit” are frequently mentioned in many companies’ annual reports, fully reflecting the effectiveness of the insurance industry’s digital and intelligent transformation—leveraging technology to handle a large volume of high-frequency, small, standardized risk incidents through intelligent systems and preset claims rules. The processes are more rapid, paperless, and standardized, which also helps control claims costs.

Second, large-scale accident payouts are becoming centralized and faster, especially for natural disasters with wide impact and destructive power. Initiating emergency response mechanisms for major disasters promptly has become industry standard. Most insurers mobilize claims resources across regions to disaster zones. Facing challenges like communication disruptions and transportation blockages, they proactively adopt simplified proof requirements, advance payments, and centralized disbursements to ensure that compensation reaches affected customers as quickly as possible.

Third, proactive and seamless social security payments, especially for inclusive health insurance products, are being promoted. Mechanisms such as dedicated channels for critical illness payouts, creating exclusive customer service groups, and implementing direct payment without advance deposit reduce customer effort and waiting time. Some leading companies, supported by data platforms, actively identify insured clients at risk, providing seamless claims services without application, documentation, or waiting. They also extend services proactively, helping clients identify other policy benefits that may be triggered, such as premium waivers, truly realizing “benefits for the right people.”

The transformation and enhancement of claims services reflect two key drivers of high-quality development in the insurance industry. First, solid support from new technological empowerment. Technologies like large models, image recognition, biometric identification, drones, IoT, and blockchain enable the industry to shed traditional passive, manual, paper-based claims processes and shift to proactive, automated, seamless models. Many companies are continuously improving and iterating intelligent claims systems to achieve automatic classification and pre-approval of claims, automatic determination of loss causes and extent, and intelligent fraud detection. These systems can also automatically generate detailed claims explanations, improving communication with clients and reducing disputes. The application of these technologies significantly shortens claims processing times and effectively reduces costs.

Second, strong guidance from new development concepts. The industry’s high regard for claims service experience reflects a shift from a business-centered “scale-driven” model to a customer-centered “value-driven” approach. On one hand, the industry continuously optimizes claims processes, enhances transparency, and effectively protects consumer rights, making “good service” a core competitive advantage. On the other hand, claims services are deeply embedded in scenarios like health, elderly care, and disaster prevention, supporting real economy development, participating in social governance, and better demonstrating insurance’s functions and responsibilities in the process of supporting modernization of governance systems and capabilities.

However, new trends also hide challenges. For example, the contradiction between customer experience and risk control. Moral hazard and fraud are unavoidable topics for high-quality development in insurance. Overly complicated claims processes and layered reviews may sacrifice customer experience; but emphasizing “speed,” “simplicity,” and “ease” can easily relax review standards and trigger moral risks. Similarly, the conflict between data demand and privacy security arises. Fully leveraging digital intelligence requires large data foundations, especially collecting comprehensive information about clients and risk carriers, which introduces new challenges in data boundaries, usage scope, and security protections.

In view of this, the continuous upgrade of insurance claims services must focus on strengthening technological capabilities and establishing the right service philosophy, finding a sustainable balance between speed and stability, data and security, intelligence and warmth.

Technology must be genuinely regarded as a tool to improve efficiency and risk management levels. Insurance companies should deepen their understanding of clients and risks, solidify technological foundations, improve algorithm models, and establish sound risk control systems, integrating efficiency improvements with risk mitigation. Respect clients’ right to be informed and to choose, adhere to principles of “minimum necessary, explicit consent, and purpose limitation,” clarify data collection lists and retention periods, and actively adopt privacy computing, data masking, and access control technologies. Under the premise of protecting privacy, support joint risk control and precise services, and clearly and promptly communicate claims progress, required materials, and reasons for denial to clients, safeguarding their rights. Based on this, balance technological development with human care, allowing platforms and models to handle rule-based, repetitive tasks, thereby improving overall efficiency.

(Author: Suo Lingyan, Vice Dean and Professor at Peking University School of Economics. Source: Economic Daily)