Insurance claim processing is a big business and effects more than just the health care industry. Interestingly enough the life insurance industry had a relatively simple claims processing program. But over the past two decades this has changed dramatically. Technology and regulations have placed new demands on data and the advent of Long Term Care (LTC) and Disability Income (DI) insurance has formed a hybrid. These new insurance claims increased the volume of submissions and brought new systems demands and costs.
More seniors than were expected filed claims and fewer policies lapsed. This caused the increase in insurance claims processing. More claims submitted led to more claims processing which led to drastic increases in insurance processing costs. These costs were passed on in the form of higher premiums, which helped to cause a slump in sales. In July 2004 Business Week reported that this rise in premiums were manifest in '5 to 10 percent increases on average, for new individual (LTC) policies'.
The life insurance industry needed to find a way to modernize insurance processing and to increase profitability. Streamlining the process helped to reduce costs. Many life and health insurers spend about 8 percent of their new project budgets on improving claims processing with approximately $503 million spent industry wide in 2005.
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