Why Claim Automation Is Not in Your Best Interest

In today’s rapidly evolving digital world, automation is becoming more prevalent across many industries, including insurance. Health and life insurance companies increasingly rely on automated systems to process claims. While this may seem like a step toward efficiency, the reality is that claim automation often works against policyholders; it can even result in the denial of claims in violation of California law.

For individuals seeking fair treatment from their insurers, the rise of automated decision-making in claims processing can have serious consequences. Read on as we explore this timely and important issue in greater detail. If your health or life insurance claim has been unfairly denied, contact Gianelli & Morris to discuss your case with an experienced and successful California insurance bad faith lawyer.

The Problem with Claim Automation

Automation in the insurance industry involves using algorithms and artificial intelligence (AI) to streamline various processes, including the review and approval of claims. These systems are designed to minimize human involvement, ostensibly to speed up the claims process, reduce administrative costs, and increase accuracy. However, automation often prioritizes the interests of insurance companies over those of policyholders, leading to problematic denials and delays.

Here are some key issues with relying on automation for insurance claims:

1. Lack of Nuance and Context

Automated systems are driven by pre-programmed rules and algorithms that lack the ability to consider the unique circumstances of each case. Health and life insurance claims are often complex, involving detailed medical records, individualized treatment plans, and nuanced policy language. Automated systems are not equipped to assess these factors adequately, leading to the denial of legitimate claims simply because they don’t fit a pre-defined mold.

For example, if an algorithm flags a treatment as “unnecessary” based solely on general criteria, it may disregard the fact that the treatment is critical for a specific patient’s recovery. In these cases, the system’s rigidity works against policyholders, who are left without the personalized attention their claims deserve, and that California law requires.

2. Increased Likelihood of Errors

While automation is supposed to reduce errors, it often creates new ones. Automated claims processing systems rely on data input, and any errors in that data can result in incorrect claim decisions. For instance, if a coding mistake occurs in a patient’s medical record or if an algorithm misinterprets policy language, the system may wrongfully deny a valid claim. The automated system may not recognize the error, and the policyholder could face an uphill battle to reverse the decision.

Human oversight is essential to catching such errors, but automated processes often eliminate meaningful human review until after a denial has occurred. By that point, the policyholder must go through the lengthy and frustrating process of appealing the decision.

3. Bias in Decision-Making

Algorithms are not free from bias. In fact, they can perpetuate and even exacerbate existing biases within the insurance industry. Automation systems are often designed to minimize the insurer’s financial risk, meaning they may be programmed to deny claims that fall within gray areas of policy coverage. Insurers may develop or utilize algorithms that are designed to flag claims as high-risk or unnecessary to reduce payout rates, even if the claims are legitimate.

Moreover, the lack of transparency in automated systems makes it difficult to know whether a claim denial is based on sound reasoning or biased algorithms. Policyholders are often left without clear explanations, which complicates their ability to challenge wrongful denials.

4. Delayed Responses and Appeals

Automation is marketed as a way to expedite claims, but it can have the opposite effect in many cases. When a claim is automatically denied, policyholders must often file an appeal, which adds significant time to the process. Automated systems can also generate vague or incomplete denial letters, forcing policyholders to seek clarification or additional information. This back-and-forth can delay necessary medical treatments for health insurance claimants or deprive life insurance beneficiaries of timely financial support.

5. Reduced Accountability

One of the biggest concerns with claim automation is the erosion of accountability. When an insurance company denies a claim based on the output of an automated system, it becomes difficult for policyholders to hold the company responsible. The decision-making process is obscured by layers of technology, and it can be nearly impossible to pinpoint who or what is responsible for the denial.

In contrast, when claims are reviewed by experienced professionals, there is a level of accountability and responsibility that can be traced. Policyholders can challenge wrongful denials and hold insurers accountable for bad faith practices when human decision-makers are involved.

Protecting Your Rights as a Policyholder

As a policyholder, it’s important to understand that automation may not always work in your favor. Insurers are businesses focused on maximizing profits, and automated systems are often designed with that goal in mind. If your health or life insurance claim has been wrongfully denied, you may be the victim of a bad faith denial based on an automated process that failed to properly evaluate your claim.

At Gianelli & Morris, we represent policyholders whose claims have been unfairly denied due to insurance company bad faith. Our experienced attorneys are committed to ensuring that insurance companies honor their obligations and treat claimants fairly. If your claim has been denied by an automated system, we can help you fight back. Our team will thoroughly review the circumstances of your case, challenge the insurer’s decision, and hold them accountable for their bad faith practices.

Contact Gianelli & Morris to fight Bad Faith Insurance Claims in California

While automation offers some benefits in the insurance industry, it often falls short when it comes to providing policyholders with the fair and individualized treatment they deserve. If you believe your claim was wrongfully denied, consult with an attorney experienced in handling bad faith insurance cases.

At Gianelli & Morris, we are here to advocate for your rights and ensure that insurance companies are held responsible when they fail to act in good faith. Contact us today at 213-489-1600 for a free consultation to discuss your case.