How Claims Severity Prediction Will Boost Insurance in 2025

Claims severity prediction is a method used by insurance companies to estimate how much a claim will cost. In simple terms, it helps insurers guess the size of a payout before fully investigating a claim.

Going a bit deeper, claims severity prediction plays an important role in managing risks and setting premiums. When an insurer can predict whether a claim will be small or large, they can price policies more fairly and plan their finances better. This prediction is based on analyzing past claims data, type of loss, and other factors like the claimant's history or location.

It fits into the bigger picture by helping companies stay financially healthy while serving customers efficiently.

For those wanting a more technical look, claims severity prediction uses machine learning models and statistical methods. These analyze patterns and details such as claim type, repair costs, medical expenses, and more. For example, a model might learn from thousands of past injury claims that accidents involving certain vehicle types or circumstances often lead to higher costs.

This level of accuracy depends on clean, timely data collection and quick updates during the claims process.

That's where technology like Strada's voice AI comes in. Strada boosts claims severity prediction by automating how claims are taken in, capturing relevant data fast from the phone calls automatically, and triggering real-time follow-ups. This means insurers get better quality data and can update predictions as new details come in.

Here are some practical reasons why claims severity prediction matters:

• Helps set premiums that reflect true risk

• Improves financial forecasting and reserves

• Allows faster case prioritization for high-cost claims

In the real world, a customer calls to report damage from a car accident. Using claims severity prediction, the insurer can quickly estimate if this case will need a small payout or a costly investigation.

If Strada is part of the workflow, the call is handled automatically, details are recorded accurately, and follow-ups happen without delay, improving overall accuracy and speed.