But before we get to the how, let’s clear up the what. Specifically:

What is a claims processing system and why does it matter?

We’ll also answer:

• What is the meaning of claim processing?

• What does a claims processor actually do?
• And how does technology help?

Along the way, we’ll touch on claims technology innovations that are changing the game (and saving insurers millions). Let’s go.

Claims processing is the set of actions an insurance company takes to review, evaluate, and resolve a policyholder’s claim. It’s how insurers decide whether a loss is covered and how much they’ll pay.

If someone files a claim after a car crash, a medical procedure, or a house fire, the insurer needs to confirm the details, verify coverage, and determine the right payout (if any). That entire journey‌ — ‌from first notice to final payment‌ — ‌is claims processing in action.

So, what is claims processing in insurance? 

It’s the operational workflow that ensures every claim is handled accurately, fairly, and within regulatory guidelines. Good claims processing protects both the insurer and the customer. Bad processing? That’s how you lose money and loyalty.

There are many types of claims in insurance: auto, health, property, disability, life, and more. Each one follows a slightly different path, but the core process stays the same: intake, verification, investigation, evaluation, and settlement. The goal is always the same: make the right call, fast.

As we mentioned above, the claims processing steps may look different across various lines of insurance, but the core process remains the same:

1. 1. First Notice of Loss (FNOL): This is when the customer reports the event. If this goes poorly, the entire claims process can unravel fast. (FNOL optimization is a huge win for efficiency‌, and ‌EIS helps here big time.)
   2. Claim intake and validation: Verify that the policy is active, the coverage applies, and that the reported loss is legitimate.
   3. Investigation: Adjusters dig into the details: Was the damage accidental? Is it covered? Are there signs of fraud?
   4. Evaluation: Quantify the loss using damage estimates, medical bills, or market value of stolen/damaged property.
   5. Claim settlement: This is the actual decision of whether an insurer will approve, deny, or settle a claim for a negotiated amount.
   6. Payout or denial communication: Hopefully, with a side of empathy and a clear, transparent breakdown of the final decision.

Which brings us to…

What is claim settlement in insurance?

It’s the moment the insurer issues a payment, or not. It’s the endpoint of the claims processing cycle, and the part customers care about most.

You can think of claims processors, whether human or machine, as the braun and brain behind an insurer’s claims operations. They’re working constantly through all the claims processing steps to:

A claims processor (or claims adjustor) is part investigator, part data wrangler, part customer service rep. With legacy systems, they also often have to act as part magician, trying to work miracles with outdated tools.

Today’s leading claims adjusters use automation to reduce human error, streamline workflows, and focus human skills where they’re most needed.

Now we’re at the heart of it.

A claims processing system is the tech backbone that manages the entire lifecycle of an insurance claim: from FNOL to settlement and reporting.

Modern claims processing systems:

• Automate repetitive tasks
• Integrate real-time data from multiple sources
• Reduce human error by reducing manual data entry
• Use AI/ML for fraud detection, damage estimation, and routing
• Connect with customer portals for self-service
• Generate audit trails and insights

Insurance claims processing steps are hardwired into the system, making processes consistent and traceable. Instead of juggling spreadsheets or toggling between siloed systems, insurers get a single platform that handles everything, and policyholders get the transparency and quick customer service they crave.

Let’s imagine this with an insurance claim example: Imagine a customer files a car accident claim via their mobile app. The system instantly verifies coverage, routes the case to an adjuster, initiates a damage estimate via image recognition, and sends status updates to the claimant all the way through settlement. No phone calls. No paper trails. Just action and results.

With EIS ClaimCore®and ClaimSmartTM, this isn’t theoretical. It’s already happening. EIS powers automation, personalization, and straight-through processing at scale.

A modern claims processing system transforms more than claims: it transforms the entire insurer-customer relationship. It reduces costs, catches fraud, prevents claims leakage, and improves loyalty.

And while legacy systems can technically “process” claims, they weren’t built for today’s expectations. Or tomorrow’s.

Want to learn how you can simplify claims and strengthen customer trust?

Learn more about claims processing and claims management with ClaimCore from EIS OneSuite.