Straight-Through Life Claims and the Future of Life Insurance Digital Transformation

For life insurers, claims are the ultimate moment of truth. Yet for an industry built on long-term promises, the claims experience remains stubbornly manual, fragmented, and slow. As we move toward 2026, straight-through life claims (STLC) are no longer a transformation ambition. They are a competitive requirement. Carriers that fail to modernize claims operations will struggle with rising costs, dissatisfied policyholders, and regulatory pressure. Those that succeed will unlock faster payouts, lower loss-adjustment expenses, and materially higher trust now that matters most.

Why straight-through life claims matter now

Life claims volumes are rising globally, driven by aging populations and expanding protection coverage. At the same time, policyholder expectations are being shaped by real-time experiences in banking, e-commerce, and health.

Yet most life claims today still involve:

• Manual document intake and verification
• Rule-heavy adjudication workflows
• Human intervention at every decision point

According to McKinsey & Company, claims processing costs can account for up to 30 - 40% of an insurer’s operating expenses, with life claims being among the most operationally intensive due to documentation and compliance requirements.
The opportunity is clear: straight-through processing can reduce claims handling costs by 25 - 40% while improving settlement times by more than 50%.

What “straight-through” really means for life claims

Straight-through life claims is often misunderstood as simple automation. In reality, it is decision automation at scale, where low- and medium-complexity claims move from FNOL to payout without manual touchpoints.

A true STLC model requires:

• Digital-first claim intake across channels
• Automated document understanding and validation
• Intelligent eligibility and coverage checks
• Real-time decisioning with explain ability
• Exception-based human intervention

According to Boston Consulting Group, insurers that successfully deploy end-to-end automated claims can achieve 30 - 50% faster claim resolution and 15 - 25% higher customer satisfaction scores.

The modernization gaps holding carriers back

Despite years of investment, most life insurers remain far from straight-through claims
maturity. The reasons are structural.

1. Legacy cores and fragmented data: Life policy data often sits across multiple core systems, admin platforms, and archives. Without a unified data layer, real-time decisioning is impossible.
2. Document-heavy workflows: Death certificates, medical reports, beneficiary proofs, and policy documents arrive in
   unstructured formats. Traditional OCR systems struggle with accuracy, forcing manual review. IDC estimates that over 80% of insurance data is unstructured, with claims being the largest contributor.
3. Rules-based decision engines: Static rules engines cannot adapt to nuanced claim scenarios, regulatory variations, or fraud signals. They create false positives, unnecessary escalations, and operational drag.
4. Siloed fraud and risk checks:Fraud checks are often bolted on late in the process, increasing cycle time instead of enabling early risk-based routing.

What carriers must modernize by 2026

To enable straight-through life claims at scale, carriers need to modernize across five dimensions.

1. Digital FNOL as the default : Claims intake must shift from forms and emails to API-driven, digital-first journeys. Mobile uploads, guided claim experiences, and real-time validations are now table stakes. Accenture reports that digital FNOL adoption can reduce claim intake time by up to 60%.
2. Cognitive IDP for claims documentation :Modern Intelligent Document Processing (IDP) goes beyond OCR, using AI models to classify, extract, validate, and contextualize documents. Gartner projects that by 2026, over 70% of insurers will rely on AI-based IDP for claims processing, up from less than 20% in 2022.
3. Real-time decision engines : Straight-through claims depend on explainable, auditable decision automation, not black-box AI. Coverage validation, beneficiary checks, exclusions, and thresholds must be evaluated in real time with full traceability.
4. Embedded fraud intelligence : Rather than post-adjudication checks, fraud signals must be embedded early to enable risk-based straight-through routing, fast-tracking clean claims while flagging anomalies. According to the Coalition Against Insurance Fraud, fraud costs insurers over USD 300 billion annually, with life and health claims contributing significantly.
5. Exception-led operating models : Straight-through does not eliminate human involvement, it optimizes it. Claims handlers should focus on exceptions, complex cases, and empathetic engagement, not routine validation.

The 2026 reality: STLC as a growth lever

By 2026, straight-through life claims will no longer be a differentiator; it will be expected.

Carriers that lead will benefit from:

•  Faster payouts that build long-term trust
• Lower operational and claims handling costs
• Higher scalability without proportional headcount growth
• Improved regulatory compliance and audit readiness

More importantly, they will redefine claims from a cost center into a brand and experience
lever.

From processing claims to orchestrating decisions

Straight-through life claims is not about automating faster; it is about deciding smarter. The path to 2026 demands platforms that can orchestrate data, documents, decisions, and humans in real time.
For life insurers, the question is no longer if straight-through claims are achievable, but how quickly they can modernize to make them real.