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⚖️ '''Claims adjudication''' is the decision-making process through which an [[Definition:Insurance carrier | insurance carrier]] evaluates a submitted [[Definition:Claim | claim]], determines whether the reported loss falls within the scope of the [[Definition:Insurance policy | policy]], and resolves how much, if anything, should be paid. It is the analytical core of [[Definition:Claims handling | claims handling]] — the step where coverage language, factual evidence, and applicable law converge to produce a binding outcome. While the term is especially prevalent in [[Definition:Health insurance | health insurance]], where it describes the systematic review of medical claims against [[Definition:Benefit plan | benefit plan]] rules, it applies broadly across all [[Definition:Line of business | lines of business]].

🔍 During adjudication, the [[Definition:Claims adjuster | adjuster]] or automated system examines several key elements: whether the [[Definition:Insurance policy | policy]] was in force at the time of loss, whether the event falls within a covered [[Definition:Peril | peril]], whether any [[Definition:Exclusion | exclusions]] or [[Definition:Condition | conditions]] apply, and whether the [[Definition:Policyholder | policyholder]] has met obligations such as timely notification and cooperation. The adjudicator then calculates the appropriate payment by factoring in [[Definition:Deductible | deductibles]], [[Definition:Coinsurance | coinsurance]] splits, [[Definition:Policy limit | policy limits]], and [[Definition:Subrogation | subrogation]] potential. In high-volume environments such as health and [[Definition:Auto insurance | auto insurance]], rules-based engines handle much of this work through [[Definition:Straight-through processing (STP) | straight-through processing]], flagging only exception cases for human review. More complex [[Definition:Commercial insurance | commercial]] or [[Definition:Specialty insurance | specialty]] claims often require manual adjudication supported by expert reports, legal opinions, and negotiation.

💡 The rigor and consistency of adjudication directly shape a carrier's financial outcomes and regulatory standing. Overly lenient adjudication inflates [[Definition:Loss ratio (L/R) | loss ratios]] and erodes [[Definition:Underwriting profit | underwriting margins]], while excessively aggressive denial practices attract [[Definition:Insurance regulator | regulatory]] scrutiny, [[Definition:Bad faith | bad faith]] litigation, and reputational harm. Striking the right balance requires clear adjudication guidelines, robust training, and increasingly, [[Definition:Artificial intelligence (AI) | AI]]-assisted decision support that surfaces relevant precedents and flags anomalies. Carriers that invest in adjudication quality often see measurable improvements in [[Definition:Claims leakage | claims leakage]] reduction and [[Definition:Customer satisfaction | customer satisfaction]], making it one of the highest-return areas for operational improvement.

'''Related concepts'''
{{Div col|colwidth=20em}}
* [[Definition:Claims handling]]
* [[Definition:Claims adjuster]]
* [[Definition:Straight-through processing (STP)]]
* [[Definition:Exclusion]]
* [[Definition:Subrogation]]
* [[Definition:Claims leakage]]
{{Div col end}}

Definition:Claims adjudication - Revision history

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