Bank Statement Extraction

The Ultimate Guide to Utilizing Bank Statements in Insurance Data Extraction

Automated bank statement verification in insurance using OCR and ML improves data extraction while enhancing accuracy and efficiency. Read the blog to learn how Docsumo simplifies the process, ensuring consistent and reliable verification.

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The Ultimate Guide to Utilizing Bank Statements in Insurance Data Extraction

Insurance teams handle large volumes of bank statements daily, meticulously reviewing each to assess policyholders and verify claims. But, manually doing this verification takes a lot of time, and sometimes mistakes slip through.

Did you know that typing in data by hand can lead to errors about 1% of the time for every keystroke? That might sound like a little, but it adds up. That's where automating bank statement checks becomes necessary. It helps insurance teams do their jobs faster with fewer mistakes. They can process claims with less hiccups and keep customers happy.

This article discusses the challenges insurance teams face with manual bank statement handling and explores how automation revolutionizes bank statement verification in the insurance industry.

What is bank statement verification?

Bank statement verification is a process where organizations confirm the validity of financial information individuals or entities provide. It ensures the authenticity of the financial data presented.

The process involves reviewing transactions, balances, and other details on a bank statement. 

Bank statement verification is essential for various purposes, such as loan applications, auditing, detecting fraud, and ensuring compliance with financial regulations. It helps establish trust and confidence in the financial integrity of the account holder or entity.

Why is bank statement verification essential in the insurance industry?

Bank statement verification is essential for assessing the financial stability of potential policyholders and determining appropriate insurance coverage. Insurers analyze spending habits to gauge risk levels, favoring cautious spenders over those with irregular income or significant debt. Insurers make informed decisions, mitigate risks, and ensure sound underwriting practices by scrutinizing bank statements.

Here are some use cases of bank statement verification:

Assessing financial stability

Insurers verify bank statements to ensure applicants can afford premiums and potential claims.

Risk assessment

Bank statement verification helps check the risk of policyholder default or fraudulent claims.

Setting premiums

Bank statements guide insurers in setting appropriate premiums based on income.

Underwriting decisions

Insurers use bank statement data to determine policy terms like coverage limits and deductibles.

Fraud detection

Verification helps detect fraudulent activity or misrepresentation by applicants.

Policy renewals

Insurers ask for updated bank statements to ensure the continued financial stability of policyholders.

a. What do insurance companies look for in company bank statements?

Insurance is crucial for businesses to manage risks and cover potential losses, such as property damage, theft, liability claims, and lawsuits. Requirements vary depending on the type of business; for instance, construction companies must offer general liability due to the risky nature of their work, while medical offices need specific coverage for malpractice and data breaches. 

In the USA, most businesses must have workers' compensation to protect employees' health and wages. When companies apply for coverage, insurers often request bank statements to assess their financial stability and risk management capabilities. Bank statements reveal vital indicators such as consistent income, savings, and debts, enabling insurers to make informed decisions about coverage and premiums.

Here's what insurers look for:

Consistent revenue streams

Insurers look for regular and consistent income deposits. They are a sign of stable cash flow and revenue generation.

Cash reserves

The company's cash reserves help ensure enough funds to cover expenses. These include insurance premiums and potential deductibles in case of a claim.

Responsible financial management practices

Insurers analyze the company's spending patterns to ensure fiscal responsibility.

Debt obligations

They review outstanding loans to gauge the company's ability to meet financial obligations.

Unusual transactions

Insurers look for any irregular transactions that could state potential fraud.

Bankruptcy or legal issues

They check for any past bankruptcies, legal disputes, or outstanding judgments. These could affect the company's financial standing and risk profile.

b. How can proper verification prevent insurance fraud?

Insurance fraud is a serious problem affecting everyone in the insurance industry. It includes various deceitful activities, such as document fraud, staged accidents, exaggerated claims, and identity theft. These fraudulent schemes lead to significant financial losses, estimated at $308.6 billion annually.

Document fraud, one of the common forms of insurance fraud, occurs when individuals submit fake documents to obtain the money they aren't entitled to. This dishonest practice costs insurers and results in higher premiums for honest policyholders. Moreover, it undermines trust among insurers, policyholders, and regulators, creating a sense of doubt and skepticism within the insurance system.

These various forms of insurance fraud strain resources, increase costs and disrupt the insurance process for legitimate policyholders. Insurers face the challenge of detecting and preventing these fraudulent activities effectively. 

Therefore, thorough inspection and cross-referencing are essential. To address this challenge, insurers require robust verification methods, with automation being one of the most effective solutions. 

Powered by document processing software, automation streamlines the verification process, making it faster and more efficient. The software's intelligent algorithms are adept at identifying mistakes and inconsistencies. It ensures thorough checks across multiple documents without overlooking vital details. 

By leveraging automation, insurers can detect fraud more rapidly, saving time and money.

How do insurance companies verify bank statements?

Insurance companies use different methods to verify bank statements, both manual and automated.

Manual extraction

Under the manual method, underwriters examine bank statements applicants submit. They scrutinize each transaction and balance to ensure everything is correct. But, because humans are involved, this process is slow and can lead to mistakes.

Automated extraction

On the other hand, automation with technology has made a big difference. Advanced software, such as OCR and intelligent document processing systems, automate data extraction. They can scan large document volumes quickly with the least human intervention.

OCR technology turns scanned or digital statements into text that computers can read. Intelligent document processing software uses machine learning to analyze this data. It flags any mistakes or inconsistencies. This automated approach is much faster and streamlines workflows. Insurers can reduce the risk of errors.

As per research, automation can improve efficiency by up to 80% and cut processing costs by 30%. It also allows insurers to handle more applications without sacrificing accuracy. This is especially useful as demand grows and regulations change.

For example, using Docsumo, a leading proptech company processes thousands of ACCORD forms daily. They extract data from over 100 data points for accurate analytics. This greatly improved their operations team's efficiency for 50,000+ apartments.

Another company achieved over 99% accuracy in data extraction for insurance compliance.

Manual vs automated bank statement verification: Key takeaways

Manual verification Automated verification
Relies on manual labor, leading to slower processing times. Automates verification. It reduces manual labor and processing times.
Susceptible to human errors and inconsistencies. Advanced algorithms ensure reliable verification, reducing errors and inconsistencies.
Operational costs are higher due to extensive manual labor Lowers operational costs by reducing manual labor and streamlining workflows.
Limited capacity to handle large volumes of applications efficiently Allows insurers to handle a larger volume of applications without compromising quality.
Manual verification overlooks signs of fraud, increasing the risk of fraudulent claims. Enhances fraud detection capabilities. Automation mitigates the risk of fraudulent claims

In summary, automation offers a superior alternative to manual verification in insurance. Insurers enhance efficiency, save costs, and minimize fraud by leveraging this technology. This improves the customer experience.

AI-Enabled Automation for Bank Data Extraction

Achieve 99% accuracy with Docsumo’s automated bank statement extraction.

How to automate bank statement verification for insurance operations?

New technology is transforming the landscape in insurance, where speed and accuracy rule. One key player in this transformation is bank statement extraction software. 

Software like Docsumo uses OCR to pull out important details from bank statements, such as account numbers, transactions, and balances. 

Here is how to automate bank statement verification using Docsumo:

  • Step 1: Upload a bank statement from email inboxes, scanners, or other document management systems into Docsumo. It can be in any format, such as image, PDF, or Excel.
  • Step 2: Automatically categorize, organize, and sort incoming documents into specific folders for quick retrieval and data extraction.
  • Step 3: Split a large document into a set of smaller ones according to the criteria you select.
  • Step 4: Access over 30 pre-built AI models to extract data from documents instantly.
  • Step 5: Additionally, you can train your model with different types of documents to achieve over 95% accuracy.
  • Step 6: Pull tabular data out of documents and reshape it to your specifications for further processing.
  • Step 7: Collaborate with your teammates as reviewers to assess incorrect or failed extractions.
  • Step 8: Break free from repetitive, manual data reviews to get your documents into your downstream systems.
  • Step 9: Double-check your data through configured checks. Remove duplicates and redundant entries.
  • Step 10: Know the number of documents uploaded, approved, and held for review with status metrics for data-driven decisions.
  • Step 11: Connect with your accounting software to create automated workflows and avoid data silos.
  • Step 12: Share the extracted data with different file formats and databases.

How the insurance industry can automate bank statement extraction

To conclude, bank statement verification is a crucial part of insurance. It helps ensure that claims are accurate and devoid of fraud. Automation, using intelligent technology, makes this process more efficient.

Technologies like OCR and machine learning help insurance companies check bank statements faster. They save more time and reduce mistakes compared to manual verification.Automation also ensures that all bank statements are consistent. Additionally, it helps insurers stay updated on evolving rules and fraud detection techniques.

Moreover, AI brings more opportunities for improving insurance processes. Using intelligent platforms, insurers can make sense of unstructured data.

The result? The possibilities are plenty, from increased customer satisfaction to better premiums and coverage. Ready to embrace intelligent automation to drive efficiency? Docsumo might interest you. Learn more.


1. Why do insurance companies need bank statements?

Insurance companies ask for bank statements to verify income and confirm payment history. This is a part of the underwriting process to assess risks.

2. How do insurance teams verify bank statements?

Insurance teams extract and cross-reference information from bank statements. They compare the data with policyholder claims. This is done manually or via automation.

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Written by
Ritu John

Ritu is a seasoned writer and digital content creator with a passion for exploring the intersection of innovation and human experience. As a writer, her work spans various domains, making content relatable and understandable for a wide audience.

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