Straight-through processing (STP) in claims means a claim is lodged, checked, decided and paid without a person handling it, inside rules the insurer has set. It suits simple, low-value, well-evidenced claims. It needs clean intake data, clear rules, fraud checks and integrated payments, and it carries real risks if the rules are wrong.
Key takeaways
- Straight-through processing means no human touch between lodgement and payment, not just faster handling.
- According to McKinsey, the technology for full straight-through processing of simple, predictable claims already exists.
- According to the Insurance Council of Australia, members detected $560 million of opportunistic fraud across motor and property in 2023.
- The best candidates are low-value claims with clear evidence and cover that can be checked automatically.
- A claim decided by rules still needs reasons a claimant can understand, so every declined claim should reach a person.
What is straight-through processing?
Straight-through processing is the handling of a claim from lodgement to payment with no manual step. The claimant lodges, the system checks the policy and the evidence against set rules, and if every check passes, it approves and pays. A person only becomes involved when a check fails or the rules say a claim needs judgement.
The term comes from banking, where it describes a payment or trade processed without re-keying. In insurance it means the same thing: data entered once, at the start, flows through every step without someone copying it between systems or approving it by hand.
It is different from automation in general. Many claims teams automate parts of the process, such as acknowledgement emails or policy lookups, while still having a handler approve every claim. That is assisted handling. Straight-through processing is the narrower case where no handler touches the claim at all.
In practice, insurers apply it to a slice of their claims, not all of them. For example, a contents claim for a stolen bicycle with a receipt and a police report may qualify. A storm claim on a damaged roof almost never will.
Which claims suit straight-through processing?
Claims suit straight-through processing when they are low in value, simple in facts and backed by evidence that a system can check. Typical candidates are windscreen claims, small contents claims, travel claims for delayed baggage and some pet or gadget claims. Claims involving injury, disputed liability or large sums usually do not.
Three tests decide whether a claim type fits. First, can cover be confirmed automatically, from the policy terms and the data captured? Second, is the evidence standard, such as a receipt, a booking or a repairer's quote? Third, is the cost of a wrong payment small enough that a rule can safely decide?
McKinsey makes the same distinction. According to its Claims 2030 analysis, "for simple claims with predictable characteristics and patterns, the technology to enable full straight-through processing already exists". Complex claims, by contrast, still need people.
Claim volumes also make the case. According to the Insurance Council of Australia, insurers received more than 22,000 claims within days of ex-Tropical Cyclone Alfred in March 2025. When simple claims clear themselves, handlers have more time for the complex ones in a surge like that.
What does straight-through processing need?
Straight-through processing needs four things: complete, structured intake data, rules that decide cover and value, fraud checks that run before payment, and a payment step connected to the claims system. If any one of them depends on a person re-keying or approving, the claim is not straight through.
Clean intake. The process starts at first notice of loss. If the claim form allows free text where a value is needed, the rules have nothing to work with. The guide to FNOL covers what a complete intake captures.
Clear rules. The insurer has to write down what it would approve without looking: which claim types, up to what value and with what evidence. Those rules then need an owner, because products, limits and fraud patterns change.
Fraud checks. Every claim that pays automatically should pass checks first, such as duplicate claims, sanctions screening and unusual patterns. A claim that fails a check drops out to a person rather than being declined by the system.
Integrated payments. Finally, the payment has to be made and recorded without someone keying it into a separate system. For example, ClaimsGateway (claimsgateway.com) builds payment set-up, tracking and reconciliation into the claims platform, alongside fraud detection and AML sanctions checks. The ClaimsGateway features page describes them.
What are the risks of straight-through processing?
The main risks are leakage, fraud and unfair outcomes. A rule set too loosely pays claims that should not be paid. A rule set too tightly sends every claim to a person and saves nothing. Worse, a rule that declines without a person reviewing it can treat a customer unfairly and breach the insurer's obligations.
Fraud is the risk most often raised. According to the Insurance Council of Australia, its members detected $560 million of opportunistic fraud across motor and property in 2023. Undetected fraud is thought to cost the industry about $400 million a year more. So any automated payment rule has to assume some claimants will test it.
Fairness is the less obvious risk. Under the General Insurance Code of Practice, a claimant whose claim is declined is entitled to written reasons and to the insurer's complaints process. A rules engine can approve a claim, but declining one is a decision a person should own. As a result, well-run programmes send declines and exceptions to a handler.
Complaints show the cost of getting claims wrong. According to AFCA, general insurance complaints reached 36,022 in 2025-26, with delay the most common issue. Straight-through processing can cut delay on simple claims, provided it does not create a new class of unexplained declines.
How do insurers measure straight-through processing?
Insurers measure straight-through processing with three numbers: the STP rate (the share of eligible claims paid with no human touch), leakage on those claims (what was paid that should not have been), and complaints about them. A rising STP rate only counts as success if leakage and complaints stay flat.
The STP rate is easy to inflate. An insurer can raise it by widening the rules, which also raises leakage. So the rate should be read against a sample audit of straight-through claims, in which a handler reviews a set of them after payment.
Cycle time is a useful fourth measure. The point of straight-through processing for the claimant is a payment in hours, not weeks. Measuring time from lodgement to payment shows whether that promise is kept.
No published Australian benchmark for STP rates was found in the research for this article. Rates quoted by vendors usually describe one product line at one insurer. So an insurer is better off measuring its own baseline and improving on it than chasing a market figure.
How should a claims team start with straight-through processing?
Start with one claim type that already looks straight through in practice: low value, standard evidence, almost always approved. Write down the rules a handler uses today, run them alongside handlers for a period, compare the results, then let the rules pay. Widen the scope only after leakage and complaints have been checked.
That sequence keeps the risk small. Running rules alongside handlers, sometimes called shadow mode, shows where the rules and people disagree before money moves. In addition, it gives handlers a say in the rules, which makes them more likely to trust the result.
The platform matters less than the discipline, but it still matters. A claims system where the business can change rules and workflows itself, without waiting on developers, makes it easier to tighten a rule the day a problem appears. The guide to claims automation software compares the options.
ClaimsGateway is one sensible option for insurers, agencies and TPAs that want payments, fraud checks and configurable workflows in one claims platform. An insurer whose priority is an AI system that assesses claims on its own may prefer a platform built around an autonomous AI adjuster.
Frequently asked questions
What is straight-through processing in insurance?
Straight-through processing in insurance is handling a claim or policy transaction from start to finish with no manual step. For claims, it means a claim is lodged, checked against rules, approved and paid without a person touching it. Claims that fail a check, or need judgement, drop out to a handler.
What percentage of claims can be processed straight through?
No published Australian benchmark was found for this article. The share depends on the product line and the insurer's rules. Simple lines such as windscreen, small contents or travel delay claims suit it best, while injury, liability and large property claims rarely do. Insurers should measure their own baseline rather than rely on vendor figures.
Is straight-through processing the same as automation?
No. Automation covers any step done by software, such as sending an acknowledgement or looking up a policy, even when a person still approves the claim. Straight-through processing is the narrower case where no person handles the claim at all between lodgement and payment. Most claims teams automate far more than they process straight through.
Does straight-through processing increase fraud?
It can, if payment rules are loose or fraud checks are missing. Well-run programmes limit straight-through processing to low-value claim types, run fraud and sanctions checks before every payment and audit a sample of paid claims. Claims that trip a check go to a person, so the rules never decline or pay a suspicious claim unseen.
What is touchless claims processing?
Touchless claims processing is another name for straight-through processing. A touchless claim is one that no claims handler touches between lodgement and payment. The term is common in vendor material and in motor and property claims, where simple claims such as windscreen replacement are the usual starting point.
About the author
ClaimsGateway builds cloud claims management software for insurers, underwriting agencies, brokers, TPAs and self-insured organisations in Australia and New Zealand. Every regulator figure in this article links to its source, and every vendor fact was checked on the vendor's own site on the date shown.
Related reading
- AI claims management software: where AI fits alongside rules-based processing.
- Claims payment software: the payment step that straight-through processing depends on.
- Code of Practice claims rules: the obligations an automated decision still has to meet.
Sources
- McKinsey & Company. "Claims 2030: Dream or reality?" Checked 21 October 2026. https://www.mckinsey.com/capabilities/operations/our-insights/claims-2030-dream-or-reality
- Insurance News. "ICA probe to detail fraud menace facing industry." 31 July 2025. https://www.insurancenews.com.au/daily/ica-probe-to-detail-fraud-menace-facing-industry (reports the Insurance Council of Australia's fraud figures)
- Reinsurance News. "Insurers receive over 22,000 claims following ex-Tropical Cyclone Alfred: ICA." 11 March 2025. https://www.reinsurancene.ws/insurers-receive-over-22000-claims-following-ex-tropical-cyclone-alfred-ica/
- Insurance Council of Australia. General Insurance Code of Practice (2020 Code), Part 8. https://insurancecouncil.com.au/code-of-practice
- Insurance Business Australia. "Record AFCA complaints mask a worse story in insurer compliance data." 4 August 2026. https://www.insurancebusinessmag.com/au/news/breaking-news/record-afca-complaints-mask-a-worse-story-in-insurer-compliance-data-584812.aspx (reports AFCA's 2025-26 figures)
- ClaimsGateway. Website, checked 21 October 2026. https://www.claimsgateway.com
