Why should this be high on insurer agendas?
As insurers continue to be challenged by rapidly evolving customer needs and expectations amid heightened competition, many have resorted to belt-tightening and “doing more with less” to shore up returns. However, as the pace of productivity improvements slows with existing staff and systems, many carriers are looking to boost their transformation efforts by integrating more advanced automation, fueled by software applications that run automated tasks, also known as “bots,” as well as machine-learning algorithms.
Robotic process automation (RPA) and cognitive intelligence (CI) technologies are fast-becoming a reality, given rapid increases in computing power and decreases in data storage costs.41 These options give insurers an opportunity not just to reduce expenses, but also to possibly reinvent how they conduct business.
What is changing?
RPA gives carriers the ability to automate mundane, box-checking-type tasks in underwriting, policy administration, and claims, potentially freeing up thousands of people hours. RPA solutions use bots to mimic the way individuals interact with applications and follow simple rules to make decisions and automate routine business processes, improving efficiency without the need of any fundamental process redesign.42 For example, about a third of the tasks in claims management typically deal with data entry and validation using multiple in-house and external data sources. A large insurer that automated these basic tasks realized a productivity gain of 68 percent, coupled with improved accuracy and compliance.43 Another major carrier utilized RPA to automatically aggregate 86 data points into a centralized document, leading to 75 percent faster adjudication of claims.44
CI goes one step further by providing insurers with tools to automate non-routine tasks requiring soft skills, such as intuition, creativity, and problem-solving. This is primarily driven by the refinement in several key CI technologies, such as handwriting recognition; image, audio, and video analytics; and natural language processing.
How are carriers employing these technologies? One P&C insurer built a cognitive virtual agent that could conduct a conversation with customers in natural language. With the automated ability to answer a wide variety of consumer questions while gathering information for a quote, the insurer realized a higher percentage of completed applications and increased online conversion rates, as well as an overall improved customer experience.45
These InsurTech solutions could eventually fundamentally alter existing in-house operations. Indeed, a report by the World Economic Forum, in collaboration with Deloitte, forecasts a potential future scenario where cognitive technologies are so pervasive that underwriting becomes much more automated than today, perhaps leading to the emergence of third-party underwriting specialty providers.46
In the meantime, cognitive technologies, combined with RPA and advanced analytics, can improve productivity of existing staff performing non-routine tasks—or could automate those tasks entirely.47 The potential benefits of RPA and CI go beyond cost reduction to offer decreased cycle times, flexibility and scalability, improved accuracy, and higher employee morale—at least among those who can make the transition.(*)