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Overcoming key challenges in insurance through process automation

Yashodeep Sengupta
   

The primary concern in the highly regulated world of insurance has been its slow adoption to technology. The industry is steeped with manual processes, paper-driven operations, high premium offerings, poor customer service, long turnaround time, etc. Most insurers still work with outdated tech stacks and legacy systems. The failure to innovate and move with the market is a death knell for incumbent insurers.

Key challenges in the world of insurance

Operational roadblocks: Most of the operations in the insurance industry are largely driven by manually intensive and repetitive processes. While, in underwriting, manual risk evaluation is based on pre-set criteria and is a time consuming process, manual processing of data from unstructured sources in claims management is slow and error-prone. Similarly, while processing time for manual policy cancellation is long and tedious, human assessment in fraud detection is prone to judgmental errors. Operational roadblocks due to manual operations are also evident in major departments like sales and distribution, pricing, policy admin, finance and accounts.

Data crunch: In a hyperconnected world, there is a continuous inflow of valuable data in insurance. A lack of proper technology and over-reliance on manual handling of data means there’s a surfeit of unused data lying around in the servers of traditional insurers. The inability to manage this data glut and unlock rich and timely insights out of it is not only a huge missed opportunity but also a threat to the relevance and survivability of such companies.

Mismanaged resources: An office space full of heads-down white-collared workers scribbling away on forms and entering data on their desktop systems is a scene from the past. With technology and automation, the world has turned smarter and more efficient. An overabundance of human resources in insurance working in repetitive processes means efficiency gets compromised and more crucial areas get ignored.

Poor customer experience: Note that the industry challenges mentioned above arise primarily out of over-dependence on manual operations in insurance. These challenges turn into gravely unsatisfactory experiences for customers. Long-drawn manual form-fills, complex fine print, errors and omissions in underwriting, bureaucracy in claims processing, long turnaround times, higher premiums, lack of product personalization and predictive services – all translate to frustration for the new-age customer, who now has the option of switching to market alternatives with digital-first offerings at the snap of a finger. Customer attrition ultimately leads to business loss and a dent in reputation for incumbent players in the industry.

From manual to machines – How process automation tackles insurance roadblocks

Change must come from within. Unfortunately, a major chunk of insurers persists with a traditional business model due to certain factors. One, they are strongly aversive to risks associated with data security. Also, there is a big cultural bias that creeps in whenever the question of adopting new technology arises. Insurance incumbents have very low tolerance for failure and even decision-making is highly collaborative in nature, with an overdependence on board concurrence. Thus, a shift from legacy to cutting-edge technologies and supply-driven models to personalized, demand driven, tech-savvy offerings with focus on customer satisfaction is majorly stalled due to internal, cultural barriers. Breaking out of this cultural barrier is the first step in conquering crucial challenges in the industry.

Technology is the missing link for all traditional insurers. Investing in the right modern technology helps in writing off technology debt accumulated over the years through the use of legacy systems, and is thus a smart way to move forward. The key to meet the challenges plaguing the world of insurance lies with process automation. There is a huge scope to derive best benefits out of process automation in insurance since processes in the industry are loaded with repetitive operational tasks, mostly handled manually.

By automating manual processes, insurers are not only able to bring in more efficiency in their operations but are also able to derive rich and meaningful insights out of data that’s growing at an exponential rate.

Transformational automation technologies in insurance

Process automation is a prime choice for any insurer looking to bring about sweeping changes in operational processes in areas ranging from underwriting and claims management to fraud detection and customer service. To improve market share and growth, it is very important for insurance players to ensure fast and accurate operational delivery through proper process automation tools. Early adopters of robotic process automation (RPA) are witnessing reduced labor and claims processing costs, and increased efficiencies in areas like document and data management. In fact, RPA has the ability to bring in efficiency in insurance with less investment, shorter implementation time and greater short-term ROI. However, to get the maximum benefit out of process automation technologies, it is imperative to go beyond RPA and explore the scope of advanced automation opportunities, without any human intervention, in various operational areas.

RPA is the best bet for automating processes that involve readily accessible structured content, including UI-level screen scraping and API interactions. However, the perfect fit for content formats that are semi-structured and unstructured in nature is Intelligent Automation, which brings together RPA with rules engine, AI and ML to transform data into accessible formats. Digital-first companies like Snapsheet and Tractable are using intelligent automation to automate claims processing via AI and RPA.

Other areas like HR, finance, IT infrastructure, sales and marketing can also be benefitted by process automation tools. It has the power to transcend the manually intensive nature of the industry and lead an insurer towards the path of greater revenue, relevance and reputation.

The impact of automation in insurance

The benefits of automation in insurance are most felt in the areas that involve the following processes:

Data extraction/ data entry

Data-related automation helps insurers unlock rich insights that were so far inaccessible due to manual operations. The insights help carriers with multiple benefits that range from understanding client needs to make personalized promotions to offering data-backed advice to drive real-time decisions.

Manual repetitive processes like data entry and data extraction are not only time-consuming but also have high error rates. However, data entry and extraction are such a crucial part of insurance operations that it can’t be left inefficient. Automated data extraction and data entry play a key role in updating agency management systems (AMS) for new client setup, managing billing activities, maintaining taxes and fees, policy review and policy cancellation. Similarly, in claims management, the automated nature of these two functions helps bring efficiency in first notice of loss (FNOL) information, claims decision and claims settlement.

Document creation

Document creation is an essential process in critical insurance operations like preparation of renewal list, quoting, issuing bound contract, invoicing, policy issuance, claim evaluation and resolution. Automating the process helps insurers get the best results by inputting minimum information. Field inspection reports and estimation of damage documents can be easily created with minimum effort and errors. Similarly, automated document creation can also help in reaching claims-related decisions quicker, reducing TAT for customers.

Workflow automation

Workflow automation can help underwriters in assessing risks, preparing renewals and endorsing policies. Similarly, it assists in preparing loss runs, obtaining quotes and issuing endorsements and rectifications. Gone are the days when the customer had to call up his agent, who would, in turn, scout for resources to assess damage and present a quote. In the area of claims management, workflow automation can support insurers in assigning a claims adjuster for case investigation and a field agent for damage inspection and damage estimation. Settling claims is also way faster with workflow automation.

Technologies like RPA can automate data exchange between systems to facilitate faster claims processing and payouts. For example, generally, an insurance agent manually enters accident claim data into the system of a mechanic, who has an agreement with the insurance company, for roadside assistance. With automation, data can be exchanged automatically between systems, which prevents delays in a tow truck reaching the accident spot.

Reconciliation

Reconciliation has been seen as yet another repetitive process that is in urgent need of an automation overhaul. Be it in billing or policy review, automated reconciliation through technologies like OCR and NLP brings down error rates and enables reallocation of human resources to more crucial areas like customer service, decision making and innovation.

Other areas

Automation also helps in detecting fraud, issuing payment and generating reports. It also helps in real-time analysis of images and data from IoT devices that leads to reduced claims processing time and cost.

While chatbots with NLP can replace human interaction with customers in FNOL situations, ML-assisted automation can help insurers understand customer grievances and analyze patterns in customer behavior. Thanks to Intelligent Automation, smart digital agents can act as risk advisors for clients and also swiftly aid agents during customer calls. Likewise, a chatbot can quickly plug in to the database to extract relevant information that helps it to address customer grievances quickly.

A solid scope, a perfect strategy

The insurance industry is a paradox today. On one hand, it has tremendous scope due to a continuous influx of data. And on another, it is plagued by proven inefficiencies due to a dominance of manual operations, arising out of cultural biases to new technology. According to industry research, safety, order and results tend to dominate the insurance industry. In such a scenario, introducing process automation would be a perfect strategy to move towards newer technologies that transform the insurance landscape.

Most insurers are leveraging the support of process automation experts to gain an edge over their competitors. For example, Imaginea partnered with one of the top 10 insurance brokers in the US to allocate, monitor, and optimize their incoming workload, and scale up operations without increasing their team headcount significantly. We built a workflow automation solution that led to standardization of process handling across teams. It ultimately led to a 60% reduction in handling time, 25% FTE reduction and a 90% increase in overall efficiency.

Process automation leads to a great customer experience, which, in turn, results in greater customer satisfaction and retention, which ramps up the business, builds credibility and increases market worth. Most importantly, the multiple benefits of process automation in insurance show incumbents that a mindset shift towards adopting the right technology with a focus on customer experience ultimately leads to holistic gains for their business in a competitive environment.

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