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The Four Stages of Effective Insurance Automation


Insurance automation can do much more than save money and streamline processes. It can unlock funds to invest in key innovations for the future.
The insurance industry can sometimes take the role of JRR Tolkein’s hobbits. ‘Change comes slowly, if it comes at all.’ Historically, it has been one of the most innovation resistant industries going, and with good reason. The entire product is based on hedging against the unpredictable, so it stands to reason that they should be reluctant to invest in ideas whose outcomes are far from assured.
However, times are changing. Digital transformation is altering the landscape and creating all sorts of opportunities.
There is a solution to this reluctance, though – one which can help insurance companies save the money they need to invest in innovations. They can do it by turning to automation. Here you have a series of technologies such as machine learning, robotic process automation and direct platform integration which have been proven to streamline operations and produce considerable savings. Taking the money saved here and using it for innovation can open the door to a future with none of the risks.

Insurance Automation in Four Steps

Understanding the value is one thing, making it work quite another. Like all things the success or failure of automation depends on how it is put into practice. We would argue that there are four stages towards automation – the first two can be implemented immediately, the second two will take a little time.

The steps can be summarized in the following ways:

  1. The obvious: A few standard practices which could be implemented immediately.
  2. The value add: Where we begin to see automation having its impact.
  3. Automated decision making: Machine learning to help automate many key decisions
  4. Cognitive Experience: Advanced AI driving innovations which can automate many of the key insurance processes.

Each of these steps can give you a reliable roadmap towards successful insurance automation.

  1. The obvious 

The good news is there’s a lot of low hanging fruit to get started right out of the gate. Basic administration contains plenty of areas for efficiency gains by automating processes currently handled by individuals.
A good example of this could be automated invoicing. This doesn’t need much oversight from humans and can be easily delegated. Every aspect of the invoice process, from generating the invoice to issuing alerts when invoices become due can be automated using basic IT structures already available. Other areas such as accounts management, scheduling payments and compiling reports can also cut a considerable amount of time from basic administrative tasks. It’s quick, simple and the chances are that this is the area where you’ll save the most money.

  1. The value add

Automation can add value by making life a little easier for the customer. You may have already seen a version of this at the supermarket or fast food restaurants where automated checkouts allow customers to manage the bulk of the purchases themselves. It reduces queues from the customer’s perspective and also saves money for you.
In the insurance sector, firms can automate the purchasing process by integrating their customer information through online platforms rather than a call center employee who will have to interact with the customer directly and pull information from a file. Companies can also harness APIs by making it easier to purchase insurance at the point of sale. This means linking the insurance with the purchase of the product you are looking to insure. Customers can buy these two together rather than as two separate transactions.
This allows you to offer on-the-spot convenience for the customer while also smoothing the path towards the purchase of your products.

  1. Automated decision making

There are many decisions associated with the insurance sector. Automating decisions, such as underwriting, claim and much more can help companies achieve straight-through processing.
These can harness the power of rule engines and machine learning to automate many of the decisions about what policy to set, how to assess risk and much more. These two pillars are often seen as being counter-intuitive, but they can work together quite effectively. Robotic process automation which automated many of the processes in step one can be disrupted by machine learning which connects the dots and delivers an enhanced level of decision making.
This is an area on the move. Technology is pushing back the boundaries of what can be achieved and, while there are gains to be had, the truly exciting innovations come with our fourth pillar.

  1. Cognitive engineering

Here is where the technology starts to get more complex and we move into the world of big data and artificial intelligence. These two work hand in hand magnifying one another’s value.
First, big data greatly increases the amount of information about any decision available to an insurance firm. For example, by connecting a black box device within a car, you can gain information about every aspect of that person’s driving style. While you might previously have assessed a policy against the time of day in which customers were driving, their car choice or where they lived, now you have solid information on how safely they drive.
AI can take this data and identify patterns more quickly and effectively than their human counterparts can. They remove the element of bias and deliver clear-headed decisions based on cold, hard, data.
Again, this technology is evolving rapidly and opening up more opportunities. One of the more exciting ways to go is to start developing products without human interference. The machines can identify trends, patterns and risks to come up with personalized products which give you an advantage against the competition.
These steps show you what should already be clear: digital is the name of the game. The more effectively you can use automation to save money and improve outcomes, the more money you’ll have to invest in digital transformation. This can help you gain a critical edge against the competition. It’s a tough world out there, and these steps will help you give you the tools you need to succeed.

Check out this whitepaper – The Ultimate Guide to Insurance Automation and Innovation

Sirish Kosaraju, COO, RapidValue

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