How vital is automation in insurance industry?

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InsuranceTraditionally known to be cautious and changing inch-by-inch under heavy regulations, the insurance sector is now entering the age of automation. More than ever before, top insurers are finding it tougher to stay afloat, find newer ways to cut costs and increase profits. On the one hand, extraordinarily tough competition and operational inefficiencies have been eating into their profits.

On the other hand, the twin-whammy of plummeting interest rates and tightening regulations have pushed insurers into an innovate-or-perish state. Though automation emerges as a potential lifesaver, it requires a layered and comprehensive approach.

The insurance industry involves a heavy deal of repetitive, mundane tasks including truckloads of structured data that tempt companies to pursue automation first. Also, automation has been played up as the panacea for clearing up all bottlenecks and driving companies towards the next level of growth.

When it arrived, robotic process automation (RPA) seemed like a no-brainer, as it promised rapid cost-cutting. In the initial years, the high-volume, data-driven insurance industry did excessively obsess over replacing the humdrum of human labour and outsourcing their worries to bots. However, the results have been mixed, calling for a complete re-evaluation of automation strategies with a customer-centric approach.

Intelligent Process Automation (IPA)

The need of the hour is for insurers to transcend the pursuit of incremental, task-based RPA to holistically embrace more powerful, intelligent process automation (IPA) to drastically improve their performance. In doing so, IPA involves analysing end-to-end processes and finding ways to use evolved automation technologies to optimise operations.

IPA is not just about freeing employees from the drudgery of paperwork. It is about going that extra mile in delivering hyper-personalised, higher-quality customer service, aided by sophisticated data profiles, recommendations, and even empathy coaching, all generated in real time. Yes, empathy! Contrary to popular belief that robots rob businesses of human emotions such as empathy, it is an immensely delighting fact that in-depth analysis of voice modulation and text communications from customers can empower insurance managers by ‘suggesting’ to them the right vocabulary to handle situations.

IPA has now evolved to replace human perception with enviable and reliable accuracy. Insurance companies can let IPA take over to scan damage photographs, and analyse and arrive at damage settlements faster than ever before. Further, voice capabilities have leapfrogged to narrow down error rates to as little as 6 percent, which equals those of an average human. Together with voice analysis, computer vision and image recognition, an insurer can significantly reduce the burden on its assessment and settlements teams.

Computer-aided decision-making in terms of analysing paperwork such as first loss reports, and detecting frauds have now evolved to match human skills. Pattern recognition engines, and business process automation can enable insurers to automate their core insurance platforms, case management and complete workflow systems, leaving the workers less stressed and more ready to provide targeted, personalised service to customers.

Developing an effective automation strategy

In developing an effective IPA strategy, companies can adopt the following seven-step approach:

Think from a customer’s viewpoint: Analyse and identify a clearly defined list of processes that enhance customer experience. Cognitive technologies help integrate data with insights from behaviour sciences to anticipate and fulfil customer needs. For example, insurers can choose to fast-lane customers who explicitly choose self-service to an AI-loaded self-service online portal, and continue to direct clients requiring human assistance to human agents backed by AI tools.

Chase the trends: Just deep process understanding is not enough. Companies should fully know the capabilities of the latest automation tools available in the market. Ways to enhance services with more sophisticated cognitive tools such as AI or automated case management should be discussed.

Turn IPA into a continuous improvement journey: Automating a poorly designed, fragmented process is the perfect recipe for disaster. Whenever possible, companies should eliminate unnecessary work or actions, and constantly work on simplifying everything. For example, just making an optional field on a form mandatory will allow a bot to process it in a jiffy.

Integrate front and back office processes: Holistically integrating customer-facing parts of processes with the back office helps achieve customer delight, as well as ease staff workload. However, it is important to consider the impact it will have on the customer before doing so.

Align processes with business priorities: Going beyond the obvious goals of using automation to cut costs and reduce manpower, insurers should match automation plans with long-term business objectives such as, say, improving claims, increasing new client on-boarding, etc.

Look beyond just cost cutting: Insurers should look at finding ways to improve overall customer experience by making services more intuitive, eliminating human biases, and personalising marketing.

Make automation a part of integrated business strategy: Automation should continue to be a part of the insurer’s integrated strategy, supported by both business and IT functions. Companies should establish centres of excellence to fine-tune and scale up automation for long-term success.

Successful IPA implementation takes care of consistent and quick execution of all bot tasks by taking the help of the latest cognitive tools. Companies should work on creating such an ideal environment where humans are called in to resolve only ‘exceptions’ that are outside the ken of bots. This will enable human executives to focus all their energies on strengthening customer relationships, which will automatically have a positive impact on the company’s profits.

(Views expressed in this article are a personal opinion of Arun Baid, Global Delivery Head, Insurance, Cognizant.)

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