THE STATE OF AUTOMATION IN THE LIFE INSURANCE INDUSTRY

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The insurance industry has undergone rapid changes in the last 10 years than it did in the past 300 years.
Changing customer demands, rapid technological advances data explosion, stochastic natural disasters and the never ending regulatory compliance demands are just some of the forces operating to shake the industry to its roots.

The insurance industry has been awfully slow to adapt to technology. Even today, when every other industry has embraced digitalization, the majority (58%) of insurance executives admit that insurance trails far behind the trend, according to a report from Willis Towers Watson. 

While slow to start, the insurance industry has embraced digital transformation—in large part due to new competitors such as InsurTech startups and platform companies entering the arena.  
 

While industries such as financial services and retail have tapped the potential of RPA, its use in the insurance industry has been slow.  However efforts are underway inside the insurance industry to catch up with other industries in the usage of RPA.
 

INSURANCE INDUSTRY TRENDS
For centuries, the insurance industry offered protection against the most serious threats faced by individuals, families, businesses, and society. Today, a combination of economic, technological, competitive, demographic, and societal changes, plus covid-19 pandemic, and climate change have made the industry’s purpose more relevant and important than ever. 
 

CHALLENGES FACING LIFE INSURANCE CIO’s
Life insurance carriers are contending with legacy systems that hinder  the speed  needed to compete for a new generation of connected consumers and producers.
 

Demographic shift has made the millennials the largest cohort in the US living population. Their expectations for seamless, end-to-end digital shopping experience in the insurance industry, far outstrips most current offerings.
The InsurTech movement, the advance of emerging technologies, and the voracious appetite of the global tech titans are all contributing to new entrants into the insurance industry, new partnerships, and new business models.  
 

Covid-19 pandemic along with related remote work and shutdowns have increased the need to compete in a digital world across all generations, and some insurers are only just beginning to respond to the new challenges. 
 

With the increased importance of business intelligence and analytics, insurers are turning to wearable devices which can provide transaction-rich and connected experience between the consumer and the insurer. 
 

AN INDUSTRY TAILOR-MADE FOR RPA
The insurance industry’s repetitive, rules based, and document-intensive business processes make it an excellent choice for automation. Several companies are now experiencing some form of measurable benefits from RPA, but the technology has a lot more to offer. 

A cursory look at the basic insurance processes, underwriting, policy issue, renewals, claims registration and processing shows how much information are pulled together from different data points to get anything done. For some insurance companies, servicing their existing customers becomes a bigger issue than the acquisition of new ones.
This is an industry that relies on its back-office processes which are often slow, and inefficiently constituted.
 

IN THE BEGINNING
RPA has proven useful in helping insurance companies to streamline business processes and to automate administrative and transactional tasks. Analysts from McKinsey estimate RPA saves 35% of employee’s time in data processing alone. 
Initially, insurance companies focused their RPA efforts on high volume, non-complex processes involving structured data, such as claims processing and form registration. Simply automating repetitive tasks significantly frees up staff time, while increasing accuracy and data quality, while speeding up the process. 

By focusing on the appropriate tasks within a process, some insurance companies have been able to develop operating models around automation and optimization.
 

COMBINING RPA AND AI
As RPA evolves, insurers are now combining RPA and AI and Machine Learning, to add intelligence to their automated processes. The addition of AI catapults RPA beyond the automation of repetitive tasks to enable the solution to address those parts of the process that currently defaults to human judgment, leading to enhanced decision making. 
 

CONCLUDING REMARKS:
Customers expect the same levels of digital connection and personalization from their life insurer as they receive from other industries.  Despite the complexity, insurers must make their products simpler as consumers expect new products to roll out quickly from the assembly line and be served up to consumers following retail-like best practices. Product definitions, pricing, configuration options, rating and calculation engines should be revitalized with the consumer audience in mind.

 

The millennials have steered away from purchasing policies because they perceive life insurance as too expensive, do not understand the products or the application process seems too cumbersome. Instead of enduring surveys and physical exams, today’s consumers prefer a digital procurement experience. Consumers are self-generating wellness and lifestyle data on wearable devices, social media, and other channels. Insurers that leverage technology to meet consumers’ rising expectations stand to gain ground among an underserved market with increasing spending power.
 

Without changing their core administration systems, insurers can add a digital front-end that transforms the quote-to-buy experience. Soon, the new generation of buyers will be configuring their own risk solutions selected from a menu set of products and riders, bundled and priced as a single offer.
 

Digital technology is mature and ready for insurers to deploy at scale. If this is not the time to accelerate innovation and adapt to the changing risk landscape, improve operational efficiencies, evolve products, and enhance the customer experience, then when? Insurers who do so successfully will establish themselves as leaders and gain a competitive advantage that will ensure continued success.