By Mike Monteiro, Solutions Consultant

Business automation has increased efficiency in enterprises across the world. One of the industries that has been the transformed in the more recent years by automation technology is insurance.

Considered somewhat of a “dinosaur industry,” traditional insurance companies are challenged to evolve to meet customer expectations of shorter processing times, increased accuracy and transparency and providing user-friendly mobile applications. Insurance companies have seen their organic growth decline, struggled with their ability to obtain new, skilled talent and are fearful as to how they will keep up with new cutting-edge insurtechs and other digital providers entering the market. Luckily, business automation technology can help traditional insurers stay in the game and address these problems.

Problem #1: Slow organic growth

The only way for insurance companies to grow organically is by obtaining new customers. LOMA Resource[1] published an article where they shared insurance CIOs’ priorities for the year ahead.  All thirteen of them voiced that their initiatives are to improve customer experience and not the acquisition of new customers.

Even though insurance providers have work to do in that area, they may be putting all their eggs in one basket. Nick Kormos, Vice President of Organic Growth Solutions at MarshBerry, believes customer service is the wrong focus for this issue. “It just continues to be a struggle for the average organization that is not focused on new business first… we tend to be a very service-oriented organization and not a sales-oriented industry.”

In order to grow, companies need to focus their efforts on serving new demographics rather than just focusing on enhancing the experience for the currently insured. We know that a lot of an individuals’ choice of insurer comes down to accuracy and transparency of a rating as well as how quickly they can receive it. After all, if your choice comes down to two or three companies, who will you pick? If the quote is good, it will probably be the first response.

So how to you overcome slow organic growth with business automation? Machine learning.

Machine learning intelligently automates business decisions; its abilities apply perfectly to the insurance industry. The traditional rating model used by the underwriters can be time-consuming and even inaccurate, but when machine learning is applied, this rating model can be completely automated, providing potential clients with a quick and accurate rating. The more applicants are processed, the better and faster the technology will be at determining the new model-based ratings on its own.

Not only does machine learning increase the efficiency of the back-office delivery to the insured, but as with any form of artificial intelligence, it causes valuable patterns to appear. Insurers can learn more about their customer base and see what’s working for certain demographics. That way, pricing within the intelligent model can be altered for different demographics.

Problem #2: New competitors entering the market

Insurtechs are blowing traditional insurance providers out of the water with their seamless and easy customer acquisition processes, especially with the millennial segment that is just entering the market. In fact, according to research by McKinsey, 40% of insurtechs have a “primary value proposition built around finding new ways of growing” and 22% are focused on “lowering acquisition costs typically by providing customers with a digital interface and using a direct model.” Perhaps not so coincidentally, these are factors millennials care about– a lot.

People are joining these digital providers because they are cheaper, faster and easier to communicate with. Plus, since they’re new to the industry, they’re naturally focusing on acquiring new customers, which the LOMA survey states is not a top priority for traditional insurers.

Here’s the good news for traditional insurance providers: you have a few things insurtechs don’t have. Traditional insurers have the reputation, the long-standing customer base, deep pockets and the extensive knowledge and experience– insurtech companies only have the technology.  

That’s a 4 to 1 multiplier! Insurance CIOs don’t need to be too discouraged by emerging competition. They just need to make sure that they’re at least matching the competition on technology so you can continue to grow and surpass digital startups.

To do that, insurance providers should make sure they’re occupying all the right channels. Agencies already come out on top as far as face-to-face and personalized services, so insurance companies would be wise to focus their efforts on ‘beefing up’ these traditional channels with business automation. A couple ways I have seen insurance companies do this are by:

  • Applying RPA to capture and input client data into a number of onboarding (and other) systems across an organization,
  • Applying workflow and decisions management software to expedite the loan underwriting process by aiding in the underwriters’ decision-making, and
  • Using analytics capabilities that identify trends and present upsell and cross-sell opportunities.

Problem #3: Lack of human capital  

Young professionals now comprise more than half of today’s workforce[1] and are quickly replacing senior underwriters who are retiring. This is causing major disruption in the insurance industry because for most of their existence, insurance companies have relied on senior underwriters as their “brains” of the underwriting process to make the approve or deny decisions on complex cases. With a large number of underwriters now retiring, transferring this knowledge to junior underwriters is time consuming and almost impossible.

With the automated sequence of logical underwriting rules, underwriters won’t need to know as much as they used to. Instead, they’ll be experts in totally different areas than their underwriter successors such as acquisition, strategy and pricing rather than the intricacies of rating an individual’s risk. Business automation technology like decision management software are available to aid the underwriter now; it’s just a matter of implementing it.  Business automation allows insurers to operationalize artificial intelligence and machine learning to aid in the assessment of risk.

 

Intelligent business automation platforms with AI learn and improve as each applicant is processed, resulting in lower risk to the enterprise and more accurate ratings over time. Traditional insurance companies who are struggling to acquire new business, compete with insurtechs and bring in new talent can leverage business automation technologies like machine learning and decisions to increase acquisition efforts, availability of resources and overall efficiency.

Ready to start automating your insurance processes? Check out the white paper on our medical extraction application that leverages machine learning and cognitive capture.

 

 

Additional References

1 Jennifer C. Rankin, “Looking Ahead: Our Annual Industry Forecast,” LOMA Resource. January 2019.

 

 

Mike Monteiro

Mike Monteiro

Solutions Consultant

About the Author: Mike engages in the purposeful application of technology for successful business outcomes. He reluctantly admits to having decades of experience in engineered systems and IT. He is a cultural wonk, soccer enthusiast (player, coach and Barcelona fan), a gym rat and an aspirational yogi.