The hottest trends in insurance? That might sound like satire to an outsider, given the industry’s conservative reputation. But that’s ok. Insurers must be conservative, but not to the point where you’re sitting out on innovation. There are some hot trends happening in and around insurance, such as Internet of Things, aerial imaging and mHealth applications. All of these will result in better insights, more accurate risk assessment and faster claim servicing.
More importantly, there are trends that are so consequential that you can call them upheavals. Since you’re in the business of risk management, you’ve sensed these upheavals and made plans to address them. But, to paraphrase a military saying, no plan survives the first contact with the customer.
So, with that in mind, what are you doing about the following?
The Millennial Demographic
Millennials are the largest living generation. The good news is they are young and a huge, underserved insurance market. The challenges of messaging to and creating products for this demographic are well-understood and common to most industries. The biggest challenge for you is technical: You must have the workflows and infrastructure in place to give these customers the smooth, personalized experience they demand. Millennials research and shop online. They don’t want to submit paper or wait weeks to be approved for a policy. Of course, all this online activity promotes the need for cybersecurity measures.
Chances are you are not technically prepared to serve the millennial customer if you are based in the USA. The venture capital (VC) community knows this: They claim that 40-50% of insurance is purchased and managed online in the most advanced economies. In the USA, it is more like 1-5%.
The Legacy Systems
The millennial shift shines a very bright spotlight onto a nagging issue for insurance companies: Some insurers are hampered by aging, obsolete systems that are incapable of gathering, analyzing and archiving modern data sources. This should not be a surprise. Most insurance companies in the Fortune 500 are about 95 years old and it shows, given the preponderance of paper-centric processes endemic to your industry. At some point, you will have to take the steps toward digital transformation or, at least, a core renaissance. This is not to say that you should take a rip-and-replace approach. That would be too risky to your core operation. A staged, augment-and-adapt method is a more prudent choice.
The New Models
Peer-to-peer, pay-as-you-go, on-demand and direct-to-consumer insurance models have unleashed several new entrants, many of which are flush from VC funding and will put part of your business at risk. Furthermore, the market expects you and your competitors to deliver all manner of new products, pricing and underwriting once you have figured out how to leverage the data generated by smart devices. How will you get there from here?
You have a long and challenging road ahead of you. One step to achieve this digital transformation is to acquire some of these new entrants. However, any reader of the business section knows that M&A is exciting when announced, but problematic in execution, especially in IT integration matters. You can also partner with these new entrants or further develop your intellectual property. The common issue in all of these scenarios is that you will have to integrate the new (e.g., UIs, the cloud, IoT, data warehouses) with the siloed, legacy back-ends, some of which pre-date APIs.
The Integration Conundrum
There are varying degrees of integration, but if your older systems are difficult to integrate, you will have some complex coding on your hands (expensive and time-consuming) or worse, you may have your employees performing “swivel-chair integration.” Swivel chair integration is best exemplified by employees reading data from one screen and keying it into another. As you can imagine, this is a tedious, error-prone approach that does not scale well. It is also demotivating. Remember the millennial shift? Those millennials are working for you (or they will be soon!), and they will inform their friends on social media about their adventures in data entry.
The Integration Solution is RPA
Fortunately, there is a solution to swivel chair integration: robotic process automation (RPA). RPA is the application of technology (agents or “robots”) to automate workflows where the process activity is well-understood and the work being performed is repetitive in nature. Think of RPA as embedded or virtual employees. RPA mimics the actions a person would take while working on a computer. These can include interactions with desktop applications, enterprise applications, email, older green screens, websites, and portals.
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RPA is not a core or backbone technology. It is complementary to your infrastructure, non-disruptive and scales easily. As you can imagine, you can deploy it faster, more easily and more affordably compared to other forms of integration. RPA is especially applicable in these “old-meets-new” scenarios, where legacy systems were conceived before APIs and aren’t seeing regular updates.
RPA is a Hot Trend in Insurance
According to Celent, RPA is a burgeoning field and a tool that belongs in the integration solution toolbox; it is a valuable technology insurers should consider, especially for underwriting. When citing “examples of RPA being used for front-, middle- and back-office deployment include for banking and insurance,” Gartner stated, “Due to the major cost reduction pressures in these industries, these organizations have been the highest adopters of RPA tools to date. Examples of uses include moving data for claims processing, predominantly from customer-facing websites; card management for issuing replacements for lost or stolen cards, and reversal of card charges; and mortgage processing, with the resubmission of failed payments.”
According to Peter Lowes of Deloitte, robot-led automation has the potential to transform today’s workplace as dramatically as the machines of the Industrial Revolution changed the factory floor.
Delivering Real-World Results
Delta Dental of Colorado, the state’s leading dental benefits company, deployed RPA as part of their move from paper-based systems to electronic content and workflows. The result is a streamlined data gathering and verification process, lower costs, improved response times and satisfied customers.
“Every day, we exchange a huge amount of information with our dental providers and customers, concerning applications, renewals, policy updates and more,” said Heather Magic of Delta Dental. “In the past, it was difficult for teams to access and process this documentation efficiently. A lack of visibility and control over content meant that files often got lost in the shuffle, and could take days or even weeks to be processed.”
She continues: “Today, we’ve streamlined the data-gathering and verification process with Kofax Kapow. All the necessary information is automatically captured from the web and put into the relevant workflows for our operators to review and approve. This has massively reduced workload for the team, so two people can now process all of the work items without the need for help from a temporary worker.”
The Questions You Need to Ask
So, you may be saying: “This all sounds great, but how can I pinpoint tasks or processes that could be quickly and easily improved with robotic process automation?”
Here are 8 questions you should ask about your business processes:
- Do you have areas that are underperforming?
- Do you have rigid applications or information siloes creating bottlenecks?
- Are there processes that can’t be scaled unless you hire more people?
- Do you have employees performing repetitive, manual tasks?
- Are your employees constantly copying and pasting information between internal and external systems?
- Do you have highly paid knowledge workers dedicated to time-consuming administrative tasks?
- Are data-entry errors creating frequent rework or exception handling?
- Is your company considering outsourcing processes that you would prefer to keep in-house?
If you answered yes to any of these questions, then that points to areas that could be improved with robotic process automation.
Get your copy of this eBook: Stop Your Swiveling: Robotic Process Automation for Property & Casualty and Life Insurers
1. Robotic Process Automation in Insurance, Celent Inc., April 2016
2. Gartner, Use Cases for Robotic Process Automation: Providing a Team of ‘Virtual Workers’, 26 October 2015