Bots and Insurance: Making Sense of the Benefits and Risks

When it comes to adopting the latest technology, the insurance industry is widely regarded as a laggard. In fact, until recently, few (if any) insurer-developed social, cloud or mobile-first apps even existed.

The advent of robotic process automation (RPA or “bots”) appears to have captured the attention of leading insurers across segments, putting the industry on an even footing with other sectors other than financial services. While life and specialty lines carriers are still evaluating the technology from afar, property and casualty insurers are increasingly piloting and engaging in widespread bot deployments in the areas of claims, policy processing and underwriting.

It’s easy to see why. A recently published report in Venture Beat reveals how chatbots can settle insurance claims in just three seconds. The Digital Insurer estimates that 80% of all underwriting will be handled by bots in the not-too-distant future. And earlier this year, GeekTime reported on five promising chatbots for insurance.

The Need to Increase Efficiency and Fast-Track Digital Transformation

Obviously, customer-facing applications are popular because that’s where both revenue and customer experience stem from. But there are other applications as well that deliver cost savings, operational efficiencies, improved turnaround time and better decision making. Several of our leading property and casualty (P&C) insurance clients have also come to us seeking insight into automating their new business and renewal processing, claims, billing and finance operations and premium audit processes to reduce manual paperwork and improve sales forces to reduce lengthy close cycles between brokers, agents and policyholders.

All told, there is significant traction at both large and midsize insurers to increase efficiency and fast-track digital transformation through the use of artificially intelligent bots, machine learning and integrated third-party data for better task automation.

Much of the investment in bots (around 70% to 80% in our experience) is earmarked to improve claim and policy processing efficiency. For example, bots are being used to analyze customer calls and determine the best plan of action before routing the call (if ever) to a live agent. More importantly, insurers aren’t just looking at automation as a singular tool, but rather the underlying technology to improve their entire omnichannel customer experience, and advance their digital journeys.

Why? Because early gains have shown that insurance automation often leads to better judgment, faster processing and ultimately happier customers. That, in turn, leads to more measurable, if not less risky, profitable premiums.

A Frustrating Experience

For example, consider the recent life insurance experience of a senior Cognizant executive. After submitting the requisite medical workup, and associated paperwork, the policy wasn’t finalized until eight weeks later. And when it was finalized in writing, the online user portal still didn’t have the policy in place, directing the holder to the message “there was a problem retrieving your account information — please call customer service.”

With the right automation mindset and experience, however, we believe much of this frustration could have been avoided. Furthermore, there’s no justifiable reason that the turnaround time could have been cut in half, if not less.

Easier said than done, yes. But the brilliance of automation lies in the amount of manual paperwork it can eliminate. When done right, it allows agents and brokers to focus on more strategic work, such as helping double the number of customers in half of the time it used to take to service clientele.

The Importance of Augmenting Human Capabilities

In other words, avoiding manual work and augmenting human capabilities is key to effective automation. And few available tools are better at avoiding manual work than intelligent bots, which explains why a growing number of insurers are considering RPA deployments across the industry.

The real question then becomes: are insurers using automation to just do things better and faster, or are they really trying to transform and strengthen how they do business? In our experience, the answer is a mix of both.

An example of this would be claims contact center transformation. We are advising our clients on broader digital transformation leading with automation levers such as AI/cognitive learnings, which can be employed for real-time sentiment tracking and persona matching to route the call to the best service representative for superior experience — while self-service could be enabled through chatbots. All of this could be applied while rules and algorithm-based solutions are applied to turnaround time, call average handle time (AHT) and accuracy. Either way, leadership is encouraged and excited by robotic automation tools.

Considering Key Factors

Still, substantial skepticism and confusion remain. In our view, the following epiphanies are critical.

Whatever you decide, RPA presents an exciting opportunity to improve productivity, contain costs, improve customer experiences and create more innovative and productive ways of working. Similar to how policy processing, underwriting and claims can be a moment of truth to customers, how insurance ultimately adopts automation will likely be a moment of truth for the entire industry.

To learn more, please read Cognitive Computing: The Next Stage in Human/Machine Coevolution.

This article was written by Sathish Ranganathan, Market Leader for Insurance Automation and Agil Francis, Consulting Partner, Cognizant Business Consulting’s Insurance Practice . It was previously published on Digitally Cognizant.

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