In the long list of its many consequences, the coronavirus pandemic has provided a veritable trial by fire for business, compelling industries around the world to abandon entrenched processes and forcing overnight transformations of enduring protocol. Unsurprisingly, the results have been mixed.
For the insurance industry, the disruptive impact of COVID-19 has thrown into sharp relief those areas where innovation has been notoriously slow to take hold. Anything paper-reliant, documents requiring wet signatures, manually performed transactions or claims and face-to-face rather than remote interactions, are all now acknowledged as industry-wide pain points which must be addressed. But how?
In addition to showing us what systems need fixing, the pandemic has shone a spotlight on what’s working in today’s chaotic insurance landscape. Automation, especially as it relates to process optimization and operations, has emerged as a key player in helping insurers achieve more operational agility and resilience.
Automation and the Insurance Industry
From continued reliance on manual processes, legacy solutions and its reluctance to move away from paper transactions and data collection, the heavily regulated insurance industry has evolved more slowly than some of its peers. But even with its more gradual approach to digitization and tech adoption, automation has been incrementally changing the way insurers do their business for the better part of the last decade – in everything from predictive underwriting to workplace automation.
In fact, the industry has come a long way from the slow, paper-intensive, subjective underwriting processes of yore. Thanks in part to the innovation of industry disruptors, traditional insurers have had to embrace automation, particularly in those areas of the industry (auto, home and health) that have become increasingly competitive. The result has been that many of today’s new insurance customers are experiencing a vastly different, and improved application process, one that relies on rule-based systems for evaluating risk. This kind of automated process optimization in underwriting yields both efficiency and scalability, which means it’s also more customer friendly and lowers operational costs – saving time and money on both sides of the equation.
Artificial intelligence like chatbot engines are another area where automation has made industry inroads, improving customer service and meeting regulatory requirements at a relatively low cost. Other examples of successful industry automation include portfolio optimization and robo-advising, fraud detection, client data protection, and compliance with regulatory agencies. With less time spent on the administrative side of insurance, customers are enjoying a different kind of service and attention from their insurers.
Automating for tomorrow, today
As market volatility continues to put pressure on capital reserves and solvency ratios, cost cutting will be an essential piece of the digitization puzzle. Today’s insurers should be looking at industry-wide examples of automation and thinking about its potential across all of their operations; particularly how automation can be used to do the heavy lifting in repetitive data entry and claims processing. Overall, time consuming and expensive manual processes and pain points should be assessed as potential opportunities for automation.
Bottom line: there is no room for complacency about the role of digitization and automation in the future of insurance – especially in a Post-COVID landscape. Finding new ways to digitally enable traditional agents and brokers (even if they refuse to disrupt existing distribution systems) must be top of mind.