P&C insurers add automation to their efficiency toolkits

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P&C Insurers are implementing RPA- and AI-based applications across the value chain to expedite processes and to explore new engagements models.

As property and casualty insurers face margin pressures and increased competition, they are adopting automation capabilities to bolster customer-centricity, reduce costs, and improve operational efficiency. From quoting to policy servicing, underwriting to claims processing, insurers are striving to improve the bottom line by automating processes across the value chain.

In fact, 80% of insurance executives surveyed as part of the World Insurance Report (WIR) 2017, said that they are either investing or are planning to invest in robotic process automation (RPA) or artificial intelligence (AI) within the next three years.

Automation is being powered by new channels for collecting customer data, advanced data processing capabilities, and improvements in artificial intelligence algorithms. And because quick, error-free, and personalized service is expected these days as part of outstanding customer experience, automation is becoming a critical competitive edge and not just a cost-takeout play.

P&C insurers are implementing RPA- and AI-based applications across the value chain to expedite processes and explore new engagement models. Policy servicing is faster and more personalized with automation. For instance, AI-based chatbots are growing in popularity for resolving customer queries during quoting and policy servicing. GEICO’s mobile app virtual assistant Kate made her debut in early 2017, while Liberty Mutual, Allstate, and Progressive recently launched voice-enabled apps on Amazon Echo or Google Home.[1]

Several InsurTech firms are focusing on building solutions based on artificial intelligence. Uniphore, an India-based speech-recognition solutions company garnered recognition as the MetLife LumenLab inaugural startup accelerator. InsurTechs Claimbot, Avaamo, Insurify, and Next Insurance have also launched AI platforms.[2] And, London-based SPIXII offers an automated insurance agent built on neuro-economics principles and the integration of user data with contextual data from multiple sources, to speak to consumers just as a person would.[3]

Insurers can also automate the underwriting process using RPA and AI to improve cost-efficiency and enable a faster and more personalized customer experience. Moreover, near-instant claims processing is now being offered by insurers using automation. New York-based insurer, Lemonade, set the world record in December 2016 for settling a claim in just three seconds by using its claims bot, AI Jim, to run 18 fraud algorithms. By June 2017, 27% of Lemonade’s claims had been settled instantly by its AI claims bot. The company’s long-term goal is to settle 90% of claims instantly.[4]

The benefits of automation

Source: Capgemini Financial Services Analysis, 2017

An automated back-end system can also help insurers interested in new business models such as on-demand and micro-insurance. Moreover, automation will be a crucial component in P&C insurers’ shift to risk-mitigation models that monitor real-time data via connected devices and notify customers of impending risk.

As highlighted in the Top-10 Technology Trends in Property and Casualty Insurance: 2018 report, RPA and artificial intelligence can help P&C insurers improve process quality, speed processing times, and efficiently meet compliance regulations. With RPA, insurers can realize significant cost savings and achieve operational efficiency through highly scalable automation solutions that may be implemented in phases without disrupting normal operations. RPA solutions can be deployed quickly with a higher-than-traditional return on investment.

There’s no question, RPA and AI are valuable tools in today’s increasingly competitive insurance market. In the upcoming World Insurance Report 2018,[5] we have analyzed RPA and AI along with other key tools which can facilitate digital automation as well as digital core transformation – for insurers across sub-sectors. The report findings highlight that RPA and AI are the preferred tools for digital transformation and P&C insurers are relatively more active in implementing RPA and AI, compared to life and health insurers.

[1] Elafris website, “AI’s potential impact on insurance is humongous,” Danni Santana, June 13, 2017, https://www.elafris.com/single-post/2017/06/14/AI%E2%80%99s-potential-impact-on-insurance-is-humongous

[2] Ibid.

[3] Digital Insurance Agenda, “SPIXII: Making insurance simple, accessible and personal for everyone,” Roger Peverelli, Reggy de Feniks, May 4, 2017, http://www.digitalinsuranceagenda.com/102/spixii-making-insurance-simple-accessible-and-personal-for-everyone

[4] Consumer Technology Association, “How AI is Disrupting the Insurance Market,” Jim Harris, September 27, 2017, https://www.cta.tech/News/i3/Articles/2017/September-October/How-AI-is-Disrupting-the-Insurance-Market.aspx

[5] World Insurance Report 2018 is scheduled to be launched on May 22, 2018.

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