Robotic Process Automation in insurance. How is it different from its predecessors?

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„Unlike traditional automation, RPA has the potential to boost an insurer’s overall operational effectiveness with less investment, shorter cycle time, and higher short-term business value”

As we know it today, Robotic Process Automation (RPA) evolved from a variety of technologies such as industrial robotics, desktop personal assistants, and business process management software. RPA creates a software-based virtual employee that coordinates with existing company systems. RPA technology will not modify an insurer’s IT infrastructure. Instead, it sits on top of it. This allows insurers to implement RPA quickly and efficiently without altering existing infrastructure and systems.

Traditional automation links isolated systems and optimizes business processes to bolster efficiency through quality improvement, time savings, and reduced costs. Today, particularly in insurance, RPA objectives are similar but the implementation time is much shorter, which enables firms to meet rapidly changing industry regulations and customer demands for more personalized service.

RPA can be programmed to mimic the work of an employee by accessing systems in the same manner as a human. RPA can handle end-to-end processes without human intervention. Or, it can be programmed to manage rule-based processes alone and to notify a human operator of exceptions. The result is a transition from “services-through-labor” to “services-through-software.” As the technology ecosystem continues to expand and the technical expertise demanded from employees is increasing proportionately, RPA flexibility becomes even more valuable.

robotic process automation

An easy-to-visualize analogy might compare traditional automation systems and RPA as part of a bakery’s efforts to improve its productivity. Imagine a bakery production line. The “product” is iced vanilla cake featuring whipped cream and maraschino cherries. The last two steps of the production process involve one employee spreading the icing and another adding the artistically-placed cherries and swirls of whipped cream.

To reduce production costs, the baker could buy or develop a machine that automatically adds the icing, whipped cream, and cherries (traditional automation). Another option would be for the cake icer to be trained to multi-task and also place the whipped cream and cherries (process optimization). But in a bakery that leverages RPA, robots would handle the tasks of both the cake icer and the cream-and-cherry specialist, without changing what is done during those steps. A virtual employee takes the place of a human—with no change to the internal infrastructure.

Unlike traditional automation, RPA accesses the presentation layer of systems and follows existing work flow and business processes. There is little need for detailed requirement gathering and design phases. And that means quick implementation (a typical RPA proof of concept requires four to six weeks for advisory and deployment[1]) and minimal capital investment.

Robotic Process Automation has proven to pay for itself within six to nine months, with return on investment (ROI) as high as six to one.[2] RPA can be implemented in a piecemeal approach, automating one process after another. During implementation, manual and automated processes can coexist without interrupting normal operations:

  • Less-critical work-flow processes can be automated first and observed for performance before more critical processes are automated.
  • RPA can be implemented in one section or department before company-wide
  • Seamless integration with other existing processes and systems is possible.

Testing is simple and efficient because the same task can be performed by humans and robots and outputs can be compared for inconsistencies. While traditional automation projects have a significant failure rate driven by long durations, RPA doesn’t carry the same risk. It is also highly scalable (the number of virtual employees can be increased/decreased based on demand). Simply stated, RPA can be trained to handle any business process change within a short period of time.

RPA offers a competitive edge

The technological revolution and growing popularity of InsurTechs, combined with customer demand for personalized experience, are pushing insurers to add more product and service value. And as if that’s not enough pressure, today’s highly competitive markets are simultaneously requiring cost reduction. RPA has the potential to boost an insurer’s overall operational effectiveness with less investment, shorter implementation time, and higher short-term ROI than traditional automation. Insurers can also divert the savings realized from RPA to other transformational projects that may have previously been sidelined for lack of funds.

Robotic Process Automation is one of the insurance industry’s biggest technology-based opportunities. As part of insurers’ innovation strategies, RPA can help safeguard return on investment while maintaining focus on business goals.


[1]: Harnessing the Power of Automation in Insurance

[2]: Robotic Process Automation Solutions for Financial Services

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