RPA and the Insurance Industry
Insurance companies — whether providers of life insurance, health insurance, vehicle insurance, home insurance, travel insurance etc. — are currently dealing with a number of heavily inundated, slow back-office processes. In order to maintain a competitive edge in the insurance market, insurers need to regularly handle claims processing, underwriting as well as policy quotations. However, the huge volumes of repetitive business practices result in reduced customer satisfaction and profits and slow growth.
To dramatically improve profit margins as well as transform customer experience, insurance companies globally are turning to automation to streamline business processes and effectively serve customers. While some of these companies have already started using partial automation — scanning paper documents to speed up data entry — a large number of companies are shifting to Robotic Process Automation (RPA) for superior automation capabilities. RPA provides additional support to help insurance companies automate their workflows and streamline their operations.
CHALLENGES
Insurance companies globally, regardless of the size or industry, face challenges in conducting business. However, these challenges often impact businesses or insurance providers that are heavily reliant on back-office processes. Some of the challenges that the insurance companies face are:
Manual Data Entry Processes
Insurance companies manually enter data into the customer database to process an insurance claim or send a quotation to the client. This entire process is a time-consuming and costly. Manual processes are also prone to errors and inconsistency, leading to significant discrepancies in the company records.
Legacy Applications and Disparate Systems
Many insurers still rely on legacy applications and disparate systems to manage their business functions. When implementing new ERP (enterprise resource planning) or BPM (business process management) solutions, insurance companies face challenges in integrating these new systems with the existing systems. The system integration involves partial or complete replacement of the existing setup and huge time, money, and effort investment. Even after complete integration, companies are left with legacy systems that no longer provide the support needed for company growth and development.
Regulatory Compliance
Insurers must comply with a host of compliance standards including tax laws, PCI standards, and HIPAA privacy rules. These compliance standards change frequently. Businesses must keep on realigning themselves with the changed regulations in order to ensure that they are compliant. While such laws are meant to protect business operations, company employees and clients often find it difficult to comply with regulations. Non-compliance leads to damaging financial and operational consequences.
HOW RPA CAN HELP?
RPA is an emerging technology trend that enables businesses to overcome challenges they face in streamlining back-office processes and transactional, administrative tasks. RPA works best when the underlying processes are rules-based, repetitive, and frequent. It reduces the effort by 20 to 30 percent at an enterprise level whilst minimizing operational risk and improving customer experience.
The areas where RPA can help are:
Streamline Claims Processing
Claims processing is fundamental to the profitability of the insurance providers. Typically, it is error-prone and time-consuming. Insurers must replace the manual processing of insurance claims with RPA to reduce the amount of time spent on performing repetitive processes and reduce, if not eliminate, human errors. This means that the insurance claims must be processed in an efficient and accurate manner.
Scalability
Scalability is easy to achieve with RPA as it is possible to increase or decrease active RPA software robots. Intelligent robots can be scaled up or down based on the number of claims or quotes to be processed during a particular time of the year. While temporary scaling of RPA software robots is essential in the short term, active robots can be increased to meet the long-term growth needs of the company.
Non-invasive Compatibility
Many insurance providers still rely on legacy systems or disparate applications. Therefore, non-invasive nature of RPA is used to streamline business processes. RPA imitates human keystrokes and mouse clicks, interacting with the presentation layer of computer programs and applications. As a result, RPA can be implemented in sync with the existing applications, without the need for insurance providers to replace their current IT setup. RPA can also be implemented with limited support from the IT team as it does not require team members to have programming knowledge.
Regulation Compliant
Regulatory compliance is necessary for the success of insurance companies. RPA ensures that the data is accurate and the software robots maintain running logs of their actions. Therefore, companies must monitor regulatory compliance on an ongoing basis through internal reviews. Regular monitoring of the ever-changing compliance enables insurance companies to stay prepared for the external audit as well.
REAL-LIFE BUSINESS AREAS
The processes in an insurance company are time-consuming, data intensive, and customer contact center based. A lot of human effort is spent on gathering and collating data from multiple systems, updating systems with changes or new data, and validating and processing the data.
RPA is part of the emerging artificial intelligence tools including virtual agents, machine learning, computer vision, and natural language classification. The move to artificial intelligence technologies such as image classification for claims and text analytics for servicing customer queries drives automation and augments insurance processes. In order to integrate the technologies’ with the underlying systems, RPA plays a vital role.
Automation Spectrum
The automation spectrum is rapidly changing. Based on data and case studies for RPA implementations, here are the areas in the insurance industry where RPA has demonstrated successful implementations:
· Claims Registrations: RPA has improved the time required to execute a claim registration process by at least 50%.The contact center saves at least half the time it takes for each claim registration and updation.
· Policy Cancellation: Implementing RPA in the insurance companies improves the cancellation process massively. For the same set of transactions, cancellation is done in one-third of the time with one-ninth of the actual processing staff.
· Form Registration: RPA implementations improve the forms registration process by 40% with half the number of staff members.
· NCD (No Claims Discount) Verification: Pre-RPA, the NCD validation takes about 10 minutes. Post RPA, after the agent uploads the details, the BOTs verify and flag mismatches within 2 minutes.
· Policy Issuance: Policy issuance is a manual, time-consuming process that can take more than a week to complete. By implementing RPA, the effort is reduced at all stages and the policies are issued in less than two days.
RPA BENEFITS
As with traditional automation solutions, one of the most obvious benefits of RPA lies in reducing the cost of manual processing. When compared to no automation, RPA costs one-fifth for on-shore full-time employee (FTE) and one-third for offshore FTE. RPA applications can also reduce the error rates by 20% and relieve employees from tedious tasks, enabling them to focus on more productive activities.
· From a productivity perspective, RPA applications can run for the entire year without any break, reducing the downtime. As RPA consists of BOTS, no human training is required and programming can be done across tens, hundreds, or even thousands of RPA applications at the same time. Insurance firms have reported productivity gains of up to 50% from the usage of RPA in various insurance processes.
· RPA also improves operational efficiency. It reduces the cycle-time to nearly 80%. RPA also ensures high level of accuracy, security, and continuity, much higher than the human or manually-driven processes. This is particularly important in the insurance industry as the customers are demanding and needs consistent service. RPA also ensures regulatory compliance. When properly coded and aligned with the appropriate process, RPA applications ensure 100% compliance with state and country regulations.
· RPA results in huge cost savings for both on-shore and offshore delivery options. The lower costs achieved through the reduction in onshore and offshore FTE along with reduced business expenses results in investment recovery in just six to nine months.
CRITICAL SUCCESS FACTORS
The success of RPA depends on identifying and prioritizing the processes that are ready to automate and decide on the extent to which RPA must be implemented across the organization. For reviewing multiple RPA projects across the insurance industry, there are a set of best practices that must be followed to ensure successful implementation.
• Apply Lean Process Optimization before Robotic Process Automation implementation
• Business criticality and component-based architecture should be used to identify RPA candidate processes
• Implement a Center of Excellence (CoE) and guidelines for assessment, design, development, and deployment of robots
• Create a central RPA command center to proactively monitor progress, benefits, capacity, and interdependencies
• Establish a dedicated, RPA project execution and maintenance team that coordinates with the command center
• Form a shared asset library and align RPA deployment architectures across geographies and functional areas
RPA IN THE LONG-TERM
RPA has the potential to deliver significant benefits including increased productivity, high operational efficiency, and reduced cost. However, it is vital that the insurance companies must consider the investment to be made in implementing the broader digital transformation strategy. Automation should not be viewed as the only alternative for inefficient processes, misaligned capabilities, or lack of vision for the organization. However, it should be considered as a critical component to ensuring outcome-focused operations and technology (O&T).
