Automating Insurance: Does This Give A Better Opportunity For The Insurance Sector?
The future is becoming less predictable every day. If insurers want to stay relevant to tomorrow’s needs, they must build agility into everything.
The insurance industry is on the brink of a major disruption brought on by changing customer behavior, new technologies and business models. In a recent PwC survey, more than half of the participating insurers predicted disruption to their business over the next five years.
In Asia-Pacific, growing demands for technology-driven solutions are pushing insurers to enhance digital capabilities.
Yet, only 43% of insurers are putting automation at the heart of their business strategies. Traditional insurers fear losing out to InsurTech companies as the latter is creating solutions that can potentially disrupt every part of the insurance value chain — from underwriting risks to predicting losses. Their fears are compounded with the growth in investments in InsurTech, where annual investments have reached a cumulative US$3.4 billion since 2010.
The insurance industry will be disrupted, with or without the participation of insurers. In order to stay ahead, insurance companies need to embrace automation, and that begins by understanding the opportunities and threats that stem from it.
Don’t run away from automation, it is already here
The robotic age is already here in the form of Robotic Process Automation (RPA). Today, we have robots that ”do” simple tasks for us and to a certain extent, ”think” for themselves. By removing humans from the equation, RPA can quickly, inexpensively and accurately automate processes and customer interactions that currently require a high level of human involvement. Moreover, we are already putting robots that ”learn” out into the world. This applies to software that executes highly dynamic and non-rules-based processes while having the capacity to make optimal adjustments when variables change. The next stage of development in automation and machine learning is just around the corner: a new generation of systems that adapt and learn on the fly.
Automation is a double-edged sword
Automation is certainly changing the industry, but to imagine that the entire profession of insurance broking will move to robots is to over-extrapolate how fast technology will change things in the real world.
According to Forrester, robots will eliminate only portions of jobs — mostly involving tasks that are repetitive, monotonous and time-consuming. Automation can and will eliminate human intervention in some tasks, so the day-to-day responsibilities of some broking jobs will change, but not disappear. Some will see this as a threat and others will see it as an opportunity.
We live in an era of when consumers can easily access information to compare insurance products, and there may be little differentiation between products and pricing. In this challenging environment, personalized and engaging customer experience becomes critical in not just attracting new customers, but also retaining existing ones against aggressive competitive offers.
Customer expectations of the digital experience and personalization are increasing. The good news is automation can actually help insurance companies deliver a superior customer experience as robot-advisers and other automation technologies help create more tailored offers and experiences for each customer. Meanwhile, this also frees up the time of brokers and other professionals to focus on building relationships with their prospects and customers.
Data analytics is the emerging game-changer
Since data collection has always been at the heart of insurance business processes, insurers also need to understand that data analytics is a game-changing technology for their business. Robo-advisors or other automated solutions can analyze the data and then write the code for the data to be acted on without human intervention. The analysis of data then allows brokers and insurers to better understand and anticipate risks and customer demands with far greater precision than ever before.
Even the most successful insurers should not rest on their laurels. They must act now to adapt to the digital age by embracing robots and automation to future-proof their businesses. By harnessing the power of automation and robotics, insurers will be able to create customer experiences through new combinations of information, business resources, and digital technologies.