Digital capabilities transforming global programmes (Part Two)

In the second article on digital capabilities and global programmes, Zurich’s Carin Gantenbein and Armin Schaefer explain how the insurance industry is undergoing a revolution, and how new technologies and digital capabilities have the ability to transform not only the insurance sector in general, but also global insurance programmes specifically.

When looking at digital transformation in the insurance sector, it is clear that the industry is currently undergoing a revolution. The insurance industry is changing in some fundamental and exciting ways, and technology is playing a key role. Our customers are forging new expectations based on their experiences with other sectors, and new risk ecosystems are emerging challenging traditional value chains. And our role as risk experts is being expanded by sensors, mobile technology and big data capabilities that are redefining the very notion of insurance.

Retail insurance is very much at the forefront of this revolution and has reached mainstream adoption in many areas. For large commercial insurance, and particularly international programme business, digital transformation is starting to happen. The pace of change is significant and has accelerated within the past 12 months in the international programme space.

Optimising current large commercial business model
A key part of this revolution is driven by powerful new technologies that are changing the business model, increasing efficiency and consistency, improving service quality and making it possible for insurers to better interact with a whole range of stakeholders across the industry.

Optimising a fragmented IT landscape
In large commercial/programme business, insurers often face a complex, fragmented IT landscape that may include a considerable portion of IT legacy systems with limited automation capabilities. There are tasks in the end-to-end process that are highly repetitive, manual and include a significant amount of data rekeying from one system to another. One of the new technologies helping to optimise in this context is Robotic Process Automation (RPA). It has the capability to take on many of the repetitive processes, so that highly skilled people can be freed up to work on the more complex and bespoke aspects of an international programme. Hence, RPA is a great enabler for driving efficiencies and improving service delivery in speed and quality.

Optimising dealing with unstructured data
Insurers are faced with large quantities of unstructured data. For instance, submissions come in a variety of formats from the broker or the customer, to be manually reviewed by expert underwriters and risk engineers who structure and manually key these data into the various underwriting, pricing or risk engineering systems for processing.

In this context, cognitive computing – more specifically, natural language processing (NLP) capabilities – can help to bring all unstructured data sources together, distil the intended semantic and properly structure the information supporting the underwriter, risk engineer or claims specialist to consume the relevant information for their risk assessment and decision making. In addition, NLP capabilities can be applied to automated research of internally or externally available data with the purpose to provide the underwriter, risk engineer or claims specialist with relevant supplementary information allowing the creation of a holistic risk profile of the customer. This includes, for example, financial reports, newsfeeds, expert reports, audit reports or internal analytics sources.

Optimising consistency between customer intent and coverage
International programmes are highly complex processes by nature, involving various parties. For the risk manager, it is crucial to have certainty that his or her original intent is reflected in all the various insurance policies, making sure there are no coverage gaps. Even in this highly complex area, cognitive computing and, more specifically, semantic processing capabilities enable an automatic review of the key elements of an insurance programme such as coverage, exclusions, deductibles or limits across all local policies. In addition, various jurisdictions and regulations or languages can be taken into account when comparing the local policies with the master policy, as well as with the original customer intent.

Optimising data into insights
Insurers, brokers and customers are starving for meaningful insights and industry benchmarking capabilities. Huge amounts of data are available across the insurance industry. Big data and analytics can shape this myriad of data points into meaningful insights. It provides benefits to customers by giving them a clear overview of their portfolio, helping them to anticipate risk trends or developments within their own company, within the industry or within geographies and being able to put in place appropriate risk mitigation actions. This also enables underwriters, risk engineers and claims handlers to gain a holistic view for their risks and support them in their risk assessment, pricing or decision making.

Industrialising the current large commercial business model and creating a new ecosystem
New technologies are crucial enablers not only to optimise but also to considerably industrialise the current business model, which in the international programme space is still largely bespoke. The industrialisation of the international programme business enables a high level of automation when it comes to processing and decision making, even for a highly complex business segment. Taking the technologies described here to the next level not only builds the foundation for self-servicing capabilities and straight-through quoting or claims handling processing, but can also turn machines supporting decision making into machines making independent decisions.

While it has been common in the retail segment for some time, industrialisation is now starting to be applied to the international programme space. For example, self-servicing channels leveraging smart chatbots, cognitive algorithms and analytical capabilities provide the potential for a fully automated risk selection and insurance purchasing process.

Furthermore, new technologies have the potential to also reduce the distance between customers and insurers and any other parties involved. Thanks to application programming interface (API) and distributed ledger/blockchain technology, all collaborating parties can become much more connected and interlinked. While today’s information and transactional exchange between customer/broker and insurer is largely defined by email and attachment traffic, it is starting to move towards a system-to-system connectivity and ultimately towards a platform-type of thinking. In effect, it is creating a completely new ecosystem in which all the players and third parties are well connected in real time, all sharing the relevant source of truth, revolutionising the insurance industry.

Conclusion
Digital transformation is a journey and, for the international programme space, this journey has already begun at an exponentially increasing pace. Nevertheless, there are many remaining challenges and questions to be answered around data standards, governance, regulations, ownership, data security and cybersecurity issues.

One thing is clear though: the ship has already set sail and an exciting journey lies ahead with interesting new setups and business models for the international programme space, enabled by new technologies. For insurers, it is not an option to ignore these developments. These developments will play a role, they are relevant and they are here to stay.

Contributed by Carin Gantenbein, head of business development and transformation international programmes, commercial insurance, Zurich Insurance Company; and Armin Schaefer, head of digital and new technology international programmes IT, commercial insurance, Zurich Insurance Company