The insurance industry has long had a reputation for being slow to embrace technological advances. But with artificial intelligence (AI), something seems different. Industry press, conferences, thought leadership is awash with discussions on this new hot topic. There seems to be a genuine drive and curiosity that could spark a digital revolution.
The industry has reached a pivotal moment in its history, where the convergence of technology and innovation is redefining how insurers operate and how they interact with customers. In this article, we will explore the key technologies driving this transformation, the challenges insurers face, and practical solutions for success in the digital age.
The Power of AI
AI has emerged as a game-changer in the insurance industry. By harnessing the capabilities of AI, insurers can optimize core processes, enhancing productivity and service quality across various customer touchpoints. Integrating AI with the Internet of Things (IoT) unlocks vast amounts of new data, enabling insurers to gain a deeper understanding of their clients.
This newfound wealth of data paves the way for personalized product offerings, pricing strategies, and streamlined service delivery. Moreover, Generative AI is revolutionizing data-driven decision-making, customer engagement, and operational optimization, particularly in critical areas like underwriting and claims processing.
But it’s not just Generative AI. There is a wealth of new technology becoming available to help insurers automate mundane and repetitive tasks, whilst at the same time improving the quality of available data. For example:
Tools for Data Extraction: In today’s competitive insurance landscape, data is king. Insurers need access to high-quality data to make informed decisions and stay ahead of the curve. Intelligent Process Automation (IPA), Natural Language Processing (NLP), and Intelligent Text Ingestion (ITI) technologies are transforming the way insurers extract and utilize data.
These technologies create robust data extraction models that enhance risk selection, policy administration, underwriting, claims processing, loss modeling analytics, appraisal of insured assets, and regulatory reporting.
Robotic Process Automation (RPA): RPA automates repetitive, time-consuming processes, freeing resources for more strategic tasks. This increases efficiency, reduces turnaround times, and improves overall operational performance.
Tools to Handle Big Data and Support Analytics: Securing data for analysis (whether structured or not) is critical for insurers. Advanced analytics is pivotal in actuarial practices, helping insurers establish premiums, manage portfolios, review unpaid claims, and plan for business growth. Pricing and growth analytics solutions address various challenges, including product launches, price monitoring, profitability analysis, and rate adequacy assessment.
Low-Code/No-Code Technology: this technology has empowered non-programmers to create applications quickly and efficiently. This gives insurers endless possibilities for developing and maintaining applications and insurance products, from coverage and rating algorithms to forms and customer interactions.
Overcoming the Hurdles
As insurers embrace digital transformation, they encounter several challenges that can hinder their progress. One major challenge is the lack of end-to-end process maps, making it difficult to visualize entirely digitized workflows or assess the impact of legacy systems. Indeed, legacy systems pose another significant roadblock, impacting efficiency and increasing costs.
Insurance organizations also need to grapple with changing customer requirements. Customers now choose to engage with insurers via various channels, and insurers must adapt to meet these demands. Inflexible system architectures can be a severe risk in this hyper-competitive industry.
Ensuring seamless underwriting, pricing, and claims processing remain a top priority. Whilst it’s generally agreed that digitization can help here, many insurers are struggling to digitize core functions, such as document verification and digital signatures, which are essential for providing superior customer experiences.
To overcome these challenges, insurers need to make strategic investments, in terms of both time and budget, in several key areas:
- Agreeing upon Strategy and Priorities for the Business: Many insurers cannot commit the budget or resource to digitize their entire organization at once. The task is too large and overwhelming. Business leaders must assess their processes and decide what should be done first – that could be trialing automation in a small part of the workflow, testing the water by addressing internal processes, or tackling a larger but more urgent problem head on.
- Implementing a Comprehensive Data Strategy: Insurers need a coherent path for data transfer, including data input and output processes, to improve operational efficiency.
- Removing and Replacing Outdated Technology Infrastructure: Maintaining legacy IT infrastructure and end-of-life applications poses risks and increases costs. Insurers must modernize to stay competitive.
- Connecting People, Processes, and Technology: seamless process flow – i.e. enabling data sharing across the organization – is crucial for successful implementation of digital technologies. In other words, the systems must be able to talk to each other.
- Delivering Superior Customer Outcomes: Optimizing customer engagement across multiple touchpoints is essential for creating a smooth customer experience. AI-powered tools exist to help insurers achieve this goal.
- Addressing Ethical Concerns: As insurers deal with vast amounts of data, they must consider ethical implications of new technologies. They must ensure that any and all AI products they employ adhere to legal, social, and governance best practices, address data security and privacy concerns, and help to build trust with consumers, investors, and employees.
Evolve and Thrive
Even the largest of tasks can be executed smoothly when broken down into small parts. Partnering with a proven strategic operations support and technology partner can help insurers navigate these challenges successfully. To ensure more resilient operations, insurers must strategically invest in harnessing automation, connecting people, processes, and technology, and implementing robust data privacy and cybersecurity measures.
To remain competitive in this fast-moving data and technology environment, insurers must proactively adopt emerging technologies and build a culture of innovation to streamline workflows, increase efficiency, and enhance long-term profitability.
* Isabelle Clausner, Vice President, Client Executive – EMEA, Xceedance