Navigating Operational and Automation Challenges for Insurers

Insurance transformation is a process. While implementing a new technology platform is a critical first step, it only represents a part of the equation for successful change. Before insurance transformation can truly take hold and positively impact an organization, there are some common challenges to overcome in transitioning from “go live” to “stabilization.” These include defining automation imperatives, achieving the target operating model, managing the degree of customization, and advancing data reporting and analytics.

As companies move from the initial implementation phase into live use, they often uncover a range of issues they hadn’t prepared to encounter, such as: 

• Nonstandard processes causing disorganization and manual intervention
• Operational issues that can range from roles and permissions to production data volumes
• Nonfunctional automated workflows causing increased delays and poor customer interaction

When faced with these challenges, it’s common to get bogged down and use a patchwork approach to resolve them. In the interest of finding a quick resolution, however, companies can fail to recognize the downstream consequences.

It is critical to take a step back and solve these issues within the broader context.

Defining the Objective: Streamlining and Stabilizing Operations

If legacy systems and processes remain in use to save money, they can be more expensive to operate because of maintenance fees, opportunity costs, and data deficiencies. For example, claim results depend on how quickly and efficiently a claim is handled, making the transformation imperative not only to impact the end cost, but also how customers view the organization. Ultimately, the bottom line and reputation are impacted by these processes and technologies, and it is critical that the organization be successful in its transformation to streamline and stabilize operations.  

An efficient operating system can simplify entire processes. For example, claims can be managed from initial submission through final settlement, using automated processes, advanced analytics, and convenient tracking. Similarly, policies can be underwritten and bound with straight-through processing. The objective should be to seamlessly integrate people, systems, and data from multiple sources. Providing automated workflows for consistency and efficiency, including tracking tools to make sure the processes move smoothly and securely, is paramount to success.   

The outcome should enable greater focus on high-value activities such as sales, customer retention, and customer service. It should also enable quick, accurate reporting.

Specifically, streamlining and stabilizing processes while enhancing technology should accomplish the following:

1. Better data: Consolidating people, systems, and data from multiple sources into one platform makes it easier and faster to uncover trends between disparate teams and divisions. Centralizing data also results in greater consistency across the organization and eliminates time spent moving from system to system. 
2. Smarter decisions: Integrating systems to leverage all relevant data drives educated, informed decisions faster — the impact of which becomes even more profound over time. The quicker and easier it is to properly issue insurance and resolve claims, the higher the satisfaction of both customers and employees alike.
3. Streamlined process: Providing intuitive mobile forms, automatic alerts, real-time access to data, integration with third-party systems, and instant data validation boosts efficiency and accuracy.
4. Wiser use of resources: Prioritize instances that require automatic manual review. This may be routing the most complex claims to seasoned adjusters for investigation and management while routing simple claims to less experienced claims professionals. It can also include rules that escalate underwriting exceptions based upon pre-established rules, allowing underwriters to focus on those accounts requiring additional analysis. 
5. Reduced financial leakage: Increase automation and reduce cycle time to improve decision-making that helps avoid fines, penalties, and payment inaccuracy.
6. Improved customer connections: Customers who feel they have been treated fairly are more likely to remain loyal to your organization. Handling claims efficiently and fairly increases loyalty, as does reducing the customer burden to obtain the insurance policy in the first place.

Goals of Automation: What, How, and When?

Automation can provide significant value to all core areas of business. It can start from unit testing of a functionality and extend all the way to core business processes automation. But before the automation process can begin, understanding what to automate, how to implement it, and when to do so is critical for success.

One of the most significant benefits automations provides is a reduction in manual tasks. For example, an insurer providing personal and commercial lines insurance can significantly reduce the effort required to generate a quote, create a claim, and issue payments — subsequently creating more time for teams to focus on areas of the greatest importance.

Automation has already reduced claim processing time over the past decade, although there is still room for improvement. For example, a U.S. insurer recently achieved a record-breaking two-second claim processing time. This would not have been possible without automating nearly all steps in the claim life cycle.

There are three main areas of focus to efficiently manage the automation process:

1. Decide what to automate: Deciding what to automate is often more difficult than it seems. This should be a combined undertaking by the business and IT departments. A solid prioritization approach and simple cost benefit analysis will uncover appropriate automation candidates.
2. Implement a plan: Enable IT teams to take the lead and put together a plan of action to combine the right set of skills and tools required for automation. Ensure that business users are engaged as subject matter experts and receive regular updates to keep them informed throughout implementation of the new system.
3. Set a timeline: The sooner an organization starts automation, the better. Before beginning the process, it’s important to define goals and deadlines for the team to target. Doing so will keep the process on track and manageable for all stakeholders.

Evaluating Gen-AI for Insurers

Generative AI is a game changer for most industries, including insurance. Using the potential of Generative AI, insurers can enhance the customer experience through custom products, security/fraud detection capabilities, and accuracy of compliance and reporting.

Some of the areas where Generative AI can benefit Insurers include:

1. Risk management: Generative AI can help manage risks effectively by using predictive analytics. It can analyze large volumes of unstructured data to identify potential risks and provide strategies to mitigate a range of issues.
2. Product recommendations: Customer needs analysis can be performed by providing a number of parameters as an input to generate product recommendations that can provide adequate coverage to the customer.
3. Agent support: Generative AI can be used to support agents in handling claims by reducing claims processing times while delivering accurate claims categorization.
4. Customer support: Chatbots using AI are already being used by many insurers to handle customer inquiries and improve response times. Generative AI can improve the efficiency of these chatbots, offering immediate feedback to customer queries and helping them make efficient, data-driven decisions.
5. Regulatory compliance and reporting: Regulatory reporting can be achieved with Generative AI. It can also improve the overall compliance percentage by highlighting potential risks and reducing penalties.

There are myriad other use cases for AI in Insurance, but the above list encompasses key focus areas to start with. Tackling these will help provide a solid foundation to rapidly implement other customer-centric cases.