What is insurance automation, and what are the benefits?

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We can hardly imagine any industry in the production sector that can function without high technologies integrated into it. Along with that, advanced solutions are rapidly seizing service sector businesses, making them more tech-dependent. The insurance industry is not an exception.

Why automate? 

Nowadays, more and more insurance service providers resort to digital solutions, automating complex processes and therefore reducing manual work. The new-age tools bring down expenses and human input, increase output, and enhance customer and agent experience as well as profit growth. They organize vast amounts of data in the system that functions smoothly and efficiently.

It may seem that the rise of customer concern for safety at the beginning of the 21st century prompted AI adoption by numerous coverage merchants quite long ago. Despite the obvious benefits of automated tools, the industry has been slow in turning to hi-tech advances. Still, positive dynamics of AI integration can be observed in the insurance market. Compared to a 2018 survey by Statista, stating that only 5% of insurance companies were dependent on automation, up to 30% of the underwriting roles are expected to become automated by 2030, based on the McKinsey report. 

When automate?

To be able to compete with rivals and attract and retain customers, major and minor industry players should not underestimate the role of automation in overall success. Staying current with global tech trends and applying them to business guarantees comfort to customers who want the services to be furnished in any place at any time. Insurance buyers admit the lack of digitalization that influences the efficiency of their claim processing. The research conducted by PwC shows that 41% of consumers are ready to switch to a more automated insurance provider. 

Innovation in the insurance sector is typically implemented through Robotic Process Automation, AI, and Machine Learning applications. 

Benefits of automation 

Effective risk management 

Thanks to technological advances, insurance providers can predict and prevent failures, which saves time and expenses. Many insurtech companies have already automated their internal systems for risk profiling, but there is still enough room for improvement.

Eliminating human touch  

Any manual work represents the likelihood of errors that pose a threat to the insurance business. In this event, automation helps insurance industries avoid the loss of goodwill caused by human factors. People can delegate monotonous processes, including data entry, to advanced systems and concentrate on more important promotional tasks. Leaders of the industry have successfully been utilizing customized CRM software – a tool that provides seamless interaction with current and potential customers, lead and claim management and other smart features. 

Speedy claim processing

This feature makes up a symbiosis with the previous one because the claim processing procedure used to involve manual tasks leaving much potential for mistakes. A well-developed claim processing cycle is a cost-effective solution that helps to resolve customer issues on the spot.

Troubleshooting side-effects of outdated systems use

Loads of insurance companies still apply obsolete legacy systems for key business processes. Such old-fashioned preferences arise out of the high costs and complexity of large-scale digital alterations and difficulties in expenditure coordination.

Unfortunately, this approach makes it impossible for companies to comply with industry standards and satisfy rising customer demands. In this event, businesses have to develop numerous disparate systems that still do not allow for overwhelming observation of all the processes. Progressive industry representatives resort to the Composable Enterprise concept and give their preference to advanced customized software.

Compliance with state regulations

If you still think that a seamless functioning of the insurance process is achievable without upgraded software – this paragraph will turn your point upside down. Outdated software represents the risk of failure to comply with ever-changing state regulations and requirements. Tracking of newly-adopted acts that may influence business procedures is a crucial factor for the legality of industry processes. For instance, the data security legislation induced companies to alter a lion’s share of business processes. 

Nowadays, the success of insurance service providers is largely dependent on their ability to conduct remote and digital operations strictly regulated by state legal bodies. More and more people favor online services that are impossible to deliver without digital transformation. Another incentive for software optimization is the government’s approval of e-signatures and e-claims that have equal legal force with their printed counterparts. This digital amenity attracts customers who appreciate convenience and flexibility. Thus, with automation systems, insurance agencies successfully keep up with global changes and state-set standards. 

Fraud prevention

Advanced insurance software ensures automated data collection from various sources along with uninterrupted monitoring of claims. The algorithms allow immediate detection of fraudulent behavior and guarantee its timely prevention. Any type of fraud, especially data leaks, causes money and reputation losses for brands. AI-powered engines ensure smooth and secure claim settlement.

Conclusion 

Implementing automated insurance outweighs the costs and risks, yielding fast results. One should bear in mind that hi-tech integration is not a panacea against all the problems that insurers face today. When used right, it can deliver high-quality service, meet high demand, and support sustainable growth. 

Author

Olga Vinichuk – Business Analyst and Insurance IT Consultant

As an insurance IT consultant, Olga shapes the unique solutions that digitally transform underwriting, claim settlement, policy management, and compliance monitoring workflows. Olga is also involved in outsourced product development projects, where she helps SaaS insurance companies turn their high-level product concepts to fully-functional solutions.

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