What to Expect From Automation in 2016 and Beyond

Much has been said about the insurance industry’s technology gap and its general hesitance to integrate modern technology into operations. While other industries heavily invested in such solutions, insurance businesses bided time, sticking to legacy processing systems.

However, we’re now seeing a renewed commitment to modernizing across the insurance industry. Insurance brokerages and carriers are more open-minded when it comes to adopting innovative new technology than ever before. In some cases insurance is actually leading the way, implementing solutions at scale which haven’t yet reached critical mass in other industries.

One such example is automation. Recently, insurers and the outsourcers they work with began implementing automation in operations – from claims processing to policy administration – to reduce costs and increase productivity. This year and beyond, we’ll see automation continue to permeate, touching new processes and delivering significant value to businesses and customers.

Automation is a broad concept but one recent solution gaining traction is robotic process automation (or RPA). Basically, RPA involves teaching software to trigger decisions on multi-step tasks using software or server-based robots. Insurance is a natural breeding ground for these solutions, which are best used to handle repeatable, structured tasks, such as those in claims processes.

RPA is gaining in popularity thanks to its compelling potential returns – between 20 and 40 percent cost savings depending on the automated process. In one case, Xchanging implemented a virtual workforce of 27 robots automating 120,000 transactions a month for its claims process work with Lloyd’s.

Several factors are driving the insurance industry’s appetite for innovation and modernization. First, the industry is more globally connected (and competitive) than ever before. Insurance markets around the globe – from London to Singapore – are competing for business and optimizing operations through solutions like automation is crucial to deliver value.

Second, the often-discussed employment gap (some predict as much as 25 percent will retire by 2018) and lack of experienced workforce is forcing insurers and the outsourcing experts they work with to be creative. Many look at automation as an intriguing solution. A recent McKinsey & Co. report examining automation in the insurance industry predicted up to 25 percent of full-time positions – from operations to sales – could be replaced or consolidated as a result of automation.

As momentum for automated solutions continues to pick up across the global insurance industry, we’ll see more sophisticated solutions and re-mapped workflows impact the following areas:

• Claims processing and submission

Much of the insurance industry has already shifted from paper-based to digital claims submission and processing on the back-end. Driven by the outsourcers already handling much of this work, claims processes are a natural fit for automation, and we’ll continue to see faster processing times (and lower operational costs) as solutions like RPA mature. For example, automated systems can read, scan and submit information from claims forms in a fraction of the time it would take an adjuster to process digital files.

• Policy administration and customer service

Customers expect a seamless experience from purchase to account settlement. These processes often involve several stakeholders and various digital systems that in many cases make for long wait times. Solutions like RPA can link these systems and workflows, triggering decisions much more rapidly, and moving forward, we’ll see automation greatly streamline how stakeholders and systems work together. For example, automation will decrease the time it takes to issue an underwritten policy and establish an account after a customer takes action on an online quote.

• Finance and accounting

Brokerages and carriers alike often dedicate internal resources to non-revenue-generating activities like accounting and financial reporting. Like claims processes, these structured and highly-repeatable tasks are prime candidates for automation, which can greatly reduce the associated time and costs. As adoption increases, we’ll see businesses re-allocate internal resources to new business development and client service, while automation handles activities outside the company’s core competency.

These are just a few areas in which we’ll feel the impact of automation in the short-term. It may be too early to say whether solutions like RPA will present a full solution to the looming talent and knowledge gap. But as adoption increases, we’ll see companies shift employees from process work to more strategic and growth-related positions.

Sean Allen is vice president for insurance business process services at Xchanging. He has more than 18 years of experience as a leader in the business process outsourcing (BPO) industry, working with some of the largest insurance firms to re-engineer processes from billing to payment and reporting.