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Automation tools: The 21st century's Industrial Revolution

Julianna Rice
August 26, 2022

It is fair to say that the insurance industry has been one of the last business sectors to fully embrace the new digital era. Seen as one of the last bastions of tradition, automation within the US insurance industry thankfully moved beyond the tipping point in 2020. Akin to the Industrial Revolution, US insurance carriers have now tasted the elixir of cognitive solutions, and there is no turning back – they are addicted!

Automation in the insurance industry

We often sense a degree of skepticism from insurance carriers, insurance agencies and brokerages when discussing insurance automation systems. This is because there seems to be a common misconception that automated systems will take over, removing the human element and impacting customer relations. However, the reality is very different.

Proactive and reactive automated solutions

There are two main types of automated solutions in the insurance industry, best described as proactive and reactive.

Reactive automation

Insurance brokers/agencies already use reactive services, such as insurance rating software, when looking for the best packages available. So why is there relatively little concern regarding this type of insurance industry automation? It is probably because these packages are operator controlled. You set the criteria, and the package brings back the most competitive offers. They react to your instructions and have no element of AI or machine learning.

Proactive automation

Since the emergence of COVID and the considerable delays in settling recent natural disaster claims, proactive automation is now growing in popularity. Cognitive automation is often described as a Digital Coworker because it is similar to that of a traditional employee:

• The Digital Coworker has the knowledge and experience equivalent to an associate in the field.

• The Digital Coworker understands industry jargon, processes, and functions.

• The Digital Coworker is continuously learning and improving from each interaction.

Rather than pitting computers/software against employees, it is probably easier to think of cognitive process automation (CPA) as a Digital Coworker, who works alongside the existing workforce. The key to successful insurance automation software is maximizing the skill sets of employees AND artificial intelligence services.

See also: How does automation benefit the insurance industry?

Prepping your systems for automation

In theory, the vast majority of administrative and many other behind-the-scenes processes can be replicated using cognitive solutions. This term is often used to describe the replication of the human thought process in intelligent automation software. It involves analyzing text, recognizing words and numbers then extracting the required data.

For any specific process to be automated, there needs to be a degree of structure already in place. Historically, this has meant precise data entry requirements, ensuring information was entered into the correct fields on forms. However, these administrative tasks often underuse employees' skills at a considerably greater cost than automated solutions. This is often referred to as structured data.

Our automated services incorporate genuine artificial intelligence, allowing Digital Coworkers to work with unstructured data as an employee would. There is no need to re-input data from claims forms, for example. Our system will extract the required data directly from the original claims form. This is a considerable advantage when looking at areas such as:

• Claims process automation

• Automated underwriting

• HR automation

We will now look at these three areas and see how artificial intelligence and automation can assist going forward.

Automated claims processing

Whether looking at property & casualty or life & health insurance, both high-volume sectors, the claims process can be prolonged. In addition, in the event of large-scale natural disasters, settlement of claims can be substantially delayed, leading to financial hardship and mental anguish for customers.

Using our Digital Coworkers, bots equipped with artificial intelligence and machine learning capabilities, it is possible to automate many processes. A bot is a software application often referred to as an Internet bot/web robot. The areas in which we can assist include:

• First notice of loss

• Fraud investigation

• Claims set up

• Analysis

• Handling

• Recovery

A recent FBI report concluded that non-health insurance fraud is estimated to cost US insurance companies more than $40 billion per year. This equates to between $400 and $700 in increased premiums per person each year.

Automated claims processing is already helping to identify potentially fraudulent claims, leading to huge savings. The automated process will save time and reduce human error by:

• Locating and pulling criminal history

• Accessing claims records

• Searching social media

• Referencing online databases

• Identifying false-positive screenings

This is just a selection of some of the information at your fingertips when using our CPA system. Consequently, insurance companies should be able to better manage premium increases in the future, to the benefit of customers.

See also: Catastrophic claims processing adjusts using AI

Claims automation also takes in several additional actions such as:

• Reading documents and extracting information

• Data analysis

• Collection of additional information required

• Evaluating simple claims

• Calculating benefits

• Corresponding directly with the claimant

• Setting reserves

• Making payments

• Closing claims

You will notice that except for electronic/printed correspondence, automation of insurance operations does not involve direct interaction with customers. However, the significant time savings associated with automating the above processes leave customer service representatives (CSRs) more time to speak with claimants.

A potential bottleneck in claims processing: Huge increase in claims after a large scale natural disaster. Automation can slash processing times, improve accuracy and allow claims to be paid out much quicker.

Automated underwriting systems

It is safe to say that time is of the essence for underwriters looking to secure as much new business as possible. This is a highly competitive area of the insurance industry and one where simple errors can prove costly. Finding a balance between speed and accuracy with attention to detail is not easy.

Step forward our underwriting assistant Digital Coworker, which has a lot to offer insurance carriers:

• Up to 8 times faster than humans

• Automated payment process with minimal employee involvement

• 250% average return on investment

• Breakeven in months, not years

While speed is essential, the highest level of accuracy must still be maintained. Automated underwriting systems not only support these high standards but also improve them, eliminating human error.

Policy processing is a prime candidate for automation, using artificial intelligence and machine learning, taking in:

• Data entry

• Analysis of competing quotes

• Quote submissions

• Requests for additional data

• Sanction screening

• False-positive screening

Then we have the underwriting process itself, with the option to automate areas such as:

• Risk raters

• Performance declinations

• Preparation of quotes

• Sending quotes

• Working with billing department

• Create and send binder

• Evaluate renewals

• Administer renewals

As mentioned above, one of the main advantages CPA systems have over non-artificial intelligence software is being proactive. This is perfectly illustrated by evaluating renewals, quote requests and contact with the customer – the perfect way to retain business.

While sometimes overlooked, the maintenance of accounts and client information is crucial. The ability to automate the following processes can save significant time, money and effort:

• Identity verification

• Change of address

• Endorsements

• Policy audits

Crucially the automation of such processes will remove human error, constantly validate and check data held, ensuring that all information is correct. This is a fundamental regulatory obligation placed on companies holding client data.

A potential bottleneck in the underwriting process: Focus on a new line of business can result in a significant increase in underwriting activity. Automating elements of the process can markedly increase capacity.

HR automation

Human resources automation is a subject that many businesses have probably failed even to consider. It may surprise you to learn that HR automation can take away many administrative/mundane tasks, leaving more time to speak with and advise colleagues. We can achieve intelligent automation for HR departments by incorporating our Digital Coworker bots into any existing system.

The activities covered include:-

• Recruiting

• License verification

• E&O COI collection

• Payroll

• Accounts payable

• Accounts receivable

Upon the recruitment of a successful candidate, there is a requirement to send numerous paperwork and documentation. A Digital Coworker can adapt output to individual employees using the latest artificial intelligence/machine learning technology. This removes human error, saves time correcting documentation and means that your employees have all of the information required in a timely fashion.

A potential bottleneck in the HR department: Manual recruiting can be a costly and lengthy exercise. Automated services can contact previous applicants or even create adverts and arrange advertising, filtering applicant data to create a list of suitable candidates. However, the interviewing of the candidates still requires a high degree of human intuition, not something a bot could ever emulate.

Reducing costs, improving efficiency and taking a proactive approach

It is not difficult to see why some people are concerned about the growing automation of business and areas of everyday life. However, when it comes to automated insurance solutions, such as our Digital Coworker, there are numerous factors to consider such as:

• Improved accuracy

• Proactive approach

• Improved processing times

• Cost savings

All of these factors will benefit customers as well as businesses. The ability to process and settle a claim quicker than your competitors is worth its weight in gold. Even after the detailed yet surprisingly short set-up period, our AI bots are continuously evaluating and learning. Consequently, akin to an employee gaining valuable experience and expanding their skills, our AI and machine learning services are constantly adding value to your business.

See also: The future is now: How automation is changing the insurance industry

Workflow automation and the industrial revolution

While there is no doubt 2020 was the year that automation was formally recognized by the insurance carrier sector, in reality, this has been ongoing for some time. Many people have genuine concerns about automation, removing the "human touch," and an assumed loss of control. This is only natural, but there are several misconceptions.

Our Digital Coworker service is best seen as enhancing and expanding your workforce, not a threat. Artificial intelligence and machine learning ensure that our bots are constantly looking at ways to improve and strengthen their role. Contrary to popular belief, customer feedback confirms automation leaves more time to interact with clients.

We know that client-facing services are becoming increasingly important to customers, with many millennials placing this above the cost of services. The more activities you can automate, the more time to interact with customers, and the fewer misunderstandings, leading to improved retention rates. For many companies, this is a win-win scenario.

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