Intelligent Automation: A Guide for Insurance Companies Ready to Go Digital

BY: RAJESH NAMBIAR – FOUNDER, CEO
APRIL 12, 2022

In insurance, automation is essential for success. It improves efficiency, effectiveness, and, if done correctly, profits. Here’s how to build intelligent automation into your insurance company.

Automation empowers insurers to build growth-focused, agile businesses. At the same time, automation is that spark that ignites a total digital transformation. It allows insurance companies to efficiently process the vast amounts of data the industry demands and use it where it’s needed.

Implementing automation reduces duplication of effort, eliminates tedious and redundant manual processes, removes technical debt, facilitates better decision-making, helps retain staff, and provides a better customer experience.

In this article, we’ll explore what automation is, as well as:

  • The history of automation
  • Terms you need to know
  • The pros (and any cons) of automation
  • Examples of what automation can do for your insurance company
  • How to bring automation to your insurance company
  • Tips for implementing automation

And because implementing a new process means nothing without metrics, we’ll talk about how to analyze the results of your automation projects. Let’s get started.

What is automation and why does it matter?

Automation, in the context of IT, is the development and application of technologies used to create and deliver goods and services with nominal human intervention. Adding automation technologies, techniques, and methods boosts the efficiency, accuracy, and speed of a variety of tasks formerly executed by humans.

For the insurance industry, automation means faster claims processing, more efficient and accurate underwriting, easy regulatory compliance, and quicker form registration. Another key benefit includes process and business analytics that enable better decisions throughout the entire company.

Automation can truly be a game-changer for insurance companies, bringing efficiencies that help increase profit margins while improving the customer experience. As one of the core components of your digital transformation, automation provides a “shot in the arm” that could ensure your company’s very survival in an industry that is becoming ever more automated and customer-experience focused.

The History of Automation

Automation isn’t at all a modern idea (having been put forward as early as the “Iliad,” which mentions automatons), but automation didn’t really come into its own until the Industrial Revolution, which began around 1760. The word automation itself wasn’t coined until 1946 by an engineer with the Ford Motor Company.

The main uses of automation before the 20th century had been in manufacturing, but the goal of all automation technology is the same: boosting efficiency. With industrial automation, the aim was to improve the efficiency of manufacturing, but it still involved much human interference.

Data-driven enterprise task automation began in the 1960s when enterprise resource planning (ERP) systems were introduced. This rudimentary automation has now evolved to include robotic process automation (RPA) as well as artificial intelligence (AI) to enable processes that optimize the level of necessary human support. This was enabled through the creation of high-density file systems, which combined with algorithmic analysis and AI tools to create exciting new opportunities to automate data-driven tasks.

RPA, hyper-automation, and intelligent automation improve efficiency by creating self-sufficient processes. These processes are enabled by modern tools that lessen the workload of human workers, enhance business processes, and provide numerous other benefits that power the modern enterprise.

Terms to know

Robotic Process Automation (RPA): An application of technology governed by business logic and structured inputs that automates business processes. A company can use RPA tools to configure software, create task “robots,” capture and interpret applications, manipulate data, and trigger responses and communicate with other systems. RPA can be used for something as simple as automatic email responses to deploying thousands of bots, each programmed to automate tasks in an ERP system.

Hyperautomation: Hyperautomation is the concept of automating as many IT processes and business tools as possible. Organizations that adopt hyperautomation use it to streamline processes across their enterprise.

Hyperautomation requires the coordinated use of tools such as artificial intelligence (AI), robotic process automation (RPA), event-driven software architecture, and other technologies to operate without human intervention.

Intelligent Automation (IA): The use of automation technologies – artificial intelligence (AI) and robotic process automation (RPA) – to both streamline and scale decision-making company-wide. It simplifies processes, frees resources, and increases operational efficiencies. An insurance company can use intelligent automation to calculate payments, make predictions for better underwriting, and keep in compliance.

Artificial Intelligence (AI): Refers to systems or machines that mimic human intelligence to perform tasks and can constantly improve based on collected information. AI takes many forms, including chatbots that use AI to understand customer questions and provide answers. AI is really about the process and capability for high-powered automatic thinking, learning, and data analysis rather than performing specific tasks or functions. The fact that it significantly enhances human capabilities makes AI a valuable business asset.

Technical Debt: Technical debt (also known as code debt) describes a consequence that results when development teams make decisions and take actions that prioritize speed over well-designed code. It is often the result of using quick fixes and patches instead of real full-scale solutions.

When you have too much technical debt, the IT team must spend all its time repairing shortcuts and patches instead of on new, revenue-building projects and other serious issues.

Event-Driven Architecture: Event-driven architecture (EDA) is a software design pattern. Decoupled applications serially publish and subscribe to events. This provides a way to build enterprise IT systems that facilitate information flow between applications, microservices, and connected devices in real-time rather than periodically polling for updates.

Everything that happens within and to your enterprise is an event, including customer requests. Real-time matters – the faster you get information about events, the more effectively your insurance company can react to opportunities to please customers and reallocate resources.

Enterprise Resource Planning (ERP): Enterprise Resource Planning (ERP) software applications help companies implement resource planning through the integration of all company processes into a single system. ERP software implementation is expensive, the success of the implementation depends on the skills and experience of staff, and it is often difficult to use.

The Pros and Cons of Automation

Traditionally, insurance companies are slow to adopt technology, but many have installed ERP systems, seeing them as the be-all and end-all to streamline and automate processes that are more accurate and efficient.

ERP software solutions were hailed as a complete problem-solver when they first came on the market. However, ERP has limitations that led to the current explosion in more modern automation solutions, including a lack of flexibility that limits adaptability and scalability.

The most common issues surrounding ERPs include:

Rigidity: ERPs are usually designed to build tightly locked databases and segregated responsibilities. This can mean confusing data and difficulty making sense of reports.

Hampered accessibility: Authorizing remote access is a difficult proposition with an ERP, and if it does happen, connection problems are likely to slow down productivity.

Intake issues: What ERPs do best is solve back-end processes, which means moving information to front-end systems through ERP-driven workflows can be quite challenging, with even simple processes, such as taking in documents, presenting struggles.

Missing details: Fields used in an ERP system have specific meanings and limitations. This means data transferred to and from your ERP could be stored in strange places or omitted altogether.

Change is expensive: Making changes to an ERP system is both difficult and expensive, especially if you make significant operational changes.

These are all serious obstacles to making automation an asset to your insurance company; one that is resilient, adaptable, and easy for everyone to use. Modern automation solutions can create a seamless digital environment that can truly transform your insurance business.

What RPA can do

RPA uses bots to emulate tasks that are repetitive and require no decision-making or strategy to implement. These include operational, transactional, and administrative chores, deploying software robots to perform end-to-end processes with little to no human interaction.

Automating processes saves work and allows staff to spend their time working on projects that are more cognitive, skill-based, and provide more value.

Claims processing: RPA integrates claims processing information from multiple sources, extracts data, tracks errors, verifies claims, and integrates claim-relevant information.

Underwriting: With RPA, the data collection process is automated so it can be used within internal systems to produce reports or recommendations based on stated rules, automating the basis for underwriting decisions and product pricing.

The client experience improves: When RPA is combined with data analysis, faster data processing allows detailed information about customers to be used to personalize offers and experiences.

Regulatory compliance: RPA validates customer information, generates regulatory reports, sends account closure processing notifications, and more.

In addition, RPA automates transactional and administrative activities that are part of accounting as well as settlements, risk capture, credit control, tax, and regulatory compliance. The tedious tasks of form registration and policy administration can be fully automated.

One significant advantage of RPA is its scalability. Any number of software bots can be deployed as needed.

What Intelligent Automation can do

Let’s move along to intelligent automation, which builds on the great features of RPA. While RPA is a great technology to automate routine, repetitive, and predictable tasks, it works by orchestrating user interface interactions that emulate the actions of humans.

IA incorporates AI technologies into RPA that simulate types of human intelligence, so it can process higher-function tasks – those that require a level of human-like reasoning, judgment, decision, and analysis. This provides benefits such as:

Cost reductions: Using data and analysis along with automating processes can speed up operations. The addition of AI means scaling quickly is possible without increased risk, quality compromise, or straining your staff.

Improve accuracy and consistency: The biggest strength of IA is its use of AI to propel data-rich decision-making and create a consistent approach to completing repetitive tasks.

A better customer experience: Real-time data means quick answers to customer questions, which makes a richer and better all-around experience that engenders loyalty and brings a competitive advantage.

For insurance companies, IA pretty much eliminates the need for any sort of manual underwriting calculations, simplifies claim and appraisal paperwork, and virtually guarantees compliance.

What Hyperautomation can do

Going yet another step further in automation technology is hyperautomation. Think of it as a toolkit of RPA, IA, intelligent BPM tools, decision management systems, and integration platforms.

Hyperautomation will drive higher-level functioning from simple task automation to harmoniousness to intelligence. That intelligence will enable predictive insights, guided suggestions, process mining, and dynamic decision-making.

In a nutshell, hyperautomation is an approach used by organizations to quickly identify, assess, and automate as many business and IT processes as feasible. It automates automation.

Hyperautomation is a future technology available today, enhancing everything that RPA and IA can do, only faster, better, and ultimately, cheaper.

How to bring Automation to your Insurance Company

The insurance industry is known for its caution – for obvious reasons. That caution has extended to technology. However, as the pandemic has forced insurance companies into the modern era, they have realized that RPA is essential, and with the enhancement of AI, they can grow, prosper, and move confidently into the future with a competitive edge.

But there are stages that must be gone through before you can implement automation, including:

  • Perform a comprehensive evaluation to discover which processes and procedures can be automated. Then assign priorities, beginning with the transformation of small areas and moving on to those that are more important.
  • Identify your business goals so you can automate the tasks that most benefit the company. If great customer service is your goal, you can automate claims filing and management first.
  • Create a flow diagram, similar to a wireframe for a website. Diagramming the tasks you are modernizing will allow you to create an automation flow.
  • Devise a plan to monitor performance so you can evaluate improvements and determine if adjustments need to be made. We can place our Application Performance Monitoring tool over the automation solutions, so you always know that the automated tasks are being carried out and are notified immediately if there are any errors.
4 Tips for a smooth and successful automation implementation

Automating your insurance company is an exciting prospect, but it can be a daunting one, so here are some tips to make it go as smoothly as possible and achieve optimum performance.

Understand the process you are automating: A complete understanding of the process is required before planning for automation. Each process must be identified, evaluated, and documented as well as tested. Processes are like living things: they must be actively used, progressively refined, and evaluated and updated over the life of the process.

Document your processes: You have to start somewhere, so start with standard and repetitive processes and put them down on paper, focusing on routine tasks that are highly repetitive. Prioritize those that will positively affect your business. If you don’t know the steps for different processes, it will be difficult to merge or eliminate any of them for increased efficiency.

Focus on specific objectives: Be clear on the objective of your automation project and document and communicate milestones. Managers must ensure that all stakeholders have a clear understanding of the benefits, both technical and for the business. Define milestones with measurable objectives and be sure to set and manage expectations and communicate often.

Keep the long-term in mind: The solution you pick should be agile and scalable to grow and adapt to both future changes in your business and its expansion.

Analyzing the results of your automation projects

You’ve implemented the three main components of your digital transformation, but how do you determine if it was a success? When analyzing the success of automation projects, in addition to getting rid of technical debt, here are things to look at in three areas: operations, finance, and overall business.

Revisit metrics at regular intervals so corrective actions can be taken quickly.

Operations Metrics

Break-even time for processes: Take a look at your ROI. Simple processes reach breakeven between two months and four months, processes of medium complexity in six months, and highly complex processes should reach an ROI between six months and two years.

This highlights the importance of tip number 1, above. The better the process selection the lower the run cost and the better the entire business case.

Human resources: How many employees were able to be moved to positions where they could add more value? How much was that value?

Measure customer experience: Constantly measure the reduction in repeat contacts, number of customer complaints, customer service backlogs, and improvement in your NPS.

Staff reduction: How many open positions were filled by bots or do not require hiring because of automation?

Project delivery cost: The annualized return from automation should include the total FTE saved ($), Errors and Omissions avoided ($), and revenue generated ($).

Finance Metrics

Net operating income (NOI): Where does your automation drive your NOI?

Five-year ROI: Because this is a digital world and technology changes so fast, you might want to also look at in-year savings.

Revenue per employee: In this case, your employee is a bot, so, what is your revenue per bot deployed?

Financial benefit by timeframe: As an example, measure the money saved by RPA vs the expense of RPA over a specific time period. This will also tell you your payback period.

Cost per transaction: Automation, if done correctly, means a lower cost per transaction.

Business Metrics

There are many business metrics you could choose, so choose those that most affect your business.

Average time to complete: The time it takes to process a transaction completely and successfully, such as a claim.

Transaction completions: The number of transactions completed and processed daily.

Size of backlog: Because automation is so much faster than a human being, there should be either no or a very small processing backlog.

Data accuracy, analytics, and availability improvement: You should be receiving consistent quality data that allows for better decision-making.

Compliance improvement: This could include direct ROI in violations and penalties avoided.

Reduction in errors: Errors cost money in the long run. How much are you saving by reducing them?

Metrics tell you whether a process is working on all levels to meet your requirements for internal efficiencies as well as customer satisfaction.

We’re living in a time of constant change, and traditional insurance companies are competing against those new online firms who incorporated automation from their beginnings. To respond quickly and effectively to changes in both the market and customer behavior, as well as to simply survive in business, automation is a must-have.

Automation packages that move you at the speed of today and tomorrow

At RD Global, we empower insurance companies with high-impact technology solutions rooted in a 5-star customer experience. Digital Transformation starts with Automation. Our Intelligent Automation as a Service packages bring you the ultimate in efficiency.

Our unrivaled team of in-house technical experts can solve your most complex digital challenges with state-of-the-art custom insurtech software to power your digital transformation.

Only the digitally strong will survive and prosper. Schedule a discovery call to learn how RG Global can partner with you for success now and in the future.

"Insurance Technology leader and Software entrepreneur with decades of experience leading technology initiatives for fortune 500 organizations. Rajesh Nambiar founded RD Global to create a unique digital consultancy offering high quality software solutions with an extreme commitment to customer experience."

APRIL 12, 2022
RD Global Empowers Insurance Companies to optimize total digital experience, unify data, and harmonize processes by developing high impact technology solutions infused with a 5-star customer experience.