Insurance Transforming Through Automation, AI, and Data: The Next Chapter

Keith Aylwin, Sunil Kumar

Automation has been a hot topic within financial services for some time. Traditionally, while many insurance firms have embraced the technology, finding the right use cases to support investment has been challenging. Despite this, we have seen firms benefit from automation in both the short and long term more recently, with the pandemic expediting digital change programmes.

The industry is now on the brink of a profound technological shift, with firms wanting to adapt as customer expectations evolve. Over the next decade Automation, AI and Data will significantly impact all aspects of the industry. Advanced technologies and data are already creating seismic shifts in the distribution and underwriting segments, with policies being placed in near real-time. We’ve seen this dynamic model in the health sector with Vitality, for example.

Where have organisations already invested in automation?

Automation Investment: Insurance Heatmap

Complex client interactions, input data variability, nuanced decision making, and integration with legacy systems have traditionally made the adoption of robotic process automation (RPA), and automation more widely, difficult to justify. Furthermore, time and cost to implement, coupled with alignment to the firm’s overall strategy, have been barriers to maximising automation potential.

The best use cases centre around manual processes that are typically repetitive, frequent, straightforward and use structured data. In the future, we envisage this being extended to tackle cross-divisional customer experience processes.

AI and its relationship with Automation & Data: Trends defining the next decade

AI technology is already making headway in businesses, homes, transportation, and wearable technology. Whilst investment in AI within insurance hasn’t radically increased during the past two years, the willingness to accept change and adapt to an increasingly digital landscape will improve firms’ abilities to take advantage of these new technologies as they become more mainstream.

Within underwriting specifically, we are beginning to see strong inter-relationships between AI, Automation and Data. Firms are ingesting data through automated processes and running AI technology to develop more accurate underwriting profiles for customers.

We believe the following AI related trends will define the industry in the coming years.

1 – Automation & Machine Learning: Tackling changing customer expectations

The shift in attitudes to utilising automation technology for customer engagement is already in-flight, as we have seen recently with multilingual and multimodal bots.

Conversational AI delivers next generation chatbot capability, using conversational processes, AI, and Machine Learning. Firms can configure chatbots for complex conversational dialogue based on unique processes built for the specific client need. We are seeing these bots collate, assess, and interpret this information as well as presenting end data through underlying natural language processing (NLP), which enables the bots to understand human language. Undoubtedly, deep learning, cognitive technologies will continue to grow substantially over the next five years.

2 – A new wave of Data: Ecosystem creation and connected devices

Insurers are typically rich in data, and new types of data sourced from wearable technology or social media, and the permissions surrounding these are disrupting the market. Through regulated ecosystems, organisations will seek to share data openly, in line with data protection and compliance rules. For example, data through wearable technology or home-based devices can be funnelled directly to the insurer and impact policy pricing in near real-time.

The prevalence of connected devices is increasing rapidly in the consumer sector, from fitness watches to self-driving cars and many more. This list of devices will continue to grow, as will the emergence of vast quantities of respective data. The correct assimilation of this information will result in more targeted product offerings and improved client satisfaction. A salient example is wearable technology in the UK; demographically speaking, the population is ageing, and the combination of health-related technology and the resulting data produced will be pivotal to assisting this segment with Life & Pensions products.

Adapting now to a rapidly changing landscape

Whilst it is difficult to predict exactly what insurance will look like, we believe firms can take three fundamental steps today to prepare for this change, grow sustainably, and remain resilient.

1. Embrace Automation, AI, and Technology boldly

Technology will play a critical role in targeting the next generation of customers, by improving customer experience, providing 24/7, 365 access to services, and using analytics to diversify product channels and allow insurers to price in real-time.

This transformation could occur as part of a “big-bang” implementation, however, typically firms want to see an immediate benefit before investing heavily. Incremental and iterative evolution of architecture utilising intelligent automation, based on customer feedback, is a cost effective and proven method to unlock technology benefit without a multi-million-pound investment case from the outset.

2. Build and deliver a progressive Data strategy

Data is revolutionising society and quickly becoming the most valuable commodity for all organisations. Data is critical to how insurers assess risk, price policies, and improve customer experience. Firms must therefore build a well-defined, progressive strategy to source the right data externally, and make the best use of it internally.

As data becomes ever present, either through point-to-point interactions or broader ecosystems, insurers must ensure they can source the right data at an efficient cost. Ideally, external data will directly feed internal product offerings by allowing insurers to produce meaningful insights and analysis to tailor product offerings and enrich the customer.

3. Prioritise excellent customer engagement

Digitisation has dramatically changed the interactions between the customer and insurer, from meetings that traditionally happened infrequently to daily touchpoints in the wake of advanced analytics through technology.

We now see insurers incentivising customers to provide data in real-time by enriching them through enhanced analysis and providing them with rewards. For example, customers can provide live fitness tracking data and in return receive trend analysis and redeemable points.

As the depth and ease of access to customer data increases, we anticipate firms doing more to proactively focus on customer engagement through low cost, hybrid advice models as well as considering customer reward strategies.

How Alpha can help

Here at Alpha, we are experts in supporting clients in their transformational journey through harnessing automation and other technologies whilst developing a comprehensive data strategy to enrich the customer experience. If you would like to find out more about the topics raised in this article or would like to discuss any wider challenges faced by your organisation, please get in touch.

About the Authors

Keith Aylwin

Keith is a Director at Alpha FMC and leads the Life & Pension's practice. He brings extensive global experience with over 20 years in the Insurance industry and has successfully led engagements covering Strategy Development, Core Technology Change, Target Operating Model Design and Implementation, Process Improvement & Re-engineering, Business Process Management, and Distribution.

Sunil Kumar

Sunil is a Consultant at Alpha FMC with over five years of experience consulting for Financial Services firms. Sunil has helped clients deliver large scale transformations, including target operating model design, operational outsourcing, technology implementation, process improvement, and developing go-to-market strategies.