The proliferation of insurtech firms has led to a swathe of new developments in automation technology – developments that are advancing robotic process automation (RPA) and presenting many new opportunities for insurers.
RPA effectively replaces a human with a robot to carry out repetitive tasks, and a number of incumbent insurers have already adopted it to varying degrees. But, by coupling RPA with layers of expert decision algorithms, robust data integration and a real time decision support platform, it will be possible to deliver consistent, accurate and informed decisions in underwriting, pricing and claims – intelligent automation if you will.
Add to that some advanced analytics, machine learning capability (that actually learns rather than just applies rules), and short update cycle times and an insurer has the basis for a true AI system that can improve with time and data.
A lot of the focus in insurtech to date has been on personal lines. While I expect that to continue, commercial insurance is also ripe for some operational transformation. If we take commercial renewals, for example (which are generally neglected when it comes to innovation despite often representing more than 80% of an insurer’s total business), a company could create an automated footprint across a number of dimensions such as premium size, complexity of risk, geography and distribution analytics. It would also need to define expert responses across a number of segments, combining layers of insight around factors such as absolute and relative risk performance of the account; intermediary behaviour; market norms and large loss potential. In this way, the expert environment can deploy smart decisions in relation to whether to automate or not, as well as in the actions taken.
In order to support such goals, insurers need an interface layer to support communication between the Frankenstein’s monster of legacy systems that often exists. They will also need a decision framework, a segmentation framework and a real-time decision engine to quickly collate and output all the analysis taking place in the background to the end recipient, be it a man or a machine. The ability to acquire and integrate data across the layers is also a prerequisite.
Intelligent automation certainly appears to offer fertile ground for cooperation between incumbent insurers and technology providers. As insurtech businesses look more to the opportunities in insurance company engine rooms, those that can provide or support the ability to better use internal and external data assets, offer novel scoring algorithms, and enable cognitive insights from unstructured data will reap the rewards.
Dave Ovenden is global director of Pricing Product Claims and Underwriting at Willis Towers Watson