By Assaf Tayar, Managing Director at BCG Platinion
The insurance sector includes many mundane and manual tasks. Yet the reality is that these tasks can – and should – be sophistically automated with Artificial Intelligence (AI), bringing a new lease of life to traditional insurers; famously known for being ‘digitally behind.’
AI comes with a wealth of benefits, like freeing up employees’ time and ensuring customer satisfaction. By leveraging the large variety of AI solutions, from chatbots to document processing or advanced analytics to fraud detection, insurers are able to improve and speed up many processes such as claims and appeals processing, while offering granular pricing, greater risk management and tailored products.
That said, AI solutions mustn’t be applied as a plaster or easy fix for the short-term. Instead, it must be incorporated within an organisation’s open architecture. Only then can insurers be prepared for the long-term explosion of technology, ensuring they can support the ever-growing rapid AI and data use cases in an iterative way while developing a “company-wide” data layer.
The modular approach
Nearly three-quarters (73%) of UK consumers feel that the customer experience for insurance products has stood still for the last five years, according to research by global technology provider FintechOS. However, AI certainly provides a viable option to plug the consumer expectations gap.
Further to FintechOS’ findings, additional research from Xerox states that 40% of financial services and insurance leaders are planning to implement intelligence and advanced analytics services, including AI by February 2022.
But if insurers don’t approach AI by relying on open architecture, then they will not reap the benefits of AI at scale. What that ultimately means is not deploying an architecture that creates soiled depth as it gets more complex. The focus instead is on continuous development using a modular, platform-based approach.
With an open architecture approach, essentially organisations are able to add and remove components in order to meet the demands of new technologies. And if they don’t – the IT infrastructure will eventually need to be ripped out and replaced entirely.
Becoming data-centric
Central to reimagining IT architecture and its impact on the wider business is data and insurers’ approach to it.
Insurers have years of historical data at their disposal to define actuarial models and risk profiles for their prospects and clients. Insurers need to be tapping into these data sharing opportunities from ecosystems spanning across multiple industries and shared infrastructure to ensure that artificial intelligence is of optimal use for both business and customers.
Simplistically put, it’s about ensuring data is independent and hosted in the cloud, rather than within underlying siloed CRM systems.
Then, looking further ahead, the concepts of data mesh and distributed data space should facilitate aggregation of more data from the same source across time and space. And this is what will deliver data-driven value at scale, generating insights into trends that feed into AI systems.
Such reliance on data from across the businesses is what will help insurers to offer much efficient services continuously – even when trends and markets change. So from a customer satisfaction point of view, the answer is clear; a strong use of data feeds into AI, helping the technology to make much more informed and accurate decisions to benefit consumers.
A bionic business
It might feel impossible to design and implement new technology, but an open architecture changes this. Such approach means that businesses can be bionic – whereby insurers can combine the best of human expertise, data and technology, such as artificial intelligence.
Intertwining technologies such as AI with human capabilities allows insurers to power growth, innovation, efficiency, resilience, and competitive advantage.
For instance with fraud, artificial intelligence can flag up suspicious activity, and in turn, call upon advanced algorithmics to assess whether a claim is fraudulent or can be compensated. A time saving method, given that only the most doubtful or dubious cases would then need to be flagged for human evaluation.
And that is a true bionic example – where the strengths of a human and AI can work together in harmony, benefiting one another.
The human touch
Yet above all else, an open architecture approach must be combined with a contentious, empathetic attitude. The voices of IT architects – who provide guidance and expertise – should be listened to widely across the business, This can’t be a one-way relationship, because in order for data-focused architecture to succeed, its architects must be in constant dialogue with the business as a whole.
IT architects need to be responsible for understanding the business, and business leaders can only create a strategy if they understand the technology on a fundamental level, with the guidance from architects.
This way, insurers can build a bridge between the strategy and the activation. Combining an understanding of how best to leverage the available data, with the human touch to make deployment a success and guide the business strategy.
The most valuable asset for any business today is an architect and leaders or partners that can combine strategic business knowledge with a mastery of the architecture that underpins it. When these people come together, using data and putting the voices of people first, AI will be a transformative, revolutionary tool taking insurers from digital laggards to digital leaders.
