Putting the “sure” in insurance – the power of intelligent automation, improved analytics and cloudification

Vivek Agarwal, President – BFSI, HLS and Corporate Development, Tech Mahindra

 

We have seen most insurers demonstrate tremendous resilience in managing through the COVID 19 curveball. Through sheer grit and determination, they have been able to make the workforce productive from home and ensure clients and employees are supported. They rapidly deployed digital tools to address virtual sales, implemented collaboration tools, upgraded networks, enterprise security, and other components to keep the business humming. This was a CEO and board conversation, and, in most cases, they realized the level of underinvestment in technology across their organization. While some were already on the path to digitization, for most the global pandemic served as a wake-up call.

According to KPMG, 85% of insurance company CEOs say COVID-19 accelerated the digitization of operations, while 79% believe the pandemic brought a new sense of urgency to create new business models and revenue streams. As per McKinsey Global Insurance Pool Statistics, there is an upsurge in digital sales over in-person sales in the last two years across Life and P&C businesses.

This is welcome progress – acknowledging the necessity of digital transformation in a historically slow-changing industry is a step in the right direction. Customers have already moved forward and are becoming increasingly comfortable with buying policies online. ~70% of millennials1 want personalized policies and report 2.5x higher interaction on social media & 2.0x on internet-mobile 1. Providing top-tier digital experiences is table stakes.

But acknowledging the need is just one step; selecting the right technologies to spearhead the revolution is a different story altogether. While a handful of businesses have shown success, many lack a coherent view of the key technology trends to select, while almost a third struggle with quick decision-making.

For those who are yet to begin digitizing operations, it would be beneficial to understand three of the biggest technology trends disrupting the insurance sector:

 

Intelligent automation

In a year likely to be defined by fine margins, intelligent automation can boost business efficiency and create smart processes. For insurance businesses, intelligent automation can significantly save time, thus creating operational cost efficiencies, for example, automation can reduce the claim journey cost by 30%. Additionally, and in the long term, it can drive insights that keep customers returning year after year. Staff can spend less time analyzing data, and reallocate their time to more meaningful, higher-order work.

Subsectors such as the global reinsurance market are under increasing pressure due to factors like everchanging capital adequacy requirements, frequent weather events leading to higher claims, and the changing business environment due to geopolitical and economic issues. Intelligent automation solutions can enable reinsurers to improve their profit margins and offer value-added services to customers.

 

Data & Analytics

Insurance organizations are becoming increasingly keen to leverage the power of in-house and third-party data. A rapidly digitizing society is driving up the number of touchpoints that generate data – be it government, environmental, individual, or even location data. In turn, this can be deployed to drive the advanced capabilities offered by big data, artificial intelligence, machine learning, deep learning, and other complementary technologies like robotic process automation (RPA).

Best-in-class insurance companies are already developing and deploying these intelligent decision support mechanisms to augment and transform customer service, underwriting, pricing, claims, and many other ancillary functions. Some of the use cases like L&A insurers predicting customer behavior, identifying lapse patterns, and improving cross-selling capabilities; P&C insurers focusing on fraud analytics while reinsurers prioritize claims automation, and insurance firms are increasing profitability in many ways. As such, taking the steps to build new infrastructure and invest in new models will add a competitive edge for insurance companies.

 

Cloudification

Finally, an increasing number of insurance providers are harnessing cloud capabilities for both their core and noncore workloads. Hybrid and multi-cloud approaches are becoming prevalent. Doing so, along with legacy decommissioning, helps businesses to reduce both capital expenditure and operational expenses, enabling them to be agile and responsive to keep pace with the rapidly changing marketplace. In our experience with large-scale cloud migration and infrastructure consolidation, insurers can expect to benefit up to 25% of the Total Cost of Ownership (TCO). In many cases, these savings are imperative to justify the business case and fund new transformation. Tech Mahindra uses 6 proven levers to deliver the overall TCO reduction.

Cloud technologies can aid and improve governance and compliance, minimizing risk for businesses in a changing regulatory landscape. The solutions are now so sophisticated that they are more reliable than traditional solutions, offering the flexibility, agility, and scalability required to meet changing customer expectations. Further, for businesses looking to harness intelligent automation and data and analytics, cloud platforms offer secure data storage which can be accessed from anywhere.

These three trends can revolutionize insurance industry processes, from optimizing premiums to identifying fraudulent claims. Intelligent automation, big data, and cloudification have been at the periphery for years, gradually disrupting many back-mid-office functions. However, the pandemic brought these technologies to the forefront, as companies deployed them to overcome new challenges confronting their customers. Drawing upon lessons from some of the other industries that are ahead in this journey and that we have served successfully as partners, there is significant potential to leverage from connected ecosystems of partners, data, and devices that these technologies can help enable.

The rewards of a digitized insurance sector are numerous. Intelligent automation, improved data analytics, and cloudification will help companies not only grow top lines and strengthen bottom lines, but they will also be more responsive in meeting market demands while having a scalable and secure enterprise. A sustainable transformation approach tying together initiatives will go a long way to achieve these outcomes. The onus is on insurance companies to establish this, move swiftly and unlock these benefits.

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