Maximizing the benefits of automation in insurance operations

The insurance industry is confronting various challenges in the present business landscape to keep pace with changing customer expectations, the emergence of new technologies, and intensifying competition. To navigate these challenges effectively and maintain a competitive edge, insurers must prioritize automation in their business operations.

Automation is a cornerstone of success for the insurance industry, and adopting these automated systems allows insurers to remain competitive, provide personalized customer experiences, and enhance operational excellence. Gartner’s recent survey of insurance CIOs and technology executives shows that insurance companies prioritize customer experience and operational excellence  through digitization in 2023. They use digital technologies to optimize operations and service quality, highlighting the significance of digitalization in enhancing customer satisfaction In today’s rapidly changing business environment, embracing automation is a strategic imperative for insurers looking to succeed and thrive.

Automation in insurance operations: Where the companies stand today

The insurance industry has quickly recognized the potential of automation in streamlining operations and improving customer service. Today, companies are actively investing in automation technologies like RPA, AI, and ML to automate various insurance processes such as claims processing, underwriting, policy issuance, and customer service. A report by Allied Market Research indicates that AI in the insurance market is expected to experience a remarkable 32.56% CAGR growth from 2022 to 2031, reaching a projected value of $45.74 billion by 2031.

Despite the benefits of automation, insurance companies, especially commercial insurance, still face a lot of challenges in adopting automation technologies. One of the main concerns is the need for skilled personnel to manage and maintain these technologies. Additionally, there may be resistance to change from employees who fear the potential loss of jobs. Another challenge is data security and regulatory compliance, as automation may require access to sensitive customer data. Moreover, legacy systems may not be compatible with newer automation technologies, making integrating them into existing systems difficult.

Low automation can have a negative impact on the bottom line of insurance companies. Manual processes are prone to errors, leading to higher claims costs, reduced productivity, and increased staffing costs. This can result in lower profitability and a weakened competitive position. In contrast, automation can improve efficiency, reduce costs, and boost customer experience, leading to increased revenue and profitability and a stronger competitive position in the market. As such, insurance companies need to embrace automation and ensure they overcome the challenges to reap the benefits.

Download case study:  https://www.edgeverve.com/xtractedge/case-studies/impact-stories-insurance/

Benefits of automation in insurance

Strategies to maximize the benefits of automation in insurance

Identify the right areas for automation: Before implementing automation, insurance companies should identify the areas where automation can provide the most value. This can include processes that are repetitive, time-consuming, or prone to errors. Insurance companies can maximize the benefits of automation by focusing on these areas.

Choose the right technology: Insurance companies should select the right technology that fits their needs. This can include software that is easy to use, integrates with existing systems, and offers customization options. The technology should also be scalable and adaptable to changing business needs.

Invest in training: It is crucial to invest in training for employees to ensure they are fortified with the skills and knowledge required to use the new technology effectively. This includes training on how to use the technology, as well as training on how to adapt to new processes and workflows.

Emphasize data management: Automation generates a lot of data, and it is vital to have a robust data management strategy in place. This includes having the proper data infrastructure, analytics tools, and governance policies.

Continuously monitor and improve: Automation is not a one-time event but a continuous improvement process. Therefore, insurance companies should monitor the effectiveness of automation regularly and make adjustments as needed. This can include identifying bottlenecks, streamlining processes, and optimizing workflows.

The importance of identifying the right areas for automation cannot be exaggerated. Insurance companies can maximize the benefits of automation while minimizing costs by focusing on areas that provide the most value. This includes identifying areas where automation can improve efficiency, accuracy, customer satisfaction, and risk management.

Technology is crucial in maximizing the benefits of automation in insurance operations. The right technology can automate repetitive tasks, reduce errors, improve data management, and provide insights into customer behavior. This leads to better decision-making, increased efficiency, and enhanced customer experiences. Additionally, technology can help insurance companies to stay competitive by adapting to changing market trends and customer needs.

Automation with XtractEdge (A case study)

XtractEdge, EdgeVerve’s Document AI platform, helped an insurance company to automate its claims processing workflow by implementing an AI and machine learning-based solution. The solution automated tasks such as data entry, validation, and fraud detection, resulting in faster processing times, improved accuracy, and cost savings.

The implementation of XtractEdge resulted in a 50% reduction in claims processing time, a 40% reduction in manual errors, and a 35% reduction in processing costs, according to the company. In addition, the solution improved customer satisfaction and reduced the staff needed for claims processing, resulting in significant cost savings for the insurance company.

In general, XtractEdge’s solution helped the insurance company to streamline its claims processing workflow, reduce costs, and improve customer satisfaction by leveraging the benefits of automation using AI and machine learning algorithms.

The future of automation in insurance operations

Automation is swiftly becoming a critical component of insurance operations. Insurance companies are streamlining their processes by adopting automation technologies, improving the customer experience and operational efficiency. Claims processing, underwriting, and RPA are potential areas for automation in insurance.

Automating claims processing can help insurance companies reduce processing times, improve accuracy, and minimize costs. In addition, advancements in artificial intelligence and machine learning are making it possible to automate even more complex claims processes, such as medical records analysis or accident reconstruction.

Underwriting is another area where automation can have a significant impact. Automating data collection and analysis can lead to more accurate risk assessments and pricing decisions, resulting in more profitable underwriting portfolios. Automation can also speed up the underwriting process, resulting in faster policy issuance and better customer experience.

Robotic process automation (RPA) is an area of automation that can significantly impact insurance operations. Thus, RPA can automate recurring and manual tasks, such as data entry, document processing, and claims processing. By automating these tasks, insurance companies can enhance overall productivity and free their employees to focus on more complex tasks requiring human expertise and decision-making. According to Allied Market Research, the RPA market (2021) in insurance is expected to reach $1.2 billion by 2031, growing at a CAGR of 28.3% from 2022 to 2031, indicating a strong demand for RPA solutions in the industry.

Insurance companies that adopt automation technologies can significantly improve their efficiency, accuracy, and cost savings, ultimately giving them a reasonable business gain in the market. As advancements in AI, machine learning, and RPA evolve, we expect to see even more positive impacts on the insurance industry.