,Singapore

How robotics and cognitive automation will transform the insurance industry

By Raj Juta and Yacin Mahieddine

The use of robots to drive tangible business benefits is very much a reality today. According to Transparency Market Research, the global IT-enabled robotic process automation (RPA) market is expected to reach $5 billion by 2020. RPA is just the beginning; cognitive capabilities that enable machines to perform tasks reserved for human intelligence are now being leveraged with robotics. Robotics and cognitive automation (R&CA) is expected to foster greater collaboration between humans and machine by both automating repetitive tasks and enhancing the quality of jobs.

Automation in the insurance sector
RPA technology is seeing widespread adoption across industries and insurers in Asia are making strides to automate their business. Successful RPA adoption in the insurance sector can transform  the actuarial, risk, and finance functions. Asian insurers including Mitsui Sumitomo, Tokio Marine, Sompo Insurance, and Ping An are harnessing R&CA to reduce administrative tasks such as responding to inquiries, processing insurance applications, as well as supporting and streamlining claims processing and the underwriting process.

NTUC Income in Singapore announced in 2017 that it plans to roll-out RC&A technology to improve its pre- and posthospitalisation claims process. The benefits of R&CA go far beyond just efficiency gains and its potential across the insurance value chain is significant. It can also support the adoption of innovative value proposition to simplify the customer journey and enhance distribution efficiency.

It is important that insurers understand the long-term business implications of R&CA beyond robotics alone. Insurance companies will need to reconfigure its operating model and adopt a more customer-centric approach in order to capitalise on the opportunitiesunlocked through cognitive automation.

Impacts to the insurance operating model
As insurers automate volume-heavy transactions and reporting processes previously done by humans, companies will need to re-deploy Full Time Equivalents (FTEs) into more complex, judgement-intensive roles. Recruitment and training engines will also have to be upgraded to hire and train skilled FTEs with competencies to handle complex decision-making roles.

It is important to note that technology will not replace talent as a sustainable competitive advantage. Instead, organisations will need to strike a balance between transitioning to R&CA, making required FTE adjustments and upgrading the skills of existing workforce.

Insurers should also prepare themselves for the imminent transformation by reconfiguring their IT systems. The transformation will be an extension of the journey that has begun in areas such as RPA and advanced analytics enablement, most likely including: (1) Modular sourcing: The R&CA technology industry is now engaged in a start-up-like phase, in which nimble positioned to disrupt the incumbents; (2) Integrated systems: R&CA technology has the inherent capability to iteratively self-learn and generate insights through access to data from multiple sources; and (3) Transparency and control: Cognitive technologies and systems will undoubtedly partner with humans in the near future. The technological landscape is evolving quickly, and the implication for insurers is the need to identify and source relevant capabilities to allow for better task design and an appropriate division of labour between humans and machines.

Staying focussed on customer centricity in an R&CA world
Insurers serve a diverse demographic of clients and customer interaction preferences are changing. Customer expectations for convenience through consistent information and service levels across multiple channels is likely to drive insurers to mirror non-insurance industry experiences, such as online retail and banking.

Insurers have already started to employ advanced analytics to gain deeper customer insights. However, the volume, unstructured nature, and velocity of data being generated are beyond the realm of traditional analytic processes. The benefit of cognitive technologies in insurance is that it can solve problems that traditional analytics cannot readily address. R&CA will help empower insurers with the ability to provide improved customer experiences and more personalised offerings.

The time is now
Insurers who fail to embrace the cognitive journey will likely cede important strategic advantage to competitors and new market entrants already riding the wave. Conversely, organisations that try to do too much too soon in pursuit of first mover advantage in the R&CA space may also be at risk. The key is running a manageable set of pilot programmes to test R&CA capabilities. This enables the insurer to align business outcomes with the expectations and facilitate a smoother implementation downstream. These are very interesting times for the insurance industry.

Join Insurance Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

The digital payments platform has teamed up with bolttech for this latest project.
Digital personal P&C insurance penetration rate in the region is at 1%-2%.
Recent increase in new auto sales help get the industry back to the growth path.
The startup was launched in September last year.
The insurer recently obtained the necessary license from CAAS.
Rey will work with AXA to remove friction from its cashless claims platform.
Ratings firm AM Best, however, cautions insurers to be careful of underwriting risks.
Cigna has operations in seven markets in Asia-Pacific.
The insurers avoided coughing up an estimated A$10b in payouts.
This is in partnership with medical home care provider Speedoc.
This marks the 10th market the insurance firm has entered.
They aim to create a seamless and personalised experience for customers.
The merger will form Taiwan’s second-largest financial holding corporation.
Natural disasters, drop in sales are main risks SMEs could suffer from.