The value of robotic process automation (RPA) in insurance

Insurance businesses are using robotic process automation (RPA) to significantly streamline their systems and remove manual effort from simple but laborious tasks – particularly rules-based tasks, where a robot can be taught to execute and repeat certain actions. Though it’s a trend that started before the COVID-19 pandemic, the pressures caused by the last few years have certainly prompted insurers to shift into a higher gear.

According to Allied Market Research, the market for RPA technology globally within the financial services sector is expected to reach US$4.8bn by the end of the decade – up from just US$340mn in 2020. Separate research from McKinsey highlights that the insurance industry has the potential to automate 50-60% of back-office functions by 2025, and RPA plays into a much broader trend of digitisation industry-wide.

It’s a trend that is much-needed, admits Chris Moore, Head of Lloyds’ syndicate Apollo ibott 1971. Speaking at FinTech LIVE London, Moore says: “I think it’s undoubtedly true that we have to digitise as an industry. Too often, I will be the first to say that the customer experience is awful. I hate buying insurance myself as a consumer. I don’t read my policies because they’re too confusing, even for me in the industry.

“What insurance has relied on is that complacency, that the customer is always going to come to us, they’re always going to buy the insurance from us. We haven’t really modernised our products – most of our products have just sat there on idle, and we haven’t really had this necessity, until very recently, to digitise.”

RPA is first step towards wholesale automation

The growing prevalence of RPA automation within insurance firms can prove invaluable because it allows the freeing up of humans for tasks that require a grasp of emotion, such as empathy.

When someone makes a claim to their insurer, it’s usually because they’ve gone through a negative life experience. Their home or car has been damaged, or they’ve lost a loved one. RPA allows the insurer to automate so-called ‘keystroke tasks’ – like identifying the basic information around a customer interaction before it fully begins, or lifting and shifting account details from a piece of customer correspondence into a claims form – and creates time for human agents to add light and shade in between.

If you like, it's the brawn to the brains of another of the insurance industry’s big trends – the adoption of artificial intelligence (AI) and machine learning (ML). While AI and ML attempt to simulate human intelligence to create meaningful interpretations from data, RPA is simply the muscle: it replicates the time it would take for a human to work manually with data, often on arduous and time-consuming activities. As such, RPA can be said to increase productivity; lead to significant cost savings for the insurer and, subsequently, the insured too; reduce the extent and likelihood of human error; and even increase job satisfaction among employees.

Elliot Green, Sales Director at Genasys, believes that RPA can be a good entry point for insurers to get into more sophisticated AI, which is often just a buzzword applied to a clever line of code. Green says: “The bulk of insurers and MGAs that we deal with could benefit from automation over actually trying to reinvent the ocean, actually automating a load of processes and using technology to do that is a good starting point for the future, when AI models will become more prevalent. For the bulk of people in the market, doing some automation is a good first step.”

In many cases, Chris Moore continues, the problem with an organisation embracing digitisation and automation is a cultural issue, not a technical one: “I hate the narrative around legacy technology. It’s absolutely a wall that people hide behind. I think when you peel that back, it’s culture. If you don’t have a client-first culture, then you won’t embrace change and I think it’s going to be a real challenge for your business going forward.”

Insurance use cases for RPA

Extracting data

One global insurer is using software robots to extract information from customer correspondence and match it with the appropriate claims forms – something that would have taken a human agent around 4 minutes each time beforehand.

Customer service

Chatbots provide a first line of defence for insurers in customer service, allowing simple queries to be resolved instantly and collecting pertinent information for later customer service interactions. Where a chatbot is insufficient to deal with a customer, human agents can step in and gain an immediate understanding of the situation thanks to the data already gathered by the chatbot.

Handling forms

Where physical forms or physical documents still exist within a back-office process, integrating OCR scanning with RPA means insurers can automatically ensure that information is transferred from the physical realm to the digital one quickly and with minimal human error.

Underwriting

To understand risk and price a new policy, underwriters need access to multiple sources of information. RPA can ensure that this information is already in place when the human underwriter comes to assess the policy application for the first time, meaning policies can be offered much more quickly.

Product innovation

It’s not just back-office functions being transformed by RPA; insurers are bringing the technology direct to consumers, too. By experimenting with the full scope of RPA, you can roll out on-demand pricing and improve the performance of customer portals, to name just a couple of examples.