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Embrace automation today to reap the benefits tomorrow

Insurance Consulting and Technology
Insurer Solutions|

By Tom Beasley and Joe Milicia | September 8, 2021

The right technology, processes and mindset can help insurance businesses come out of the pandemic stronger and more resilient.

There’s a perception that automation is merely about time and cost reduction, replacing people and making things more efficient. This is an obvious potential benefit, but automation can be so much more. What would you do if you had twice the staff and double the time? This is what automation can help the insurance industry achieve: unlocking potential and bringing value to our businesses.

Companies that have embraced automation are far more likely to manage those uncertainties and steer their businesses towards greater success.

There is rising demand by insurers to better utilize modern technologies, such as cloud computing and automation, to meet rapidly increasing future needs due to cost challenges, regulatory pressures and gaining more-informed insights from actuarial, risk and finance. This trend continued throughout the pandemic as employees switched to remote working. Initially, this disrupted the way we do business and underscored the industry’s need to leverage automation better.

As we now emerge from COVID-19, significant uncertainties remain. For all these uncertainties, having relevant and timely data at your fingertips to make strategic decisions and having the agility to quickly react to emerging trends is what will separate the good from the great.

Companies that have embraced automation are far more likely to manage those uncertainties and steer their businesses towards greater success.

Therefore, automation shouldn’t just be seen as a short-term fix to help alleviate the challenges of COVID-19, but more so an integral component of the business to derive value and help mitigate future uncertainty.

Leveraging automation

Automation presents significant opportunities to transform the insurance industry and disrupt existing business processes in areas such as cashflow modeling, capital modeling, proxy modeling, bordereau management, pricing, underwriting, predictive analytics and ceded reinsurance.

It is also a potential solution to alleviate some of the challenges of working remotely, e.g., robots can access 24/7 computing power. They aren’t subject to virtual private network bandwidth restrictions and can work around the clock to augment our human workforce, which may be unwell themselves or otherwise unavailable. Automation can ensure the workers continue to abide by governance procedures and aren’t tempted to work around slow network connectivity by using personal email or other unsanctioned file-sharing or collaboration technologies.

COVID-19 has led to unprecedented changes in how we work and collaborate internally and externally; we must be better prepared for potential future disruptions to our industry. Automated processes held up well to the disruptions caused by COVID-19. While the insurance industry has progressively adopted automation over the past few years, the pace at which new technologies will be embraced, and the speed that insurers become more digitally enabled is likely to accelerate. This will spark an era of transformation and modernization to help improve the efficiency and resiliency of businesses.

Approach to transformation

Those companies that approach transformation by holistically considering core aspects of their business, i.e., technology, processes and people, and giving them equal weight are the most successful in automating their businesses. Just considering one aspect is shortsighted. Many individuals may see automation as just a technology play, but if you’re not investing in the right processes to automate, alongside bringing your people ‘on the journey,’ then the technology will fail to add any value and may be an unnecessary hindrance to progress.

Therefore, when re-engineering processes, it’s critical there is enough time spent upfront designing the newly transformed end-state architecture. This should focus on the right technological solutions, processes to be automated (ensuring you don’t automate bad processes) and making sure significant time is spent embedding this change with the people in the business to make sure it sticks.

People are a key aspect of ensuring any automated solution is successfully adopted, but it is often the most neglected part of a company’s transformation.

Businesses should also consider the timing of when they’ll implement automated systems and think about the cost-benefit of how much they want to automate now versus re-engineering with more comprehensive automation afterward. Businesses need to consider the balance and cost/benefit of perfecting a process before they automate versus going ahead and automating the process immediately to free up resources. This is a delicate balance; for example, if a company spends too long re-engineering and re-designing a process, then potentially, by the time they’ve perfected the design, regulation has changed. As such, companies should prioritize long-term goals making sure they have the right balance between being strategic and tactical.

People are a key aspect of ensuring any automated solution is successfully adopted, but it is often the most neglected part of a company’s transformation. Leadership needs to set a clear vision and bring their employees along on the journey through encouraging a culture of change, e.g., winning over the hearts and minds of the people on the ground. Some staff may be really invested in the old process, and it’s, therefore, important to demonstrate how automating this process will add value and help them with their day-to-day job, i.e., automation to augment the human workforce, as opposed to replacing them.

It’s difficult to find time to innovate, improve and make a dramatic change if your workforce is so focused on slow and manual processes. However, if you’re taking advantage of new technologies and using automation to transform the way you do your business, you will generate more room to breathe and be able to focus more on value-add areas.

Processes ripe for automation

Companies can’t just snap their fingers and automate a complete end-to-end process straight away. We find automation works best when performed iteratively; this also helps with the adoption of automation by the business at large. A company must look at the different tasks and processes within its taxonomy and develop a plan for automation, making sure they have the right balance between implementing ‘quick wins’ versus longer-term transformation. This balance is different for every business dependent on its structure and the types of processes that it needs to run.

We also need to consider whether the processes to be automated are repetitive or are unique and moving. Obviously, the more a process is repetitive, the easier it is to automate; if it’s repetitive and you’re doing it multiple times, you’re going to get value every single time this task is repeated now and in the future.

We also need to know whether the process is prone to errors. Robots will not make mistakes like humans, but equally, a robot won’t know what to do if something unexpected occurs. Therefore, it is very important when implementing automation to not just consider the ‘happy path.’ We find a significant portion of automated builds is building in catches, fail-safes, and mitigations for when the process doesn’t go as planned to ensure the robots know how to react.

Robots will not make mistakes like humans, but equally, a robot won’t know what to do if something unexpected occurs.

There are many other factors that make a process a good target for automation, such as being clearly rules-based, working with data already in digital formats (although automation can be deployed to perform optical character recognition on ‘hard’ copies of data), and the level of manual intervention inherent in the process. Even if a process has many of the factors that make it ripe for automation, this doesn’t mean the process should simply be automated ‘as-is.’ Taking the right amount of time to re-design and optimize that process first, ensuring a consistent approach to automated methodology across your business, will ultimately mean a more effective and streamlined process taxonomy across your organization, leading to more time saved and better business decisions.

Embedding the right technology, processes and mindset within your staff will all help your business embrace automation now, meaning you can come out of the current pandemic stronger and more resilient — ensuring your business is future-proof and able to deal with potential uncertainties in a much more streamlined and effective way. Best-in-class automated systems will give businesses the flexibility and expertise required to transform their organization and empower their employees, all through the effective use of automation.

This article first appeared in the July 8 issue of PC 360.

Authors

Director, Insurance Consulting and Technology

Global Proposition Leader, Business Process Excellence
Insurance Consulting and Technology

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