Robotic Process Automation (RPA) to fix P&C Insurance Carrier problems in IT and Operations
Over the last few years, we’ve seen a lot of interest from P&C carriers who are looking to ride the wave of Robotic Process Automation (RPA) to fix problems in their IT and Operations. When we talk with our customers, we typically hear things like:
- We want to reduce clerical expenses.
- We can’t afford to fix legacy systems; so we need workarounds.
- The CEO asked why we’re not ‘doing RPA.’
All of these are apt reasons to launch an RPA effort, but I think this misses the mark. In my experience, there are more important reasons to embrace RPA. Two of the critical ones are:
- To address competition from increasingly digital competitors.
- To free up expensive, scarce talent to address more important, high value activities.
Let’s look at both of these in more detail.
Competition from Digital Natives or Digital Pioneers
Like it or not, digital insurers are expanding into more markets. For example, with personal lines already heavily penetrated, the next battleground is small and commercial, including Business Owner Policy (BOP), Commercial Package Policy (CPP), etc. Between the big, direct writers and more nimble traditional carriers, the bar is constantly rising in terms of expectations around speed and service.
- Faster response to agent/ broker submissions. If you’re not one of the first carriers to respond, you might not make it to the short list.
- Better service for in-force policies. If simple endorsements require days to be processed and/ or confirmed, the customer is left wondering ‘what’s wrong with these folks.’
- Claim is always described as the moment of truth. But for many carriers, that ‘moment’ can become days or weeks, even for relatively simple claims. Manual data entry and reviews drag the process out and create a lot of extra work for both the carrier and policy holder.
So, our advice is to look at how the customer (prospect/policy holder/agent) is impacted, rather than just looking at fixing back office problems that affect clerical staff. Taking an outside-in view will likely uncover a lot of opportunities for traditional RPA, which add a lot more value to the organization than pure clerical cost savings.
Unlocking Value in High Skill Staff
One of the things I see time and again is highly skilled, knowledgeable staff such as underwriters or claims specialists spending inordinate amounts of time on clerical tasks like data entry, manual comparisons/ reconciliation or shuffling around attachments and documents. Often, these tasks are highly repetitive, but because of legacy systems constraints or integration challenges, the activities are not easily handled by the systems of record. In some carriers, this is addressed by adding layers of underwriting support staff. However, this adds cost, coordination challenges and can also impact the speed (see above).
I’ve seen a lot of breakthroughs by conducting ‘ride along’ sessions with folks in new business, underwriting, claims etc. to observe these groups in action. My ‘Spidey sense’ tingles when I see things like:
- The last hour of the day being spent on entering data into some tracking tool.
- Keying from documents (digital or paper).
- Spreadsheets being passed around like office birthday cards.
- The same data being copied from system A to system B and again into system C.
While each of these activities may not, in themselves, account for significant time spent, in the aggregate, they add up to significant lost productivity. Rather than spending time focusing on submissions that are on the borderline of underwriting guidelines and using their extensive experience, underwriters may decline these cases because of time constraints. Claims adjusters get caught up in clerical work rather than providing faster, smoother claims settlement. If you focus on high skill positions, the value of the time you free up will be measured in terms of increased business, improved underwriting outcomes, and happier customers. More importantly, we’ve seen significant improvement in job satisfaction among these key employees, decreasing churn in these departments and reducing the very expensive process of hiring and onboarding talent.
The real value of intelligently addressing RPA opportunities is not in X hours multiplied by Y hourly rate to achieve Z clerical cost savings. The business case is more complex, but ultimately, much more compelling. The same amount of should be spent on the ‘why’ of RPA as the ‘how.’
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