Cognitive automation can shake up insurance sector

23 Oct 2018

Cognitive Automation can shake the insurance sector

The insurance sector is increasingly seeing the strategic benefits of adopting Robotic Process Automation (RPA) in business processes. The technology, also known as a common form of intelligent automation, leverages basic AI to perform routine tasks and operations. Using software with rule-based triggers, RPAs or "bots" enable businesses to streamline administrative tasks, reduce the margin of error from data entry and minimise an organisation's reliance on forms.

Intelligent automation such as RPA can help to alleviate these operational burdens by accelerating the digitisation of processes without a complete overhaul of fragmented IT platforms in the short term. Instead of requiring a whole new setup, the technology operates on the surface level of an insurer's system by imitating human keystrokes and mouse clicks. RPA is a friendly entry point for insurers to implement as the software is non-invasive, complementary to existing systems, and can be set up with ease.

Global forecasts indicate that the IT-enabled RPA market will reach US$4.98 billion by 2020. This is especially meaningful as the industry takes a significant step towards the digitisation of insurance, one of the world's oldest trades.

While RPA has been discussed at length by insurance industry leaders, its full potential would not be recognised without cognitive technology. By using intelligent automation tools such as machine learning, natural language processing, analytics around video and image data, and emotion recognition, RPA can go beyond standard data parameters to automate functions that require higher perception or judgment. This natural extension is also known as Robotics and Cognitive Automation (R&CA), and has potential to shake up the insurance sector.

Across the value chain, R&CA has many potential applications that can extend into making routine business decisions. Robotics capable of self-learning from unstructured claims data can compute complex algorithms to identify fraud. Beyond traditional datasets, R&CA can also develop deeper cognitive capabilities around image and video analytics. These upgraded bots can be used to assess the severity of motor accident claims, predict the claims outcome and recommend the payment.

R&CA can also be used to perform standard underwriting tasks through assessment of simple images such as selfies. Using a machine learning technique, R&CA can pinpoint facial indicators to determine body mass index, an estimated age range, gender and smoking habits.

In the long term, R&CA is a more responsive way to deal with the changing shifts in today's competitive landscape. By leveraging cognitive automation, R&CA has the potential to untangle complexities hardwired into insurance models.

Looking ahead, insurers may have to consider how the regulatory environment will change as solutions like R&CA evolve, and if these developments will happen in tandem with emerging technologies. Further developments around such legal frameworks will help to accelerate the pace of innovation in an insurer's journey in digitisation.

Another change that the insurance sector will have to adjust to is changing customer demographics. As the oldest millennials enter their late 30s, insurers will need to improve their understanding of this segment in order to capture this significant target market.

Perhaps R&CA's true value can be found in how it benefits customers. By drawing out deeper insights on customer behaviour and preferences, insurers can do more to improve their overall experience across each potential interaction point. For instance, insurers can customise products and price points for each customer by understanding the data points.

In the future, an insurer can also use an R&CA-enabled smart assistant to improve customer service. Powered by natural language processing and emotion-recognition API, the robot assistant can detect a customer's needs through facial or verbal expressions, and provide emotional support when needed.

According to PwC, insurance CEOs are more concerned about the pace of technological change than other business leaders. This is unsurprising when we consider how rapidly the landscape has evolved. Today's insurers are not just beset with rising pressures from cost and revenue standpoints, but have to constantly meet moving goalposts driven by shifts in technology and customer expectations.

Innovation will continue to be high on the agenda for insurers as Big Tech firms like Google and Amazon have become better positioned to enter the insurance market. According to the World Insurance Report for 2018, 29.5 per cent of customers are willing to buy at least one insurance product from a BigTech firm. The same report found that millennial and tech-savvy customers are the most inclined to switch from insurers within 12 months, with a large number of them being open to purchasing insurance from Big Tech firms.

Nevertheless, insurers will still have an edge over Big Tech firms in terms of the wealth of underwriting experience and insurance data built up and augmented over the years. R&CA can bring together existing and new data sources and help insurers to learn and analyse in more insightful and efficient ways than traditional analytics can. R&CA can dovetail tailored customer service, more efficient assessment by insurers and faster pay claims, and more accurate underwriting and pricing.

In recognition of R&CA's potential benefits and in anticipation of this industry-wide shift, MSIG Insurance in Singapore has started to look at ways to deploy cognitive automation into the organisation's claims and underwriting processes by building up the company's digitisation strategy and data analytic capabilities.

It is clear that RC&A is a significant opportunity for the industry. While insurers may not be naturally wired to adapt to such a major change, it is a shift that is necessary to ensure that organisations continue to stay relevant to what customers expect and need.


An edited version of this article has been published in The Business Times on 2 October 2018.

The article was contributed by Sharon Teo, Senior Vice-President (Corporate Services and Project Management Office), MSIG Insurance (Singapore) Pte. Ltd.