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Do Insurance Bots Dream of Mitigating Risk?

The recent appearance of “Blade Runner: 2049” in movie theaters is yet another reminder of the human fascination with robots taking over the world. The infamous slogan of the Tyrell Company in 1982’s original franchise installment, “more human than human,” eerily foretells of a world where machines replicate the characteristics and capabilities of humans, to the point where differences become indistinguishable. Cue countless other movies in which robots attempt just such a take-over, a list which memorably includes Arnold Schwarzenegger’s “Terminator,” and Skynet’s eventual moment of self-awareness.


Whether the motivating factor is curiosity or fear, many people observe the ever-increasing pace of developments in intelligent technology across industries with cynicism and suspicion, often skeptical of potential benefits or even gripped by paranoia regarding the conflicts. Insurance, in fact, is among the service industries searching for smart technology integration and adaptational approaches — as its traditional workforce converges with a wide variety of cognitive machines impacting both global operations and local processes.


The prominence of InsurTech and the rise of ever more intelligent technologies, including artificial intelligence (AI), machine learning, and robotic process automation (RPA), mean once hypothetical scenarios are beginning to look a lot less like cheesy sci-fi and more like reality. Today, insurers and industry stakeholders are increasingly questioning how intelligent technologies will affect the industry’s workforce and its age-old, reliable workflows.


Living the Dream

Playing out the “Blade Runner” analogy in which humans once questioned whether androids “dream of electric sheep,” it seems appropriate to wonder if insurance bots may one day dream of mitigating risk. Said another way, the potential for cognitive technology to have a significant impact on how the insurance industry manages risk is certainly at hand, but so is the hype. Undeniably, changes brought about by intelligent technologies are already evident, and it is prudent to pay attention. Just consider the near obsolescence of paper maps and travel agents as society ushers in the era of drones and driverless cars, which can be remotely maneuvered and trackable anywhere on the face of the earth.


For the insurance industry, the dramatic impacts experienced almost daily and driven by the evolution of intelligent technology are both exciting and alarming. There are already many examples of insurance companies using intelligent and cognitive technology to augment workforces, thereby increasing efficiency, improving customer experience, and cutting costs. Simultaneously, intelligent technology is also supplanting traditional roles in the insurance lifecycle. Today, chatbots can easily confirm first notice of loss (FNOL) for affected policyholders in a move toward touchless claims, and sophisticated rules engines can drive straight-through processing (STP) of new business for applications which fall within customized risk appetites. 


Adapt or Perish

Where does this leave the average insurance employee – the coder, the underwriter, the claims handler? As data ubiquity continues to empower intelligent technology and spawn process automation, the industry struggles to adapt, but is also excited about the possibilities. Insurance companies are already experiencing shortages in once indispensable positions such as insurance adjusters, for example. Meanwhile, distribution channel talent and expertise is dwindling, with the average age of the independent agent approaching 60. Are such positions fated to be replaced by algorithms, automated workflows, and self-service processes? Clearly, to become complacent is to become obsolete. Professionals, especially newcomers to the insurance ecosystem, should consider and seek new skills — for example, insurance data sciences — with which to better contribute in an industry increasingly reliant on data-driven, smart technology, and automated processes.


As insurance companies become more data-enabled and technology-empowered, the previously separate functions of operations and IT will likely merge and integrate more directly. In addition, the role of the insurance knowledge worker will increasingly transition from a preponderance of manual and repetitive tasks to making informed decisions, analyzing the outcomes, prescribing ways to optimize future activities and predicting the factors that could disrupt or accelerate productivity. Rather than endangering business or service-oriented jobs in the modern insurance enterprise, machines will likely take over repetitive or cyclical tasks, allowing skilled workers to focus on complex risk management, product/market administration, and policyholder service responsibilities.


Bang for Your Automation Buck

Underwriting is one of the key insurance lifecycle areas in which intelligent technology can make significant impact. To realize the benefits, however, insurers must first be open to converting arcane processes. Most insurance applications today, for example, still require answers to outdated questions as the prerequisite for determining risk and exposure.


Typically, the assumption is that such questions are regulatory requirements, or that change is unreasonable because there has always been a certain way to get things done throughout the insurance value chain. As it turns out, neither of those factors prohibit positive change. Personal auto insurers, for example, still typically ask policyholders for miles driven to work each day, even though the Coalition Against Insurance Fraud identifies this question as one of the top instances leading to intentional or unintentional fraud. Furthermore, most modern underwriting platforms are capable of easy callouts to third-party data providers for accurate integration of this information.


Intelligent technology can also help to improve efficiency in the underwriting process and alleviate the overburdening of risk evaluation teams. When underwriters are overworked, the logjams can easily result in slower processing times, inaccuracies, distribution channel delays and loss of business or credibility in preferred markets. The introduction of RPA, driven by customized business rules, can help insurers better manage the risk assessment workflow challenges.


Be the Change

Before insurance professionals start planning a career change, however, some consolation may be found in the fact that technology is not the silver bullet. While algorithms can help to more accurately evaluate risk based on new sources of data, the mere replication of such tasks does not make technology “more human than human.” Knowledge workers alone possess the intellect, experience, and intuitiveness to understand the multi-faceted, dynamic environment of risk management. That said, it is also judicious to proactively plan for the impact of technology in transforming roles, responsibilities, and industry processes. 


Fortunately, there are also robust, industry-expert partners, and consultative enablers in the journey of mastering intelligent technology for optimal business outcomes. Increasingly, insurance organizations are turning to the specialized services and capabilities of insurance-focused, managed services providers to efficiently augment and strengthen plans and methodologies for integrating emerging automation.


As movie-goers enjoy “Blade Runner: 2049,” and other sci-fi films that challenge the boundaries of human-machine interactions, there is comfort in knowing that the Tyrell Company’s ominous vision remains a pure fantasy for now. But insurance organizations would do well to anticipate the impact of intelligent technology as a catalyst for growth in the fast-evolving insurance landscape.


Kaushik Gohain is vice president, insurance operations, and Prateek Vijayvergia is vice president, application management and technology services at Xceedance.









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