Even the most tech-savvy insurance companies can struggle to keep up with the rapid rate at which new technology and automation are reshaping the industry. By adopting insurance solutions, carriers are slashing administrative costs and improving employee productivity while eliminating tedious manual tasks and offering a superior, more personalized product to clients.
What Is Insurtech?
The application of automation technology to the insurance world is often simply referred to as "insurtech." Insurtech is a subset of fintech (or financial technology).
While some aspects of the insurance world still require the human touch, automation can take over some of the more tedious, labor-intensive processes of insurance administration. Insurance-focused SaaS platforms will only expand their capabilities, but for now, they're being used in a variety of capacities:
- Automated "virtual agents" can understand customer questions and provide answers
- Artificial intelligence can be used to automate the entire claims-processing workflow
- By analyzing customer data, AI can assess customer risk and price policies accordingly
- AI can remind customers of policy renewal dates and guide them through policy updates and renewal
- Virtual assistants can guide employees through maintaining regulatory compliance
Automation is useful in many industries, but it's particularly helpful in insurance. Many processes involve collecting and consolidating data from several different sources, and automation both speeds up the process and eliminates human error. That leaves human agents free to handle less mind-numbing tasks.
Why Automation in Insurance Matters
Historically, the labor-intensive policy of insurance administration has both damaged the efficiency of insurance carriers and increased the risk of human error. By adopting automated solutions, carriers can minimize problems.
One such platform that the world's largest insurers are turning to is Vitech, which provides insurance and retirement benefits administration. "SaaS streamlines processes, reducing manual errors and increasing efficiency," says Vitech CEO David Burns. "With automation, carriers can handle complex benefit structures more easily, offering personalized plans to clients." In many cases, these personalized plans and more accurate risk assessments translate to lower premiums for all but the highest-risk customers.
Automation saves time and reduces errors, so as you might expect, it's good news for any insurance company's budget. "The cost-effectiveness of SaaS reduces large upfront investments in infrastructure and maintenance," says Burns. "Alongside this, significant time savings in labor, materials, and operational expenses are realized."
The insurance landscape is highly competitive, and the added convenience of automation can reduce the risk of customers switching providers.
Burns adds, "SaaS improves employee, employer, and member servicing, which leads to faster response times and straight-through processing, ultimately increasing customer loyalty and retention."
The Evolution in Insurtech
Like any technological development, AI and automation didn't suddenly appear on the insurance landscape. For years, many major carriers have used automation in some capacity, usually through policy management.
If you've ever gone online to get car insurance and purchased a policy in minutes, you've experienced one of the benefits of automation in insurtech.
Just like human minds as they undergo years of study, the capabilities of AI and machine learning are constantly evolving. Now, automation tools are becoming smart enough to handle high-stakes assessments like fraud and risk detection.
Burns explains that the insurtech revolution has another benefit that many people may not think of: it facilitates connection between insurers.
"Insurtech platforms are increasingly interconnected, allowing seamless integration with other systems and enhancing data-driven decision-making across the insurance value chain," he says. In an industry where both accuracy and efficiency are highly important, that's always a good thing.
The Many Challenges of Integration
Once an insurance carrier integrates automated solutions, it will find that nearly all facets of operation become faster, smoother, and more accurate. But integrating automated solutions is much easier said than done. Insurance companies store massive amounts of data, and changing the way that data is processed is a massive undertaking.
On a basic technological level, a carrier's existing software system might not be compatible with newer software. This means that when automation is implemented, employees aren't just tasked with learning how to use one new type of software—they'll have to migrate large amounts of data and learn an entirely new workflow on top of it.
Such an undertaking often means coordinating several departments, and for larger carriers in particular, that can be an incredibly challenging process. The process may cause significant downtime, which can be inconvenient for customers.
"Concerns around data security and regulatory compliance may also arise during the integration process," Burns says. "Adapting internal processes and workflows to accommodate the new platform often requires comprehensive training and change management efforts to ensure smooth adoption."
Insurance companies are subject to stringent regulations because they handle such large amounts of sensitive data. And because automation is so new, even regulatory compliance personnel may be unsure of how to verify that it meets security requirements.
What Does the Future Hold?
Even within the past few years, automation has already made huge strides. These developments have transformed the insurance industry, benefiting employees, customers, and shareholders alike.
However, the evolution of automation shows no signs of slowing down, so it will likely become even more beneficial to insurers and their clients in the future. And if AI in other industries is any indication, automation will continue to assist insurers in the same areas—it will just get faster, better, and more accurate.
Burns notes that if you're an insurance customer, you'll likely be seeing the benefits of AI soon (if you haven't already). "AI further enables persona-based customer servicing via virtual digital assistants, tailored coverages and pricing, dynamic policies that adjust based on real-time data, compliance, and regulatory filing assistance, personalized marketing campaigns, smart data conversions to streamline onboarding and auto-generation of policy and plan documents," he says.
Of course, automation is in its relative infancy, so even the impressive changes happening now are just the beginning. Exciting developments are well on their way for customers and employees alike.
