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Automation is more than just a buzz word. If you get it right, it will have an immediate impact on your bottom line.
But who are the people that are implementing these technologies and what can we learn from them?
To answer these questions, Insurance Nexus reached out to three pioneers and asked them to share some of their key insights on claims automation: Eva Berg-Winters, Former Head of UK Claims at Hiscox; Steve Tait, Head of Claims Automation at RSA; and Klaus Vogel, SVP Claims at IF P&C.
A Practical Guide to an Efficient Customer-Centric Claims – Part 1 (Human vs Machine!)
Automation has become a fact of life in the insurance industry. From simplistic autofill online forms to complex algorithms determining payment thresholds for claims resolution, we are starting to build a picture of where machines fit in the insurance ecosystem.
As a result, there has been a natural concern over what this means for the human element. Does implementing robotics mean that the human workforce is ultimately redundant? When we eventually move from automated process into true artificial intelligence (AI), is it game over for the skilled underwriter and claims specialist?
The answer is, as it always seems to be, that insurers should expect change but there will not be wholesale revolution. It’s in defining the role that each resource - human and machine - plays that will determine the success of any integration.
Merging human and technological resources wisely
What is driving the integration of machines in the first place is pressure: time pressure, data pressure and ultimately cost pressure:
“We are always under pressure to deliver more with less and that drives the focus to how can we reduce the amount of expenses in claims. And also, there is a pressure to understand how we can do more with the information we have access to and convert that to data to drive insights that reduce claims cost. Basically, be leaner as a business, that is a constant,” explains Steve Tait, RSA’s Head of Claims Automation
Machines can respond to that pressure by processing more data, more quickly and more accurately. In some cases, a machine will be able to do most, possibly all of the job that a person is currently employed to do and will inevitably be able to do it better.
Of course, saying this creates immediate cause for concern. The difference between people and machines however, is that people are both retrainable and are able to access the je ne sais quoi of the human touch.
In February 2017, UK insurer Aviva1 asked 16,000 employees if they were concerned that a machine could do their job as well as they could. This wasn’t an exercise in weeding out unnecessary labour. The company will look to retrain those employees for another role where the human touch is a vital element.
Moving towards greater automation will also impact new hires with executives already suggesting that they are seeking more ‘whole brained’ individuals - people with a talent for both logic and emotion, art and science - to round out their teams. They also echoed an industry-wide belief that there is still a place in a technological world for experience and ‘gut instinct’.
Merging technology and human resource is an exercise in listening. Understanding the pressures and concerns of the workforce won’t just help the organisation repurpose, retrain and hire its staff more effectively, it can also reveal new insights that will make the combined automated/human workforce exponentially more effective.
Hiscox’s Former Head of UK Claims, Eva Berg-Winters suggests: “Win the hearts of the team and allow them to flourish and drive the answer. It’s their future and they should be the ones shaping it. If the team believes and can see how automation changes their working lives in a good way, they will not only support it but drive it.”
Understanding how to reshape the organisation to meet the dual demands of a technological and human labour force is a question of business culture. It’s especially difficult to manage in the claims space because it is often at the tail end of any business wide change.
“Claims has a tendency to have a follow strategy, it is normally second in line to underwriting and product areas. To change the culture of the business, you need to start from the underwriting and product part of the business,” Tait suggests.
However, we are already beginning to see cultural changes taking place at the ‘front end’ of insurance so to speak. In Anything You Can Do, AI Can Do Better,2 AIG noted there was “tremendous potential” for machine learning while Zurich Insurance agreed “I see insurance applying machine learning to improve P&L then claims management [...] it’s a much faster process and it is easier to reduce errors by using machine learning.”
Strategic, rather than tactical cost savings
Simply parcelling out roles to machines or humans isn’t enough to make the most of the combined technology and human resource. Nor is it enough to simply look at cutting topline costs. The concept of ‘being cheaper’ can lead to a very superficial application of automation to the issue of cost.
Klaus Vogel, Senior Vice President and Head of Claims, If P&C Insurance agrees that there is much more potential in automation than insurers have been able to access: “I have heard of examples here and there but there’s still a big, unrealised opportunity. No-one’s made a great deal of progress yet, particularly in claims.”
Instead of looking at making savings largely from an operational cost perspective, just in the claims environment, insurers should be looking at their whole business model to find out where technologies could be contributing to an overall improvement. Berg-Winters elaborates:
“Automation lowers the cost of claims handling; the cost of arranging payments. But the key cost benefit lies in better cost management such as from increased visibility over the supply chain. With a focus on third party cost this can be a win-win for both insurer and customer.”
Vogel agrees that process cost is only part of the picture: “Previously, automation has only been viewed through the lens of cost cutting but now it’s becoming part of the business model supporting seamless customer experience including transparency and standardised communications.”
Automation impacts indemnity cost throughout the claims process. There are several points in the process that technology can support handlers in speeding up the resolution of the claim. From the time taken to complete the claim (and the resulting use of support services such as replacement vehicles or temporary accommodation) to the cost to service the claim through call handlers, number of site visits and so on.
And of course faster claim resolution is central to improved customer experience. Great customer experience and reduced indemnity costs are two sides of the same coin. Improving one benefits the other. Intelligent application of both human and technological resource is key.
Claims Visionaries and Insurance Leaders Together at Connected Claims Europe Summit!
This article has been compiled in the lead up to the Connected Claims Europe Summit (October 24th & 25th, London).
Connected Claims Europe is an unmissable opportunity to leverage technology, such as AI, Machine Learning, Chatbots, Advanced Analytics IoT and more to drive business efficiencies and exceed customer expectations.
From automating the first notice of loss to digitising and connecting your supply chain, this is the ultimate meeting place for claims visionaries and leaders to gain inspiration and tools for immediate implementation from innovative insurance case studies.
For more information on Connected Claims Europe Summit, please go to our website (http://events.insurancenexus.com/connectedclaimseurope/) or message me at firstname.lastname@example.org