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Application of Robotic Process Automation and Cognitive Technologies in Insurance

Team AckoJan 17, 2024

The insurance industry has been criticized in the past for being laggard as far as technology is concerned. Other industries in the financial services domain embraced technological advancements and leaped ahead, whereas the insurance industry had to be prodded by digital-savvy customers to open their doors to technology. However, the rise of InsurTech companies all over the globe has changed this lethargic attitude.

Gone are the days when a website and a mobile app were enough to call oneself a digital insurer. Now, insurance companies are looking at Robotic Process Automation and Cognitive Technologies to drive their business and serve customers. Read to know more about application of robotics and cognitive automation (R&CA) in Insurance.

Contents

Understanding R&CA
Technologies and Application
Immediate Impact of R&CA
Going One-up Against Competition

Understanding R&CA

R&CA has been used to gain tangible business benefits in the insurance sector. Robotics pertain to rule-based automation of repetitive tasks and cognitive capabilities mimic human learning to make decisions. Together, they make use of technologies to analyze unstructured data and strengthen the relationship between man and machine for achieving strategic goals. R&CA has the potential to completely transform the insurance value chain by impacting product, pricing, underwriting, marketing, sales, administration, and claims, depending on various levels of installed automation.

Technologies and Application

The following table will give an overview about the key technologies forming R&CA and their application in the insurance industry. Although these technologies mostly impact the functioning of an insurance company on a large-scale basis, for better understanding, the ‘application’ column highlights the most-likely insurance function in which the technology is applied.

Technology	Explanation	Application
Machine Learning	Ability of machines to learn without the need of being explicitly programmed for it. Computer systems can enhance their performance by exposure to data.	Underwriting, Fraud Detection
Data Mining	Going through huge chunks of data using mathematical models to find correlation, patterns, and trends.	Marketing, Cross-selling
Natural Language Processing	A process where computers work with text in a human way. For example, deciphering the meaning behind a particular text, coming up with technically correct text, etc.	Customer Service
Cognitive Reasoning	Mimicking human reasoning, understanding, arriving at a conclusion, and learning.	Underwriting, Sales
Emotional Recognition	Understanding a person’s emotional state based on the input provided.	Sales, Claims, Customer Service
Integration Adapters	Laying the base for a seamless integration of all types of systems such as cloud-based, on-premise, etc.	Administration
Recommendation Engine	A framework offering recommendations based on all-encompassing integrated data and analytics.	Claims, Sales

Immediate Impact of R&CA

Employee Management

R&CA will shift the way insurance companies hire and manage their employees. The approach will change from ‘service through labor’ to ‘service through software’. Automation will eat into the jobs of employees on the bottom of the pyramid. The now bottom-heavy employment pyramid will invert and become top-heavy. As menial jobs get handled by machines, insurance companies will need top-level employees to focus on data and make sense of it to reach organizational goals. People with a skill set comprising data analytics, machine learning techniques, and algorithm excellence will be in demand.

Customer Interaction

From purchasing policies to settling claims, the involvement of machines shall increase exponentially. A personalized software-driven virtual assistant can interact with customers, advise, cross-sell, and resolve queries. The extent of loss in a car insurance claim can be adjudged by merely looking at the image of the damaged car. The claim can be settled instantly through technologies such as Machine Vision. Products can be offered based on information shared by the customer on their social media platforms. This can also come in handy to mitigate fraud.

Challenges

The insurance sector shouldn’t lag behind in applying these technologies. However, one must be wary of going full-throttle too soon as the Indian insurance sector is heavily regulated. Conducting a pilot study and making long-term plans accordingly, seems like a viable option. Concerns regarding customer’s data are of prime importance, rules and regulations need to be followed and the need for privacy should be respected at all costs.

Also, read: Vehicle Scrappage Policy in India

Going One-up Against Competition

Digital-natives are dictating terms to online businesses. Their convenience is paramount. The price quotient matters as always; however, a compromise on the value derived for a price cut shall not be entertained. In such a scenario, cost-cutting seems lucrative and R&CA can provide that without hampering the service delivery.

In the InsurTech playground, the first-mover advantage with respect to technology and its correlation to business strategy results in a competitive edge. And R&CA has the potential to provide that much-needed advantage.