How Insurers Can Achieve Efficiency and Stability with RPA

MaryBeth Folger News

Insurers achieve efficiency and stability with RPA

In an environment with low interest rates, market overcapacity, increased competition, and growing regulations, many insurers are fighting to remain profitable. Insurers are burdened with high volume, manual work, often utilizing duplicative legacy or mismatched tech stacks to do so. Operationally, they also suffer from gaps between business processes and systems resulting in higher costs, reduced productivity, longer cycle times, and issues with quality, compliance, and service levels. The industry is also beginning to experience labor shortages as Baby Boomers age out of the workforce and millennials shy away from the profession.

Robotic Process Automation, or RPA, is an ideal solution to the unique challenges that insurers are facing today. Robots can be trained to perform the same tasks as employees, and can even work alongside employees to improve the quality of work produced. Insurers are also recognizing the benefits of RPA-as-a-Service (RPAaaS), which applies the as-a-Service model to RPA. With RPAaaS, consumers pay for results, not licenses. RPAaaS is a more cost-effective path to automation that reduces the risk and operational burden associated with purchasing licensed software to build the program in-house. For insurers focused on maintaining profitability and normalizing operations, RPAaaS is ideal because it allows them to reap the benefits of automation while avoiding the heavy lifting of building out and maintaining the program.

Automating Insurance Processes

RPA can automate a wide range of insurance processes, yet a Cognizant study shows that roughly 70-80% of RPA investments by insurers focus on making claim and policy processing more efficient.

  • Property and Casualty (P&C) – Processes like new quote or policy issuance, premium and non-premium bearing endorsements, cancellations, premium audits, initiation and assignment can all easily be reassigned to robotic workers with minimal or no human intervention required. More advanced automation methods like Optical Character Recognition (OCR) and Machine Learning (ML) can enhance robotic capabilities to assist in the claims intake process. With these enhancements, robots are able to examine claims submissions to determine intent and route the claim accordingly. Additionally, robots can examine claim notes, diaries, and police reports to highlight or eliminate subrogation candidates to increase recoveries.
  • Catastrophic – Catastrophic events are becoming more frequent, further increasing the operational strain for CAT insurers. Robots can be inserted throughout the CAT claims process to reduce the strain of seasonality and unexpected volumes while keeping costs under control.
  • Life and Annuity (L&A) – Robots follow rules exceptionally well, which is of great benefit to L&A carriers. Contract setup, premium applications, policy statements, and cancellations are just a handful of examples of processes that don’t require much decision-making, thus being ideal for automation.

As competition and uncertainty grows in the marketplace, more insurers are seeking out automation to gain some operational security and cost reduction. According to the aforementioned Cognizant study, 200 insurance organizations have already embarked on RPA initiatives. A UK-based insurer reports that robots used for claims processing administration are about 15 times more productive than a claims processor.

Leading insurers are seeing significant ROI with RPA in their industries:

  • A top 10 P&C insurer chose to automate 28 processes that encompassed all lines of business with 61 robots total. As a result, the insurer achieved $2 million in savings per year, a 50% reduction in average handling time for the call center, a 50% increase in throughput, and 99% accuracy in transaction data processed.
  • A large P&C company wanted to transform a new business process that involved 18 full-time employees (FTEs) using multiple systems to aid underwriters in approving new submissions and creating quotes for clients. By moving this work to robots, the number of processors required was reduced by 50%. Automation also helped the client achieve 100% accuracy and compliance.
  • A group health insurer wiped out a 66,000-claim backlog in just eight days after implementing an RPA solution. The project freed up five FTEs to work on other higher-value tasks and projected an annual cost savings of $150,000.

Automating Shared Services

The potential for automation isn’t limited to just claims and policy processing. If rules can be built around a process, robots can follow those instructions to process the work. RPA can also boost productivity and reduce cycle time for underwriting, as well as shared services like Human Resources, and Finance and Accounting. Robots can be used in underwriting to assist in calculating risk and exposures by extracting and analyzing data at a fraction of the speed of employees. Deloitte found that organizations utilizing RPA have automated F&A processes by up to 80%, increased Accounting productivity by 50%, and improved shared services efficiency by as much as 75%. Robots can be deployed in Source-to-Pay, Order-to-Cash, Record-to-Report, and Financial Planning and Analysis. Automating common back-office processes allows insurers to cut costs even more and better utilize their current resources.

View the HPA for Insurance use case to see how RPAaaS can benefit insurers.  |   View the HPA Solution Overview for Insurance.