New Tool: Cognitive Process Automation

With low interest rates putting pressure on expenses, CPA goes beyond robotic process automation, cutting costs while maintaining service.

Much of North America is seeing lower interest rates across the board, which bodes well for consumers making large purchases but puts the insurance industry under intense scrutiny. Carriers with bond-heavy portfolios may see a decline in returns and, as a result, lower profit margins. Despite the insurance industry’s overall acceleration toward technology in 2020, carriers of all lines of business will need to move much more quickly – or risk falling even further behind their profit margin.

Insurers should cut unit costs, but not corners.

Insurers must cut costs; however, with more consumers requiring personalized attention from their insurance company, insurers must walk a fine line. Reducing expenses may be necessary, but insurance companies must be careful not to lose their existing customers in the process. Automation -- especially a newer form, called cognitive process automation (CPA) -- allows for reducing costs while still providing the service that customers require.

In some departments, such as underwriting and billing, insurance companies should prioritize responsivity for a more convenient customer experience. This can be done by using process automation to streamline communication between the carrier and the policyholder.

In other departments, such as claims, policyholders will appreciate careful and attentive human interaction. While responsiveness is still paramount, customers will have more trust in the company’s claim-handling process when they have access to a dedicated claims adjuster. 

Where resources are scarce, technology is a viable solution.

Even prior to the impact of COVID-19, carriers like Protective Insurance had begun implementing CPA, a more advanced version of robotic process automation (RPA).

Many carriers have at least discussed the features and capabilities of RPA. However, RPA and even intelligent process automation (IPA) products are primarily limited to structured data. 

CPA is the new disruptor in both the insurance and automation industries. Combining the repetitive abilities of traditional RPA with artificial intelligence (AI) and machine learning, CPA relies on bots that capture data and scan documents via optical character recognition (OCR) but that also do much more. The bots can fully automate entire underwriting and claims processes, from start to finish, with minimal human intervention.

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As an example, policy underwriting has traditionally been considered a manual undertaking, but CPA has demonstrated that underwriting can be largely automated -- everything from policy submission to risk rating and underwriting to issuing declinations and binders. Using CPA, insurers can write more new business, streamline the renewal process and even detect cases of potential fraud with minimal human supervision.

Claims departments can significantly reduce the manpower needed for largely repetitive processes. Bots programmed with CPA can fully automate the first notice of loss (FNOL) process, fraud investigations, benefits calculations and even payments. In fact, time-consuming processes like claims communications can be automated up to 95%

Employees can instead focus on more engaging tasks and provide better service on edge cases.

Increased efficiency is more remunerative than reduced overhead.

In cutting expenses, the matter of efficiency is sometimes overlooked. If time is money, shouldn’t carriers condense time-consuming processes, as well?

Automation saves time and money. Whenever carriers optimize a process by implementing an automation solution, a precious resource has been created: time

As the policyholder mindset continues to grow in favor of more personalized experiences, cognitive automation allows insurance carriers to use their best asset – their human workforce – to focus on retention efforts, customer satisfaction and even cross-selling additional lines of business. At its heart, insurance is a people-focused business, and even tech-friendly consumers prefer personalized human interactions.

The takeaway

With lower interest rates threatening profit margins, insurance carriers must target cost reductions – and sooner rather than later. Companies can use new process automation tools, such as RPA and CPA, to cut redundant work often found in underwriting and claims departments. Insurers are then able to reprioritize the focus of their workforce on customer retention, or even scaling for growth.

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