How Automation Adds to Need for Humans - Insurance Thought Leadership

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November 7, 2021

How Automation Adds to Need for Humans

Summary:

Automation does not mean industry professionals will be left out in the cold. In fact, the opposite may be true.

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The P&C industry has been on an automation path for many years. When the pandemic hit, it became a catalyst for accelerating automation and digital transformation. Straight-through processing, self-service portals, virtual inspections and digital payments are just a few of the areas that insurers put a sharper focus on. But automating tasks and workflows does not mean that machines will take over and leave industry professionals out in the cold. In fact, the opposite may be true. I believe that a case can be made that automation initiatives will increase the need for skilled professionals with deep industry domain knowledge.

All the automation occurring is good for the industry. And anyone who knows me knows that I am certainly not a Luddite or anti-technology. However, I believe there is one dimension of tech progress in the P&C industry that is being overlooked – skilled individuals. I’ve written extensively about how automation and AI will elevate the role of industry professionals and how relationships are still vital in the industry, especially in commercial lines. But in this blog, I turn my attention to another implication of task automation – the need to manage it. Several examples expose the challenges.

  • Bots: Chatbots to automate interactions, robotic process automation to automate tasks and voice bots to respond to phone calls all take the burden of simple, repeatable tasks away from humans and speed up the process. Bots of these types are sweeping through the industry, and some insurers have deployed thousands. On balance, this is a good thing. Companies are realizing ROI on their investments and improving process flows. But many are now experiencing maintenance headaches. How should the inventory of thousands of bots be managed? What happens when a bot breaks? How are bots updated to comply with the latest regulations? These are important questions that must be addressed.  
  • APIs: It’s an API world. You’ve probably heard that phrase. Even CEOs talk about APIs (application programming interfaces), and, again, it’s a great thing. APIs standardize and improve connections between systems and make integrations faster and easier. After all, integrations and data exchanges between systems have been some of the big challenges for the industry for a long time. But once again, as the number of APIs expands, there emerges a need to manage the hundreds or even thousands of APIs that might be relevant for a given insurer.
  • Models: Rules-based or AI-based models are widespread in P&C, and their number and the variety of use cases continue to expand. Done well, they are helping improve product design, risk selection, pricing, profitability, claims processing and many other parts of the business. Model management is now becoming a discipline in its own right, and there is a need for strategy, governance and hands-on management of the models. And, in the case of models, the most important human contributions are in designing the models to address specific business opportunities, interpreting the models and then taking action.

Over all of this, layer the complexities of the insurance business, the trend toward more specialization and the evolving risk landscape: The picture gets even more complicated. The state-by-state regulation regime in the U.S., coupled with the variations by line, introduce multiple dimensions that must be managed for new tech solutions in automation. As customer risks become more complex (as in middle-market and large commercial accounts, specialty lines and workers’ comp), the intricacies of the business create challenges.

See also: Insurers Turn to Automation

Automation and leveraging AI for insights are good for the P&C insurance industry. But there will still be a need for industry experts who understand how to execute tasks that comply with evolving regulations, who can exercise judgment based on experience and who can manage all the automation activities. Some of that automation management will demand IT experts, but much of it requires an understanding of how business is conducted, the details of different customer segments and insurance products and the requirements imposed by the many regulatory bodies involved.

Will there be increasing levels of straight-through processing, bots and other automation in P&C? Of course! But does this mean that the machines will be in control? I emphatically say no! People and their experience and expertise in the industry will remain at the heart of the business.

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About the Author

Mark Breading is a partner at Strategy Meets Action, a Resource Pro company that helps insurers develop and validate their IT strategies and plans, better understand how their investments measure up in today’s highly competitive environment and gain clarity on solution options and vendor selection.

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