Insurance

As the insurance industry continues to evolve while facing new challenges, catastrophes, technological disruptions as well as uncertain, volatile and complex economic conditions, insurers and brokers have no choice but to adapt to constant change in order to thrive.

A Glimpse into the Insurance World

Five key trends shaping the South African insurance industry

Regulations

Regulatory changes will be at the top of the agenda for insurers as they ensure that their businesses comply with key amendments impacting the entire financial services industry.

Climate Change

The increase in the frequency and severity of extreme weather conditions, coupled with intensifying natural catastrophes will continue to have a significant impact on clients and ultimately on the bottom line of insurers.

Stringent Underwriting Measures

Due to the ongoing strain endured by global reinsurance and insurance markets as a result of increasing catastrophic losses and insurance costs, we are likely to see more stringent underwriting and proactive risk management measures being taken.

Product Innovation

Insurers will continue working around the clock to develop innovative products that meet the ever-changing needs of customers.

Technology

Traditional insurers will be required to put in more effort to catch up with start-up disrupters who are progressively using technology and data analytics tools for policy management and administration, amongst other innovations that challenge the traditional insurance model.

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Areas Where RPA Can Make an Impact in the Insurance Industry


Claims processing require companies to gather a vast amount of information from several sources, creating exhaustive quantities of data. Current claims systems lack functionality as well as flexibility and have reached their practical limits which has resulted in excessive levels of manual processing. RPA in Insurance makes it possible to integrate all the different claim processing information from multiple sources. It can automate the manually intensive processes like extraction of data, complex error tracking, claim verification, integration of claim relevant data sources and more; consequently, speeding up the process and creating a better customer experience. 

Underwriting requires the evaluation of risk and exposures of clients. This involves gathering information from various sources and assessing the risks associated with the given policy. A great deal of data scrambling, analyzing, and determining the risks involved before landing on a conclusion takes more than 2- 3 weeks on an average.

Robotic Process Automation automates the process of data collection from various external and internal sites, thus considerably reducing the time taken for underwriting. It can also be used to populate multiple fields in the internal systems with relevant information and produce a report or make recommendations while assessing the loss of runs, thus automating the process which forms the basis for underwriting and pricing of products.

The insurance sector faces strict guidelines for documenting work and creating audit trails. Regulatory scrutiny of the insurance space has never been more acute than it is today. With a multitude of tedious and error-prone processes in insurance, the risk of a regulatory breach increases multifold.

Automation is instrumental in helping companies improve regulatory processes as it essentially replaces the need to devote significant staffing to go through operations to enforce regulatory compliance manually. Validating existing customer information, regulatory report generation, sending out account closure processing notifications are a glimpse of the scenarios which RPA in Insurance can automate. 

Insurance companies can improve and serve customers better only if they can measure what they are doing. The vast number of operational and paper-intensive processes make it difficult to track and measure operational efficiency or identify areas of improvement.

With automation processes in place, the tasks performed by software robots can be tracked easily, without involving manual efforts in several transactions processed while exceptions encountered can be effortlessly measured using RPA in Insurance. The audit trail provided by RPA helps with regulatory compliance which further supports process improvement. Therefore, claims and customer service response times are improved, and customers are benefited with streamlined applications.

From quoting, rating, underwriting to distributing customer services – policy administration links all the functions of an insurer. Current policy administration systems that have been around for decades are expensive and high maintenance. They cannot scale quickly enough to meet the growing demands of customers or support business growth.


RPA in Insurance allows all key players within each process or each silo to accomplish a plethora of operations easily without involving vast navigation across systems. It essentially automates transactional and administrative parts of activities such as accounting, settlements, risk capture, credit control, tax, and regulatory compliances.

The insurance sector faces strict guidelines for documenting work and creating audit trails. Regulatory scrutiny of the insurance space has never been more acute than it is today. With a multitude of tedious and error-prone processes in insurance, the risk of a regulatory breach increases multifold.


Automation is instrumental in helping companies improve regulatory processes as it essentially replaces the need to devote significant staffing to go through operations to enforce regulatory compliance manually. Validating existing customer information, regulatory report generation, sending out account closure processing notifications are a glimpse of the scenarios which RPA in Insurance can automate. 

The RPA Disruption Model


Spectrum of Automation within Organisations


The Effect of Automation

The Impact of Robotic Process Automation

The Institute of Electrical and Electronics Engineers (IEEE) Standards Association defines RPA as: ‘‘A preconfigured software instance that uses business rules and predefined activity choreography to complete the autonomous execution of a combination of processes, activities, transactions, and tasks in one or more unrelated software systems to deliver a result or service with human exception management’’. These preconfigured software instances known as robots, or software robots, reproduce the work typically performed by humans. In other words, RPA has the capability of automating human tasks. 

Rather than hard-coding automation workflows and Application Programming Interfaces (APIs) into software programs, RPA mimics a person’s actions in conjunction with existing systems. RPA works in the same way that a human worker reads and interprets data from a physical document and transfers this to multiple applications on their computer.

Robots can seamlessly move data across boundaries, from one application to another, mimicking activities such as clicking, typing, and moving between windows. In addition, these robots can use native and add-on Artificial Intelligence (AI) and Machine Learning models (ML) to enhance overall capability and learn from experience over time.

The Benefits of Creating a Digital Workforce

There are numerous ways in which Internal Audit can embed automation capabilities throughout the entire audit life cycle. This includes risk assessments, audit planning, fieldwork and reporting. The investment in automation technologies can yield the following positive returns:

Better use of scarce resources
By replacing manual activities, automation can free up capacity for teams, allowing personnel to focus on higher-value activities, such as quality assurance reviews, exception management, process improvement, and interpersonal interactions. In turn, this shift toward value-added activities can improve operating effectiveness, allowing the Internal Audit organization to keep pace with business changes and the associated impact.
Increased efficiency and reduced costs
RPA can operate and execute audit tasks around the clock at an accelerated pace. As a result, the reduction of time- consuming manual activities can lead to significant cost savings.
Higher quality output
RPA enables tasks to be performed more uniformly and efficiently. In addition, the results are highly traceable and auditable. With inherent process standardization, fewer manual errors are likely to occur, which improves the accuracy and quality of audits. When mistakes, manual or otherwise, are made, they can be detected more readily and rectified more easily due to the systematic nature of the process.

Typical RPA projects include multiple functional “pilots,” but the program is completed in 9 to 12 months with an ROI in less than 1 year.

Cost savings ranging from 20%- 60% of baseline FTE cost.

71 % increase in developing employee skills in more specialized tasks.

Robotics work 24/7 with up to 98% more accuracy.

74% increase in process speeds and productivity.

More business value

Nearly every Insurance organization seeks to increase assurance and coverage. RPA furthers this goal by enabling Insurance to move from statistical sampling to full population testing. These technologies can also enable organizations to increase the frequency of testing and, in many cases, to transition to a continuous auditing model for providing more timely insights to the business. As technologies evolve, business value is expected to increase in tandem, enabling proactive insights and analysis in reporting.

Greater coverage

Having a Robotic Automation manage and drive the full analytics allows Insurance professionals to get greater coverage across the organization (more data, transactions, etc.) while not increasing the time or resources needed to analyze large data populations. This also removes audit sampling from the equation and helps auditors get closer to complete assurance. Robotic Automation allows teams to find the anomalies in data/transactions and focus on those outliers.

Improved on-demand visibility into department performance

Using automation in reporting and project tracking allows for on-demand visibility into departmental performance. Dashboards and workflow tools anchor and make possible a timely and efficient Insurance function. Such tools ease Insurance’s work with those they are auditing or advising, and they simplify the sharing of information and the collaboration with risk functions.

“Automation is not about decreasing head count; it is about moving up the value chain. By freeing up resources, auditors can shift time to proactive activities like business transformations and emerging risks, becoming problem solvers rather than problem finders.”

- Christine Katziff, Corporate General Auditor, Bank of America

Basic Considerations for Automation

The way to begin an automation roadmap is to conduct a process scan and opportunity assessment to identify processes and activities with the highest potential return on automation investment. Activities appropriate for RPA generally have certain characteristics.

It must be a highly manual, repetitive and high-volume process.

It must be a rule-based process.

It must have a low exception rate (low variation between processes)

The inputs must be electronic or machine readable.

The processes and their underlying applications must be stable.

The processes are already being performed by large teams. 

Making Automation a Priority

Innovation is changing the future daily and bringing with it an expansive array of risks and opportunities. That is why Insurance functions must not only fully understand innovation’s impact on their organizations’ risk profiles but also embrace that impact themselves. Through the acceleration of an existing technology and talent strategy, or building a more revolutionary action plan, all Insurance functions will have the ability to address the technology- and innovation-related risks facing them. That readiness will continue to increase Insurance’s relevance and reinforce the function’s role as a trusted advisor.

The Insurance Industry, which have been burdened by manual processes and tedious tasks for years, can now turn the majority of the “grunt work” over to a digital workforce who are able to handle long hours and repetition, and who rarely make mistakes when managed properly. As a result, this has the potential to increase efficiency, effectiveness, and quality throughout the Insurance life cycle, creating more value for the business and making better use of the most precious resource of all - intelligent, highly skilled human talent.

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