Can Intelligent Automation Guarantee the Prosperity of the Insurance Sector? A Perspective on its Impact
For the past five years, 52% of global equity in the insurance industry has been unable to reach its cost of equity return on investment. According to McKinsey’s 2022 Global Insurance Report, although projections for premium growth indicate a recovery from 2020 pandemic-related declines (1.2%), numerous challenges remain ahead: consumer trends are changing and advanced technologies present relevant issues that must be addressed if insurers wish to stay competitive in this ever-evolving landscape.
Intelligent automation (IA) can revolutionize the traditional model, replacing it with an effective and cost-effective alternative. By adding IA to claims management, underwriting, pricing tactics, and distribution processes insurance companies are able to bolster profits while improving customer service as well as employee satisfaction.
What factors are causing the insurance industry to struggle?
The insurance industry is in a stagnant state, unable to bear the burden of profitability. The advancement of technology has opened customer options with price transparency and rapid access, creating a fiercely competitive market where businesses must battle for customers’ attention. Consumers now have more power than ever before when it comes to choosing an insurance provider due to the abundance of information available at their fingertips.
In recent years, property and casualty insurers have been unable to make cost-cutting measures work. Consequently, the entire industry has witnessed its return on equity fall below what it costs them for capital – except insurance brokers which are the only segment of this field with a positive economic growth rate. This contrast is further compounded by scant market demand in established markets leading these companies to rely more heavily on price hikes instead of an increased number of clients and new coverage options as was once their strategy.
The industry is facing a significant threat due to the changing growth model that involves increased prices. To break away from this, and cultivate sustainability-focused growth as well as innovation, advanced technologies must be utilized. This can provide lower costs for customers and employees, a better experience when it comes to customer service or the decision-making process, plus improved productivity overall.
What has driven digital transformation to be a necessity for the industry?
To satisfy the growing needs of the marketplace, insurance companies must increase their operational speed. According to McKinsey’s research, what normally took years now must be done in mere months or weeks – an ambitious goal that can only be attained with smart automation capabilities.
By introducing AI into the mix, insurers are able to benefit from reduced turnaround times, successfully manage higher volumes of applications and eliminate errors associated with manual processes. This newfound efficiency provides employees more time for creative problem-solving in order to come up with unique strategies, pay attention to complex cases and craft personalized customer experiences.
In today’s competitive business environment, it is essential to stay ahead of the competition. Consumers want the convenience and ease associated with digital channels but crave personalized service that only a human could provide. Insurance companies can set themselves apart by creating an ideal balance between automated technology and customer-oriented communication tailored specifically for each individual client. By doing this, they will be able to give their customers what they need while remaining profitable in such a turbulent market.
The emergence of Insurtechs – companies leveraging technology to maximize savings and efficiency within the insurance industry – has profoundly impacted IA’s significance in the future. It is evident that they are a force to be reckoned with considering global investments have gone from $1 billion in 2004 up to an astonishing $14.6 billion this year! Not only do these tech-savvy organizations provide improved customer experiences, but they also hone their focus on marketing & distribution along with property & casualty products which gives other insurers valuable insight into where value can be added.
How is the insurance sector utilizing intelligent automation to its fullest potential?
With the pressure to stay within budget, transitioning away from legacy systems and siloed functions can seem like an overwhelming task for many insurance companies. Fortunately, partnering with an automation provider provides a much-needed respite. These partners facilitate improved use of existing systems through digital workers who can weave between different applications and synchronize data information seamlessly – enabling insurers to selectively dismantle their legacy system in more gradual steps rather than having them overhaul everything at once.
By leveraging this transitional automation strategy, tasks such as onboarding, data analysis, claims settlement, and invoicing can still be automated – thus freeing up human workers to focus on more valuable activities. As a result of the reduction in manual labor required for these processes insurance companies will find themselves able to quickly settle customer disputes and comply with the most recent regulations without having to worry about extra costs or delays. Moreover, since IA initiatives reduce workloads, insurers are now able to automate additional services while simultaneously modernizing legacy systems that deliver increased value at no extra cost!
The demand for insurance is predicted to continue growing this year, particularly in emerging markets. Yet the long-term success of the industry will be based on its capacity to respond quickly and seamlessly by leveraging advanced digital technologies. To stay ahead of the game, insurers must learn how to leverage these tools to remain relevant now and into the future.