“Sometimes we assume we know our customers’ needs without actually validating that.”

 

Ashish Savani, Zurich

Yet realising these opportunities will require insurers to work, think and invest in a very different way. Ashish Savani of Zurich said the first steps to becoming more innovative and agile workflow was to foster an innovation mindset with employees and draw on the capabilities of marketplace providers. “And make the customer part of the journey,” he said. “Sometimes we assume we know their needs without actually validating that.”

“Make some mistakes, break some eggs and don’t be afraid of failure because from that you can learn a tremendous amount”

 

Nick Baldridge, IBM

Our panellists agreed this was a big step for the industry, which tends to be risk averse. “It’s about enabling teams to make some mistakes, break some eggs and not be afraid of failure because from that you can learn a tremendous amount,” said Nick Baldridge of IBM. “Make small measured bets, rooted in the end user research you have done, to demonstrate the value and then use it to springboard and scale.”

Demonstrating value

“The benefit value really begins to scale as you bundle more and more things and fundamentally start reimagining what’s possible and how new business models could be created”

 

Nick Baldridge, IBM

This can be a big ask for an industry not used to such an approach, and that can make it difficult to secure investment. “These are brand new technologies for the carriers and this is an industry that’s risk averse so there’s some reluctance to put big money into something that may not work,” explained Benku Thomas, Vice President of Claims Technology and Architecture at Chubb.

Nick Baldridge of IBM highlighted some of the value cases IBM has built, pointing out that transforming a single process delivers a benefit of 5-10 per cent but blending multiple processes and work activities, the combinatorial effect of automation and AI on a single function can deliver a 25-50 per cent benefit. “However, if you are taking multiple functions, such as the entirety of claims management or underwriting, then that benefit could be 50-70 per cent,” said Baldridge. “The benefit value really begins to scale as you bundle more and more things and fundamentally start reimagining what’s possible and how new business models could be created.”

He pointed out that loss adjustment expenses in the US auto insurance industry alone are roughly US$32-34 billion. “If you’re building a value case, imagine shaving two, three, four per cent off that. The numbers start to add up pretty dramatically,” said Baldridge.

Benku Thomas of Chubb agreed. “One of the biggest benefits is reduced cost of doing business,” he said. “As you start to shave off small percentages that amounts to huge sums of money.”

“Automation leads to more consistent processing decisions and a better customer experience through the insurance life cycle”

 

Benku Thomas, Chubb

Thomas said it’s not just cost savings. “Automation leads to more consistent processing decisions and a better customer experience through the insurance life cycle,” he said. “We have a lot of human work flow and human capital knowledge but it doesn’t necessarily mean consistency – automation gives you that.”

“What’s more,” added Thomas, “when you automate, you’re not just automating processes, you’re also collecting data as you go.”

But automation isn’t the answer to everything. Ashish Savani of Zurich stressed that one of the industry’s strongest assets is humans. “But they could be put to better use in customer experience and services we create for the customer,” he said. “Get them onboarded into this process through early communication and then create opportunities for upskilling and new opportunities.”

Nick Baldridge of IBM agreed. “Empower employees with information so they can do their job well and lift them up a level so they can focus on the value-added stuff rather than the mundane administration that can be handled by intelligent automation,” said Baldridge. “Reimagine how this work can be done and break down silos that exist within enterprises. That opens up a whole new set of opportunities to allow employees to add value that wasn’t even possible before.”

Getting started

Most insurers made great strides during 2020 and now is the time to capitalise on that work. It’s important, however, not to sign blank cheques but to approach the next phase of the automation and innovation journey with purpose and focus.

“We see people trying to be great at everything but the reality is the management focus, the attention and the investment will get diluted really quickly,” said Nick Baldridge of IBM. “Pick what to focus on and be realistic. What do you want to be great at and what can you offload to a partner so you can focus on the things that matter?”

“You need to think about how these technologies will mesh with the customer experience”

 

Benku Thomas, Chubb

Benku Thomas of Chubb said this can mean going back to basics. “Insurance processes are manual and human so to get the ROI out of these technologies requires us to rethink the insurance life cycle itself,” he said. “You also need to think about how these technologies will mesh with the customer experience – virtual inspections, for example, requires customers to collaborate with the carrier when it comes to using the technology.”

Nick Baldridge of IBM agreed this process will ask hard questions of current insurance operations. “These last 12 months have exposed many inefficiencies in the way work is done. Take a step back and see if there’s a better way to get this done,” he advised. “It’s a dialogue happening in every boardroom across the industry right now.”

He said carriers should ask more of their technology partners when it comes to driving value from their investments. “We’re regularly putting skin in the game,” said the IBM partner. “Ask your partners to help you demonstrate the value. We’re seeing more of this and we are open to it.”

“There are so many new entrants and customer needs are changing. If you do not meet them, then you will become obsolete”

 

Ashish Savani, Zurich

One thing was clear from the discussion: intelligent automation is set to sweep the industry, whether it’s ready or not. “This isn’t an option anymore, it’s necessary,” said
Ashish Savani of Zurich. “There are so many new entrants and customer needs are changing. If you do not meet them, then you will become obsolete.”