How The Pandemic Accelerated Digitalization In The Insurance Industry

There is no doubt that the insurance industry has traditionally been resistant to complete digitization, still relying heavily on paper-based applications in many areas, and on face-to-face contact (for example, from intermediaries to assess claims).

But COVID-19 changed all that. Almost overnight, the industry had not only to get people working effectively from home but also to accelerate its digitization plans. It was no longer enough to have a few discrete pilot projects being automated or digitized; paper-based processes and in-person meetings were simply not an option.

Some insurers were already well on their way to implementing digitization and intelligent automation strategy before the COVID-19 hit, and that has stood them in good stead. But even for the best-prepared businesses, the early days of lockdown were challenging, pivoting a business model that is predominantly office- and relationship-based to operate in a virtual environment.

The lessons have been learned fast, and the solutions will stay in place long after the pandemic. To build operational resilience, businesses must be able to operate from anywhere. Most continuity plans (pre-COVID) included a failover plan for a key building being taken out of action. Few included all buildings and business infrastructure being taken out, and employees losing their usual support networks such as childcare.

In weeks, insurers that have adopted digital transformation for their business had everyone up and running from home, including the customer service teams, with home work stations, VPN access, connectivity — everything needed to function effectively. That was more difficult in countries where home working was less accepted. And then it had to factor in business process partners, who also needed support setting up with a virtual model.

Some business functions were more able to transform quickly than others. There was already great work being done in claims, for example, where technologies such as voice recognition, auto transcribing interviews, and digital signatures meant that claims could be assessed and processed remotely. Risk assessments, too, were already using technology such as smartphone-based virtual tours so that assessors don’t have to go into a property to evaluate a claim. When COVID-19 hit, these processes could be rolled out across regions that have been slower to adopt digitization.

But there are still paper-based processes (particularly with applications), and the industry is having to reassess how it ingests and processes information.

Insurance: going digital

Intelligent automation and technologies such as natural language processing (NLP) can help. For example, insurers are working to create digital mailrooms with all paper mail scanned and routed digitally on arrival; everything is delivered to a central location, scanned, and put into a workflow, with links emailed to the appropriate teams. Apply Intelligent Character Recognition (ICR) and NLP to that process, and you can start to automatically triage and respond to documents. If you have a medical or legal file coming in that might be hundreds of pages long, a good NLP engine can extract and highlight the relevant information before securely passing it on to an assessor. The machine doesn’t make the decision, but it does a ‘pre-read’, which is a huge help to the assessor (who still has access to the full file), who can then spend more time where the real value is, in assessing the claim. It removes the admin work, and the NLP is continually learning and updating, based on changes made by the assessor.

Of course, the first step here is digitizing the paper process in the first place — something that the current climate has made necessary, but the benefits of which will far outlive the pandemic.

Having an entirely distributed, virtual team isn’t without its issues — particularly in countries where the infrastructure isn’t reliable — but it has made the industry consider what future operating models might look like, with more flexible and remote working. Far from being a drain on the business, it could make us all more resilient. As an industry we are using better collaboration tools to work together, which has made us all realize what’s possible and enables resourcing models across geographies and role types.

What will be really interesting is to see the impact all this will have on culture, and our ability to innovate and embrace change. We are likely to see new models of working, and, of course, new ways to improve the customer’s experience. Who would want to go back to a paper process, now?

Underpinning this is a layer of new skills and roles that are emerging: teams who can reskill to move into slightly different roles to be able to work alongside technology that will help them make better decisions, focus on higher-value tasks and do what humans excel at — building relationships, making decisions based not just on data but on empathy and compassion.

If we can do all this, the insurance industry will emerge from this crisis stronger, more streamlined, and ultimately resilient for the future.

Inmediate is an insurtech startup from Singapore that is using the latest technology such as Artificial intelligence, Distributed Ledger, and NLP, making insurance processing and underwriting fast, cheap, and flexible. That gives for better processes, lower costs, improved time to market, and new revenue opportunities.

Introducing Inmediate: a platform on which customers, distributors and insurers using smart contracts connect. https://inmediate.io

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