The Intelligent Quarterly from the publishers of The Insurance Insider

Summer 2018

Search archive


A revolution is coming

Chris Main

The age of robots and automation is about to become the norm for everyday living.

Innovations already in use range from Apple's personal assistant, Siri, to robot vacuum cleaners that learn the layout of our homes and clean up while we're out at work.

But will this revolution transform the workplace in the same way that smartphones have - and do we need to worry that we're all about to be replaced by a robot?

The potential applications for robotic technology are so numerous that Google acquired the robot maker Boston Dynamics and has employed the technologist and futurist Ray Kurzweil to spearhead their drive towards thinking computers. Bill Gates describes him as "the best person I know at predicting the future of artificial intelligence".

But what is available today and how is it relevant to insurance companies?

Technological solutions

Technology and insurance are uneasy bedfellows and they have been since computers first arrived in business in the 1950s and 1960s. There are many aspects of insurance operations that are numerical and lend themselves to digitisation, but there are also many processes that involve human judgement with highly nuanced distinctions and meanings - not forgetting the importance of personal relationships.

Even though the insurance industry generates huge volumes of data that are highly diverse in structure and complexity, the more cerebral aspects of our business have remained beyond the reach of IT. This is why insurance IT systems have never fully realised the potential they have in other markets such as banking.

Underwriters or actuaries feel that IT systems are more of an overhead than a business asset. Undoubtedly, many insurers and brokers are struggling with inflexible legacy systems that are getting in the way of doing business rather than being an enabler. Regulation is constantly changing and products evolve, leaving older systems behind. However, will migrating to a new system with a modern user interface and sophisticated end-user configurability, but built on largely the same database structure, solve all the problems? Arguably not.

Sophisticated interaction

It is hard to define a perfect technology solution to a constantly evolving problem. Some insurance products have a very long lifecycle, so introducing new technology does not always enable old systems to be retired.

In fact, introducing new systems can actually increase operating costs in the short term as both old and new systems have to be run in parallel. The cost and risk of migration to enable full transition to a new IT system can put a massive hole in the value proposition. Any change involves significant risks and everybody remembers the failures!

We wouldn't argue that technology never needs to be refreshed, or that some older systems are not rapidly becoming unsupportable, but those seeking quick fixes or "silver bullets" are likely to come back empty-handed.

So it could be argued that, to some extent, fragmented systems of various ages within the insurance ecosystem are inevitable and not really the root cause of the problem. Complexity will always be with us and it will develop in ways that we can't predict.

Perhaps what is needed is more sophisticated interaction with diverse systems and less pursuit of the holy grail of the all-singing, all-dancing "super app" that does everything.

More than human

To date, the best integrator of complex information sets held in multiple repositories has been... the human. Humans are capable of identifying and analysing a business problem and viewing it from multiple perspectives. Humans can define a solution, identify information required to inform that solution, source the information and integrate it into a coherent whole.

This human resource needs to be highly capable and located close to the business decision-maker because of the complexity of the interaction required to get a timely result. This works - it has done for decades - but it's very expensive.

Robotic process automation (RPA) has now arrived. RPA can use computer systems like a human does. It reads the screen, it moves the mouse and it makes keyboard entries.

With RPA, it does not matter if your data is held across numerous systems, some of which are older than they should be. RPA can interface with multiple systems or websites (internal and external) and can extract, process and compile information according to a complex set of business rules.

In short, it does things that only a human could do previously - and it doesn't need expensive office space. In a recent deployment of RPA for a technology company, Sutherland Global Services saved the client 64 percent over a three-year period from an operation that was already based in a low-cost offshore location.

The RPA revolution

This is the just the start. A revolution is coming.

So how do you end up on the winning side? What are the resources or skills you can free up and can this help you address the challenges of today's insurance market?

RPA is highly flexible technology because it has more "human" attributes than a conventional IT system, interface or data warehouse. It has the advantage of fast and inexpensive configuration compared to other types of IT integration because it uses existing interfaces and retains current security protocols. But what difference could it make to the business?

If an underwriter needs to be able to interrogate multiple systems (both internal and external to the organisation) in real time, so as to be able to quote on a piece of business with the broker standing in front of him, RPA can be configured to fetch the information, process it in a predetermined way and present the results in a user-friendly format.

Where a number of different systems need to be populated with policy data, RPA can populate the various core legacy systems simultaneously.

RPA can extract financial results from multiple accounting systems by running reports and then consolidate them following complex business rules. This can considerably reduce the time it takes to close the books each month and the resources required to do it.

In addition to simple headcount reduction - robots work 24 hours a day, seven days a week, they are never ill and they don't take holidays - RPA brings benefits in terms of speed and accuracy. Put simply, robots don't make mistakes.

Freedom through automation

Overall, RPA can dramatically increase the quality of back office functions, dramatically reduce costs and reduce the need for captive servicing centres. Sutherland estimates that 70 percent of the work done in captive centres can be automated using RPA.

RPA provides the answers to three perennial industry challenges:

1) How to cope with the complexity and diversity of the multiple IT systems required to meet all the requirements of the industry.

2) How to remain cost competitive in an increasingly competitive market.

3) How to retain customers by consistently delivering superior experience and value.

Insurance professionals who focus on activities that add greater value to their business and use RPA to free them from low value or routine tasks will be the ones that win this revolution. And there is much more to come. Computers that can read natural language and discern meaning are not so far away...

Chris Main is vice president of Insurance Solutions at Sutherland Global Services

This article was published as part of issue Autumn 2014

Euromoney Trading Limited - 3rd Floor, 41 Eastcheap, London, EC3M 1DT, United Kingdom. The content of this website is copyright of Euromoney Trading Limited 2018. All rights reserved Euromoney Trading Limited actively monitors usage of our website and products and reserves the right to terminate accounts if abuse occurs.