Role of RPA in the Insurance Industry – Benefits and Use Cases

by | Published on Oct 27, 2022 | Business Process Outsourcing, RPA

The advent of several advanced technologies is transforming businesses like never before. Robotic Process Automation (RPA) is a new technology that has shown significant potential in various industries and the insurance sector is no exception in this regard. RPA in the insurance sector is widely regarded as the technology that will dramatically improve the sector’s efficiency and customer focus. RPA is compatible with many insurance processes, particularly those that require a lot of manual workforce like handling applications, registration and processing of claims, and data entry. In fact, there are many insurance companies that have implemented sophisticated systems globally, various languages, and regulations – a complete necessity for data security, precision, risk elimination, and efficacy in processing. Therefore, RPA bots can focus on certain activities that can essentially change the working of the industry. Partnering with a robotic process automation company can help implement disruptive technologies that can take insurance businesses to the next level.

In simple terms, robotic process automation (RPA) is a software technology that combines artificial intelligence (AI) and automation to perform rule-based, routine and repetitive tasks. The insurance sector suffers an overabundance of tedious clerical work, resulting in significant wastage of time and low client satisfaction. Insurers are overburdened with routine and operational duties in the course of performing day-to-day insurance operations such as underwriting claims processing, policy servicing, and so on. This has resulted in growing expenses and a break in the insurance industry’s growth. Implementation of RPA has tremendous opportunities in the insurance business as it can automate a lot of redundant processes, boost productivity and efficiency, save costs and gather external data.

Significance of Automation Required in the Insurance Industry

As mentioned above, RPA enables insurance companies to streamline business processes and automate transactional and administrative tasks. According to McKinsey, RPA saves 34 percent of an employee’s time in data processing alone. Earlier, insurance companies tended to concentrate their RPA efforts on high-volume, non-complex activities involving structured data processes like claims processing and forms registration – that involve a significant amount of manual data entry, retrieval, data gathering and collation. This automation yielded a very high return on investment (ROI) (less than six months in most cases). RPA has helped the insurance companies grow exponentially as it contains many backend repetitive tasks.

Here discussed are some of the benefits of employing RPA bots for an insurance company –

  • Fast Claims Processing – Claims processing is a time-consuming task that involves several manual tasks to process applications. Employees as part of the process need to collect data from several departments and feed it into various systems. Due to the long processing time involved, customer satisfaction suffers. However, RPA technology allows bots to gather data from several systems and put it all together in one place, making claim processing much easier.
  • Boosts Data Accuracy – Unlike human workers, RPA bots execute data entry 24 hours a day, seven days a week (without any interruptions). Properly programmed data RPA bots help collect the correct data.
  • Simplified New Business Onboarding – Scaling to satisfy the demands of each consumer becomes more complicated when insurance businesses add more clients. RPA bots can automate the majority of the onboarding process, speed up the process and improve the customer experience.

However, RPA bots do not necessitate the installation of new infrastructure as the technology can be easily integrated into an organization’s existing system to help processes in sales, marketing, human resources, and other departments smoother.

Key Challenges Facing the Insurance Industry

Before the implementation of RPA in insurance, the industry faced several challenges

  • Large Amount of Data – The insurance industry experiences constant flow of valuable data. Traditional insurers, due to lack of appropriate technology tend to over rely on manual data handling.
  • Operational Roadblocks – The majority of operations in the insurance industry are manual, time-consuming, and repetitive tasks. While manual risk appraisal in underwriting is time-consuming and dependent on predetermined criteria, manual data processing from unstructured sources in claims administration is slow and prone to constant errors.
  • Poor Customer Experience – The abovementioned challenges in the insurance industry arise primarily from insurance’s over-reliance on manual processes. As a result of these problems, customers are really left with seriously unsatisfying experiences.

Role of RPA in the Insurance Industry – Top Use Cases

The ability of RPA to merge back-office processes with front-end technologies in order to automate end-to-end lifecycle processes is what makes the technology a perfect fit for the insurance sector. There are several opportunities for RPA to ease many processes that are part of the insurance industry. Insurance automation using RPA can be extensively used in the niche for working with legacy systems, automating the redundant tasks and also gathering external data. In addition, it also helps in increasing the productivity and offering a unique customer experience. Here discussed are some of the top use cases where robotic process automation can be implemented in the insurance industry –

  • Claim Registration and Processing – Generally, claims processing requires gathering a large amount of data from various sources, which results in comprehensive data. Current claim systems lack functionality and adaptability as they have exceeded their practical limits, resulting in a high level of human processing. This in turn reduces efficiency and flexibility; resulting in delayed service and poor customer experience. AI is increasingly being included in the claims management process to reduce costs. RPA in the insurance industry has a range of commercial benefits. The technology provides solutions for integrating multiple claim processing data from many sources. It helps in automating various processes including data extraction, difficult error tracking, claims confirmation, and unification of claim-relevant data sources; resulting in speedy processes and a better customer experience. Other processes that can be automated include – claims intake, claims assessment and claims settlement.
  • Underwriting – Underwriting is another key feature of insurance that is ideal for automation. Underwriting involves acquiring and evaluating data from a variety of sources to evaluate and reduce the client risks associated with the policy in question. It usually takes more than 2-3 weeks to analyze and determine the risks involved before coming to a conclusion.
  • Some of the common risks connected with the client’s policy in question include – health risks, creditworthiness, financial limits and duplicate policies (whether the applicant already have a policy in their name). RPA technology facilitates automation of the data collection process that involves gathering data from multiple external and internal sources. This in turn can minimize the underwriting time. It also helps to provide the necessary information or data to various fields in internal systems, generate a report or make recommendations or suggestions while evaluating run losses, thereby automating the underlying process of product underwriting and pricing.

  • Regulatory Compliance – When documenting work and creating audit trails, the insurance industry adheres to strict regulations. In fact, the danger of regulatory violation increases with so many complex and error-prone processes involved in the insurance sector.
  • Automation is significant in this regard as it eliminates the need to deploy employees to carry out operations to manually impose regulatory compliance. In the insurance industry, RPA may automate things like validating details of existing customers, generating regulatory reports, and sending out account closure processing notices. Other processes that can be automated include – customer research, customer data security and compliance checking.

  • Process and Business Analytics – With so many operational and paper-intensive processes involved in the insurance sector, it is quite difficult to monitor and measure operational efficiency or track improvised areas. With automation processes in place, software robot tasks can be easily tracked without any manual effort.
  • RPA can be utilized to measure the total number of transactions handled and exceptions encountered. The audit trail provided by RPA promotes regulatory compliance and process improvement as well. This in turn helps in improving claim and customer service response times and customers benefit from simplified applications.

  • Integration with Legacy Applications – Insurance companies are highly dependent on legacy applications to handle business processes smoothly. As Enterprise Resource Planning (ERPs) or Business Process Management (BPM) needs incorporation with legacy applications, implementing them can be really challenging. The fact that RPA can adapt to the current workflow of insurance companies means that it can adapt to any type of system available for well-structured RPA implementation.
  • Corporate Office Operations – Back-office workers can be redeployed into front-office roles, where they may focus on complicated customer demands, freed from mundane and regular activities. Here are some examples wherein RPA can improve the efficiency of insurance operations –
    • Policy Cancelation – RPA can be utilized to automate the policy cancellation process, saving time and eliminating errors. The RPA process usually includes Mainframe, web-based applications, and Outlook to follow the cancellation process from beginning to end. A robot may also work 24 hours a day, handling many applications.
    • Finance and Accounting – RPA systems can help automate a considerable percentage of daily bank reconciliations by performing clicks, keystrokes, hitting buttons, template auto-fill, copy-pasting information, field-entries, and more. This in turn reduces transactional expense and policy-cost footprint.
    • Sales and Distribution – RPA can help with the complex and challenging work of insurance sales and distribution. Top processes that can be automated include creating sales score cards and sending notifications to agents, as well as doing compliance, legal, and credit checks.

The insurance industry is facing stiff competition with the rapid changes in customer needs. As the insurance business primarily relies on back-office process efficiency, insurers have started using RPA to automate transactional, routine and repetitive operations so that capital and talent can be repurposed for more sophisticated and strategic work. In fact, large insurance companies have integrated RPA with the assistance of business process outsourcing services in almost all business operations to achieve greater organizational performance and efficiency, increased profits, improved compliance and reduced customer dropouts.

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