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Us Cons How Robotics and Cognitive Automation Will Transform The Insurance Industry
Us Cons How Robotics and Cognitive Automation Will Transform The Insurance Industry
Contents
Introduction to robotics and cognitive automation (R&CA) 1
Automation in the insurance industry 1
Operating model reconfiguration 2
A. Impact to employment in the insurance industry 2
B. Technological transformation 4
Focus on customer centricity 4
A. Improved customer experience 4
B. Increased personalization 5
R&CA guiding principles 6
Conclusion 7
Appendix 7
How robotics and cognitive automation will transform the insurance industry
List of figures
Figure 1. Defining R&CA 1
Figure 2. Transformation of the insurance value chain by R&CA 2
Figure 3. Insurance employment pyramid 3
Figure 4. FTE impact of R&CA on insurance functions 3
Figure 5. Customer focus vs. cognitive technology adoption 4
Figure 6. A potential customer interaction using robot agent 5
Figure 7. R&CA guiding principles 6
How robotics and cognitive automation will transform the insurance industry
Introduction to robotics
and cognitive automation
(R&CA)Figure 1: Defining RCA
The use of robots to drive tangible business Each of these technologies builds on the Figure 1. Defining R&CA
benefits is very much a reality today. In fact, existing competencies of RPA and advanced
the IT-enabled robotic process automation analytics, including neural networks, data
(RPA) market has been growing rapidly at a mining, and Big Data processing. The RPA
CAGR of 60.5% from 2014 and is expected resulting combination—termed robotics
to reach US$5 billion by 2020.1 and cognitive automation (R&CA)—
Rules-based automation of
encompasses a potent mix of automated routine tasks
RPA in a pure form, however, is just
skills that finds application across
the beginning: Cognitive capabilities
industries. R&CA is expected to foster
that enable machines to perform tasks
greater collaboration between humans Advanced
normally reserved for human intelligence
and machine by both automating repetitive analytics
are now being leveraged with robotics as
tasks and enhancing the quality of jobs.
well. Cognitive technologies include such
R&CA technology is now poised to unlock a Capabilities used to analyze
capabilities as machine learning, natural unstructured data
world of possibilities through the synergistic
language processing (NLP), machine
combination of its key components.
vision, emotion recognition, and optical
character recognition, among others. Cognitive
capabilities
Automation in the
insurance industry
Robotics and Cognitive
Automation (R&CA)
Manage
Manage/support
products/services Deliver policy Evaluate fraud
distribution channels
pricing
Level of automation
Low Med High
Cognitive
2
How robotics and cognitive automation will transform the insurance industry
These skills would better enable insurers Operations, including policy servicing and data-intensive jobs and also aid in decision
to build new insurance products using reporting, would see ever-greater levels making. This phenomenon, which is widely
dynamic pricing strategies based on lifestyle of self-service and automation, as well as termed “bring your own robot,” will likely
pattern intelligence and recognition, while completely new, highly streamlined digital make employees more productive and
running focused and customized marketing processes. With requests to back offices efficient, thereby allowing them to focus on
campaigns. dropping significantly, these services will innovations to help serve customers better.
mployment Pyramid
likely see the steepest FTE shift/migration.
As FTEs will be required to deliver more
In the claims area, R&CA is expected to
value-added services/processes, insurance
Figure 3. Insurance employment create new roles that would leverage such
firms have to be cognizant of the following
pyramid technologies as machine vision and optical
key implications for their service delivery
character recognition to assist humans in
model:
adjudicating complex cases.
32% –
25% 37% IT and other support functions would see •• Skill matrix: Insurance firms will need
decreases in FTEs due to reduced overhead to upskill the different layers of the FTE
28% –
35%
30% as a result of standardized and automated pyramid in order to re-deploy resources
processes and the potential migration to into more complex, judgement-intensive
40% 35% – 38% new strategic data platforms on cloud and roles. And underwriters of the future will
other third-party analytical tools. need to be equipped with tools that work
Current state Future state with inputs provided by a cognitive system
These shifts might, however, also lead
that takes into consideration multiple
IT and support functions Operations Product dev
to the creation of more fulfilling jobs in
& marketing
complex variables about risk from non-
Source: Deloitte analysis the transformed insurance landscape.
traditional sources such as social media.
For example, it is a likely scenario that
knowledge workers will have access to
personal cognitive assistants to enable
Marketing Digital marketing, campaign management Customer segmentation, focused and customized marketing
Product and
Product development Digital products Customized products based on individual preferences
underwriting
Underwriting/actuaries N/a Customer segmentation, focused and customized marketing
New business
Customer management Automated complaints and issue management Lifestyle pattern intelligence
development
New customer acquisition Automated customer onboarding Targeted customer acquisition
Policy issuance Business rules administration Cognitive analytics enabled self-correcting processes
Policy Policy servicing Business rules administration Cognitive analytics enabled self correcting processes
processing
Regulatory and business
Automation of rules-based reporting capabilities Intelligent reporting and analysis capabilities
reporting
Claims management Standard claims management processing Advanced processing enabled by image recognition
Claims
Claims adjustment Automated processes Machine vision to assess simple claims
Human resources Standardized HR processes, digital recruitment Standardized HR processes, digital recruitment
Support
Finance, tax, and planning Standardized reporting Reduced overheads
functions
Other support functions Reduced overheads Reduced overheads
3
How robotics and cognitive automation will transform the insurance industry
•• Managing talent: Recruitment and and use these capabilities as “cognitive Gen Xers, and Gen Yers, customer
training engines will have to be upgraded operating systems” in building intelligent interaction preferences are changing.
to hire and train skilled FTEs with stronger applications. According to one survey, approximately 41
domain competencies to handle more percent of respondents have left an insurer
complex decision-making roles. Along with •• Integrated systems: R&CA technology because of poor customer experience.3
the demand for such technical capabilities has the inherent capability to iteratively In another survey, 27 percent of the Gen
as machine learning and NLP, soft skills self-learn and generate insights through Yers and 23 percent of Gen Xers who were
such as creativity, flexibility, reasoning, and access to data from multiple sources. questioned indicated that they want to
empathy are also likely to be key for talent In order to maximize the returns from interact with their insurer through digital
leaders managing this organizational this technology, integration with legacy self-service.4 Customer expectations for
change. A shift toward a highly skilled systems and other emerging technologies convenience through consistent information
workforce would also lead to a need for such as Big Data, IoT, cloud, etc., must be and service levels across multiple channels
enhanced talent retention. achieved. This will likely lead to a much- or touch points is likely to drive insurers to
desired breakdown of walls between mirror non-insurance industry experiences,
As jobs are transformed at all levels across
silos of data acrossFigure
the enterprise,
7: Customer Focus Vs Cognitivesuch as online
Technology retail, banking, etc.
Adoption
the insurance value chain, it must be
thereby enabling the establishment of a
understood that the technology will not
single source of truth and delivery of a
replace talent as a sustainable competitive
unified data model in a significantly more Figure 5. Customer focus vs. cognitive
advantage. New jobs with completely
consumable form. technology adoption
renewed job descriptions will be created as
a result of this large-scale transformation.
•• Transparency and control: Cognitive
Firms that strike a balance between Tech innovator Market winner
systems will undoubtedly partner with
High
transitioning to R&CA on one hand and • Focus on • Better customer
humans in the near future. To gain trust in operational experience
making required FTE adjustments and up- efficiency as • Higher customer
Focus on
positioned to disrupt the incumbents. R&CA will help empower insurers with the
These vendors are already providing ability to provide an improved customer
disaggregated services on the cloud. experience and more personalized offerings.
customer
For example, one leading ecosystem
A. Improved customer experience
player provides a series of modular
services such as “personality insights,” Using social data, interactions can be
centricity
“visual recognition,” “text analytics,” etc. personalized to understand customer needs
Through this approach, insurers can better. Through solutions that understand
source different capabilities from niche natural language, learn and build knowledge,
vendors (provided that their underlying and communicate seamlessly with
IT architectures are flexible enough to With the demographics of insurance customers, organizations can provide better
tap into these cloud-based services) customers seeing an influx of Millennials, customer experiences.
4
How robotics and cognitive automation will transform the insurance industry
Robots equipped with language processing B. Increased personalization automation capabilities provided by
capability could replace human interaction this technology can enable insurers to
Another priority for a customer-focused
with customers in areas such as First Notice virtualize the underwriting process to
approach is to make insurance offerings
of Loss (FNOL) and customer support. a large extent, thereby facilitating their
more personalized across customer touch-
Using machine learning techniques, these ability to scale up to a wider customer
points.
robots will be able to iteratively improve base. With such advancements at hand,
their understanding of customer queries • Personalized products: Historically, the industry is expected to move away
and grievances. With advances in emotion the process of rendering underwriting from the practice of “finding customers for
recognition and sensing technology, the decisions on a case-by-case basis to products” to a model in which needs and
robots will also be able to analyze patterns account for individual applicant risk risks of customers are understood and
in customer behavior. Insights gained from considered at a much more granular level.
these can be used to provide a unique, Figure 6. A potential customer
• Personalized advice: The role of
personalized customer experience. Without interaction using robot agent
agents is diminishing as increasing
emotional wear and tear or natural human
5:50 PM, Monday, Jan 2
disintermediation in insurance distribution
fatigue, robots can be used to achieve scale
John is an existing customer of an Insurer continues to create an “advice gap.” Taking
in quick time, increasing the scope of this
cues from the investment management
technology to a wide base of customers. @JohnDoe: Upcoming vacation in
Italy in February. Really excited about it!! industry, robots are being designed now
This capability can help the insurer to curate
6:00 PM, Monday, Jan 2 to act as trusted risk advisors to insurance
and control the customer experience, while Cognitive system generates insights about John
based on social data and past interactions
customers.
letting employees focus on more complex
tasks. • John is an avid traveler
To that end, insurance robo advisor Clark,
• He likes to engage in high- for example, recently completed “Series A”
adrenaline sports such as bungee
question that could be I’m doing great. Thanks for asking. companies are already utilizing analytical
engines to generate a unified profile
answered by a robot in This is about your upcoming trip to Italy. I
wanted to offer our insurance services for
view of their consumers as a means
of intelligently aiding agents on their
English without human
your trip .
As per Italian embassy website, travel
insurance with medical coverage of
customer calls. Take the same example in
•• Given their probabilistic nature, cognitive •• Run a series of pilots: Finally, program
systems need to continuously learn sponsors should identify metrics-driven
Evaluate
from their past actions and evolve more pilot programs to stress test solutions
technology
accurate algorithms driven by R&CA technology to ensure that
the technology implemented is delivering
With a firmly established core foundation,
business value as planned.
insurers can adopt a measured approach to
Run pilot
achieve their desired R&CA goals: Since R&CA technology is still an evolving
science, there are no industry-leading
•• Develop strategy: To establish an
practices yet around its implementation. A
effective strategy, consideration should Interact careful assessment of needs coupled with
be given to business outcomes that align
targeted pilot programs would allow insurers
with key strategic objectives, such as
to test the waters in small modules and
improved customer experiences, better Source: IBM, Deloitte analysis
subsequently capitalize on the advantage of
underwriting capabilities, enhanced
these learnings while embarking on a full-
fraud detection, and smoother claims a. V1 – “Viable”: Use cases that are
blown implementation effort.
processing, among others. Insurers will relevant and viable must first be
also need to evaluate the business case identified and understood. Tasks
6
Deloitte Development LLC. All rights reserved. R&CA in Insurance
How robotics and cognitive automation will transform the insurance industry
Conclusion
Insurance companies are often perceived can be leveraged to define how cognitive In short, these are very interesting times for
as being conservative in their approach and automation should be blended into the the insurance industry. Organizations that
slower to embrace changes. Unfortunately, fabric of the organization. define an optimal and successful operating
such inertia is no longer a viable option. model and design a strategy centered
Finally, it is always interesting to watch
Simply put, insurers who fail to embrace the on leveraging new enabling technologies
how the external environment responds
cognitive journey will likely cede important to meet the needs of today’s insurance
to the advances in technology. Given the
strategic advantage to competitors and new consumer are likely to be most successful.
highly regulated nature of the insurance
market entrants already riding the wave.
industry, we can expect these watchers
Conversely, organizations that try to do to bring cognitive technology into greater
too much too soon in pursuit of first mover focus in an effort to assure that interests of
advantage in the R&CA space may also be the consumer are not being compromised “The horse is here to
at risk. Running a manageable set of pilot through the deployment of such tools.
programs at the outset of the journey to test Undoubtedly, the extent to which personal stay, but the automobile
cognitive automation capabilities is a more
sound strategy. This approach can enable
information can be used in R&CA-enabled
environments to customize customer
is only a novelty, a fad”
the insurer to align business outcomes with interactions and experiences without -President, Michigan
the expectations and facilitate a smoother breaching rules of privacy may become a
implementation downstream. Once pilot bone of contention for regulators. Savings Bank, 1903
results prove out, a longer-term strategy
Appendix
Glossary
Technology Description
The ability of computer systems to improve their performance by exposure to data without the need to
Machine learning
follow explicitly programmed instructions.
The process of discovering meaningful correlations, patterns, and trends by sifting through large amounts of
Data mining
data stored in repositories by leveraging statistical and mathematical techniques.
Natural language Ability of computers to work with text the way humans do; for instance, extracting meaning from text or
processing even generating text that is readable, stylistically natural, and grammatically correct.
Cognitive Emulating human reasoning typically by learning, coming to conclusions, appearing to understand complex
reasoning content, engaging in natural dialogs with people.
Automatically and accurately transcribing human speech by interpreting the voice and translating it into text
Voice recognition
or commands.
Integration adapters provide a critical foundation for any system with a unified connectivity architecture,
Integration
facilitating integration of information from several on-premise, legacy, and cloud-based applications and
adapters
systems.
Optical character Using pattern matching to convert handwritten letters into corresponding computer text or commands in
recognition real time.
Emotion The task of recognizing a person’s emotional state by analyzing the characteristics of the voice signal, with
recognition word use as an additional input, if available.
Recommendation The framework that provides insights/recommendations from an integrated view of all data components
engine and combining analytics capabilities.
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How robotics and cognitive automation will transform the insurance industry
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