Bots. Internet of Things. Artificial Intelligence. However you say it, automation is everywhere. It’s no longer the science fiction of the past: companies now use robots and algorithms to carry out core business functions like production, managing inventory and optimizing logistics. These technological advances have created a new age of automation, and consumers – especially young consumers – that expect smart, quick, and flexible solutions on a large scale. With generational shifts occurring in all industries, expectations are also shifting in the insurance industry, and a prevalent question is how to more efficiently underwrite policies.
Consider the far-reaching hands of automation. Last year, in keeping with their embrace of disruptive innovation, Amazon launched Amazon Go. This automated grocery-store concept uses AI, eliminating cashiers and cutting down on long lines. When customers shop at this brick-and-mortar location, they never wait in line; they simply need to download the Amazon Go app, enter the store, take the products they want, and…go.
An industry that fits closer to insurance that has embraced these forward-looking automated concepts is banking. Automated teller machines, better known as ATMs, have been a part of the American landscape since the 1970s, revolutionizing the banking experience. But with people using cash less and less, the industry has now been forced to move further forward. The mobile payments wave is rushing in, allowing consumers to use their smartphones to pay for purchases. Social services like Venmo and Apple Pay are forcing the industry to create their own easy-to-use apps for payment and purchase options.
According to research conducted by Morgan Stanley, over the past 20 years, GEICO, Progressive and USAA captured 17% market share from competitors that did not adapt quickly enough to changing consumer preferences — most notably, the shift to evaluating and purchasing auto insurance online. This demonstrates the opportunity commercial insurance carriers have to stretch further when it comes to automation. Integrating smarter risk modeling and predictive analytics will streamline your business operations and allow for more straight-through processing (STP), so you can focus on larger, more complex policies. Automation improves carriers’ overall workflow by achieving greater speed and efficiency, adapting to changing business needs, reducing human error and improving team roles and responsibilities.
A good place to start your plan to embrace the automation disruption is in commercial underwriting. We’ve created five simple steps insurers can take to put automation to work in 2017:
- Benchmark where you are with STP compared to the current industry benchmark (37%), which is still lower than what teams would prefer. See our eBook for help with industry benchmarks.
- If you’re below the mark, determine what issues can be solved through automated solutions.
- If you’re higher than average, consider maximizing automation and using data more effectively.
- Educate your teams, and have each role (underwriters, managers, and product managers) identify areas that can be automated.
- Communicate out the plan so everyone is on the same page.
Don’t get left behind. Automation is here to stay, so implement a strategy soon to advance automation this year.