The U.S. life insurance industry is beginning to understand the vast potential benefits of robotic process automation (RPA) and artificial intelligence (AI). These two related breakthrough technological innovations leverage the power of machine learning to increase productivity and reduce the risks associated with human error.
Of course, many professionals in our industry find the names of these technologies unappealing, prompting skepticism from the outset. These reactions are often rooted in fear of the unknown, apprehension that is unnecessary once we understand the essence of the technologies.
(Related: Jim Maxson to Lead Life Settlement Group)
RPA and AI are often used in tandem to complete a transaction and are currently utilized in many customer servicer interactions we encounter daily. As with many new technologies, the possibilities of RPA and AI are virtually limitless, while the restrictions are commonly rooted in poor execution. The best software and systems capabilities in the world do not overcome poorly executed or poorly designed processes.
Adoption in the Life Insurance Space
RPA is an emerging form of business process automation technology based on use of software “robots” that consistently apply certain algorithms. AI is simply a form of intelligence that is derived when a machine mimics cognitive functions associated with human minds — such as “learning” and “problem solving” — and continues to improve over time.
The race to incorporate RPA and AI into the way life insurance companies do business has already begun in earnest. With respect to RPA, more than 45% of life insurers say they are actively deploying RPA systems now and another 35% are in the pilot phase, according to the 2018 World Insurance Report. In regard to AI, a majority of life insurers (55%) said their firms were piloting or deploying AI solutions now.
More than 80% of insurers surveyed in the 2018 World Insurance Report said the top driver for embracing these digital technologies is “customer demand” — just 45% referred to margin pressures — so it is clear that life insurance companies view these technologies as crucial to delivering the level of service that today’s consumers demand. The insurance industry is typically slow to embrace change (for a multitude of reasons such as regulatory oversight of personal information), so these statistics are encouraging and demonstrate that insurers are partaking in the type of self-reflection necessary to stay relevant in an ever-increasing digital age.
RPA and AI are poised to fundamentally change the way life insurance is priced, sold and managed in the primary market. I believe the same will be true in the secondary market for life insurance policies.