Digitally savvy customers are increasingly demanding ‘always-on’ seamless experiences across channels of their choice. However, insurance companies bogged down by manual time-consuming processes are often left with little time to respond. This disconnect in fulfilling expectations eventually leads to poor customer experience. The speed at which claims are settled by insurers and their ability to communicate on-demand across channels are crucial enablers for driving customer satisfaction. The insurance industry’s future growth is therefore dependent heavily on how quickly and efficiently it digitises.
Enhancing Customer Experience with New-gen Technology
Adopting technologies such as Artificial Intelligence (AI) and Robotic Process Automation (RPA) is enabling insurers to optimise their claims process, improve compliance and exceed customer expectations. A U.S.-based insurance company automated their claims process to achieve 75 percent reduction in the claims processing time. Additionally, they also increased their overall productivity and claims handling capacity by 30 percent.
RPA, AI and even chatbots create the perfect foundation for self-service giving clients a speedy claims experience along with complete visibility of the process. The same benefits apply when customers are submitting their insurance applications. If the application process is simple, it results in fewer drop-offs. The implementation of chatbots can also improve the client experience through 24/7 availability, reduced customer effort and decreased waiting times.
The use of AI has enhanced insurers' capability to provide their customers with personalised products that suit their pocket and risk profile. A South African financial service provider saw an improvement in their sales after implementing AI and machine learning to provide their customers with personalised products. Insurers who provide personalised products will reap long-term rewards in the form of customer growth, retention and positive brand reputation.
The data required by insurers to offer personalised products and experiences is provided by customer analytics. Operational teams are increasingly banking on analytics to extract Customer Experience (CX) metrics such as Customer Satisfaction, Net Promoter Scores, First Contact Resolution and Customer Effort. These metrics are helping insurers optimise their operations to dramatically improve their service delivery.
Furthermore, the effective use of CX metrics is leading insurers to effectively promote their brand image and boost customer loyalty. The life insurance division of an Australian bank was experiencing high lapse rates, which were negatively affecting their profit margins. The business utilised analytics to diagnose actual patterns and develop short-term tactical initiatives to design high-level retention strategies. The company saw an increase of more than 7 percent in Net Profit After Tax (NPAT) in the first six months and a two percent reduction in lapse rates over the long term.
Regulatory Compliance: A Competitive Advantage
Last year, PwC revealed that South African insurers identified market conduct regulations as the second most disruptive issue after technology. The great news is that RPA and AI can help insurers address these regulatory challenges. For example, software bots maintain logs of all their actions. This hard-wired transparency allows insurers to monitor their regulatory compliance regularly and make appropriate course corrections, if need be.
Insurance companies are also driving compliance by coding their RPA applications to consider industry regulations. One of U.K.’s largest insurers recently implemented a new fraud detection tool, which has shifted their focus from fraud detection to fraud prevention, revealing 20 percent more fraud. Regulatory compliance will continue to be a competitive advantage, alongside digital capabilities.
While RPA, AI and customer analytics present significant growth opportunities for the insurance sector, the benefits will only manifest if insurers identify the correct automation opportunities and utilise the analytical insights to drive continuous improvement.