How Cognitive Automation Boosts Efficiency of Insurance Companies: Use Cases

By Natalia Markovskaia Published on Aug. 05, 2020

The insurance industry has always been slow to adopt the most cutting-edge and sophisticated modern technologies. Plagued by reliance on manual work and archaic methods, a revolution has begun amongst established insurers to upgrade their legacy systems. Modern technologies are now actively monitored to assess their usefulness in the industry, with a particular emphasis on software, namely automation and artificial intelligence.

These types of software come with several perks, most of which can be attributed to their efficiency. The improvement over manual labor is obvious. Human error, waiting times, and costs are reduced in this new tech era. Although the terminology is at times skewed, robotic automation is usually seen as a more rudimentary technology with clear cut applications. However, the more advanced cognitive automation raises the bar substantially in terms of its scope and versatility.

What is Cognitive Automation?

It is easier to define cognitive automation when a distinction is made from traditional automation. The most common form of software automation today is known as Robotic Process Automation (RPA), which mainly handles repetitive tasks with little to no deviation. This is perfect for situations where a clear set of rules can be followed and executed, such as calculations or data collection. While this can be sufficient for more ordinary tasks, cognitive automation goes a step further by incorporating ideas guided by the AI.

Software using cognitive automation has the ability to learn from observing human input and make decisions in the same manner as a human would. This approach is better suited to knowledge-based tasks, such as analyzing large sums of complex data or unstructured processing. Software using cognitive automation can analyze images, audio, and natural language texts, among other things. As insurers are also upgrading their customer experience, policyholders are now capable of submitting a claim leveraging their insurance app and uploading the images of their accident taken with the phone. In this specific example, CPA comes in with a quick assessment of the data collected from the picture in order to assess the damage, quantify the cost, etcetera.

Insurance Automation Use Cases

Friedrich Sulk, Head of Strategic Partnerships, Automation Hero 

Optimized Claims Processing

Claims processing is one of the functions in the insurance industry that is primed for automation. This process is tedious and labor-intensive and suffers from human error, extended wait times, and massive data processing. 

A partnered effort between RPAs, cognitive automation systems, and a human insurance agent, significantly reduces the friction experienced by both insurers and customers.

When a claim is submitted, an RPA may be able to pull out relevant information from a variety of sources and send it to a cognitive automation system. This system can then analyze the information and approve the claim or, if there’s an issue, send it to a human agent. When the agent makes a decision, the cognitive automation system learns from his or her behavior. This method reduces waiting times by up to 50%.

Our portfolio startup Sorcero is a good example of how an insurtech solution can improve claims processing. The US-based startup offers a language intelligence platform that allows insurers to rapidly deploy enterprise applications for conversational and document-driven workflows. 

Let’s see a use case of Sorcero’s technology: “A health insurer was experiencing leakage in the manual identification of claims that should have been referred for medical investigation and review,” the Founder stated. By adopting their platform, the insurer was able to achieve “a significant reduction in the number of claims that would otherwise slip through the cracks.” The platform’s cognitive automation and decision support systems established a functional understanding to improve efficiency and increase the number of claims identified for medical review. “This cognitive automation improves the accuracy of claims processing and empowers the insurer’s employees to speed up the number of claims to review and its accuracy”.

Using OCR For Claims Processing

One of the biggest drains to insurers is the efforts expended on simple data entry tasks, particularly those of paper forms that need to be read and input by a human agent. Part of the difficulty in automating this process came from recognizing the handwriting of customers. However, with OCR technology, such as Automation Hero's, a cognitive automation system can review a scanned file and effectively read and input the data itself.

This can be used in most insurance claims, from medical claims to vehicular claims. Many documents need to be submitted as proof to any given claim, some of which are inevitably handwritten. For example, a doctor’s note on a medical claim.

Personalized Marketing & Advice

New insurtech solutions have made it possible to access multiple data sources for a more complete understanding of a customer's needs and wants. Using data from personal devices, social media, and the internet of things, it is now within the capabilities of cognitive automation systems to gather large pools of data, analyze it, and form it into usable suggestions for insurance agents. This reinforcement provides agents with advanced communicative abilities when conversing with customers.

This can be used in multiple situations. For example, an agent can be informed by a cognitive automation system of a customer’s upcoming travel plans during a typical inquiry. This allows agents to offer applicable products at the most opportune times possible, thereby maximizing their efficiency and improving customer care.

r4 Technologies is a startup that provides a cloud-based, AI-enabled software product for B2B customers. Their technology enables sales teams in the insurance industry to be more relevant and proactive in customer conversations, focusing on the right deals, better targeting new customers, predicting their life stages and related needs, tailoring cross-selling and up-selling offers and more. In their own words, “Across all sectors, r4 enables a much better understanding of a customer’s ever changing needs, tastes and preferences.” This allows the insurer “to proactively offer the right product, offer or message to the right customer, at the right time, specifically leveraging direct digital channels.”

Policy Administration

Changes to a customer’s account, whether it is contact information or a change of address, can be time-consuming to review and input. These can come in many different formats, and emails are an increasingly common one. The initial difficulty of automating this process is the language used by the customer. Sometimes nuances of the language can be easily misinterpreted by a rudimentary automation system. However, cognitive automation systems like those used by Sorcero or Automation Hero, can detect the intention and request of the customer and independently implement them.

This is an issue many insurers face, regardless of their field. For example, a customer may send a quick email detailing their move and a change in their address. An NLP can then review the email, conceptualize the intent, and make the change independent of an agent.

Optimizing the underwriting practice

The practice of underwriting is complex since it relies on the analysis of historical data (and, of course, on the expertise of the underwriter). Technology can be of great help when it comes to examining large amounts of information, as in this case. That’s why cognitive automation is playing a key role in optimizing the underwriting process. Virtual underwriters are fast and accurate and insurance companies are relying more and more on them. 

“A life insurer was looking for a deeper review of medical information for underwriting to assess risk from customers using a biological age model, not just basic demographics and simple risk calculations from smoking or prior heart disease,” said startup Sorcero. “By ingesting and processing complex medical notes and diagnostics in real-time, from underwriting packages, Sorcero’s platform can identify relevant medical tests, symptoms, demographics, disease severity, disease progression, and more. This speeds up underwriting, enables intelligent automation in straightforward cases, and can identify risk factors to improve underwriting and guide personalized health recommendations to reduce risk and improve the health of customers.”

The Role of Startups

Startups provide a valuable source of innovative ideas to insurtech and the wider insurance industry. They are the groundbreakers when it comes to new technologies and refining their applicability to specific industries. These growing companies harmonize cutting edge tech with their target industry through intensive research and investor input. This is indicated through the rise of insurtech startups from outside the insurance industry where 31% of insurers plan on working with startups from outside their industry in the next two years.

It is evident that the role of insurtech startups is strong, and growing even stronger. They’re releasing new technologies and they’re the reason why many large corporations are evolving in order to stay relevant.

Looking Ahead

Insurers are on the edge for rising startups in the insurtech sector, as well they should be. The future of the insurers is heading towards a fully integrated insurtech system that incorporates automation on a multilevel basis. It is true that the earlier these integration efforts are implemented, the less downtime companies experience, and the sooner they see a return. This is particularly important in cognitive automation technologies as the learning curve and integration into existing systems take some time.

Only an integrated insurer can meet the demand of the next generation of consumers when they arrive. During these changing times, corporations that will stay relevant will be those that have the ability to adapt and fluently integrate their internal systems, therefore early acknowledgment and investment are essential.

At Plug and Play’s Insurtech accelerator we match large corporations with top-tier startups that are changing the future of the insurance industry. Join our platform today.