In this latest Opinion article, by Wayne Butterfield, Director at global technology research and advisory firm, Information Services Group (ISG) (https://www.isg-one.com/) we take a look at the automated claims process – will AI settlement really replace the human touch?
When a company like Allianz takes a stake in an Artificial intelligence (AI) based Insurance start-up like Lemonade, you know things are changing in insurance, and particularly in the way insurance claims are handled. The insurance industry – which, after all, is all about assessing and avoiding risk – has traditionally been fairly slow to adopt digitisation, AI and the new processes associated with them. But customer expectations are shifting, and so the industry has to move with them.
Automation and artificial intelligence are starting to make their impact on insurance companies. And despite the scaremongering news headlines that would have us believe we’ll all be replaced by robots, these new technologies are not necessarily a threat to jobs. They are, however, changing the way we work, the kind of jobs we do and the customer experiences we are able to create as a result.
AI is already revolutionising contact centres across all sectors, including insurance. We’re starting to see contact centres being repatriated from offshore locations that were chosen for their low employment and business costs. But if lower-value customer service tasks can be automated, there’s no need to offshore them, and insurers can invest in skilled people to undertake the more complex interactions that were always kept closer to home.
Technology is changing how we work, too. Simply Business made headlines recently with the news that automation is increasing productivity to the point that the company is trialling a four-day week in its contact centres. Everyone is paid their full salary, but the company believes a shorter week could boost productivity and promote better mental health at work. A better result for the same money.
To understand where AI and automation will make the biggest impact in insurance, we should start by looking at how customers behave. What is their experience of the industry? What could AI improve?
Most insurance customers will have three points of contact with their insurer: when they first buy, at renewal time, and if they make a claim. It is the claims part that is ripe for change. Can technology help the customer have a more positive experience? We know that companies have to excel in customer experience if they are to be competitive. A good experience means a customer is more likely to renew. But processing claims is labour intensive and (mostly) manual. Checking and processing a claim can take days or even weeks. It can be frustrating for the customer and for the insurer.
AI can reduce that process, for many claims, from days or weeks to a few minutes. Imagine what a difference that would make to a customer, who is probably going through a tough time (no-one puts in a genuine insurance claim for fun) and wants the claim sorted quickly. AI could mean they get a claim approved – and money in their bank – almost immediately.
Take a routine claim: a camera stolen on holiday, or a minor car accident. AI can use big data to check the likelihood that it is valid and truthful, far quicker and more effectively than a human can. In seconds, it can search and analyse relevant data to see how the claim stacks up: whether it was likely to have happened in the area, whether the claimant has a history of suspicious claims, whether the amount being claimed is in line with other, similar claims. An insurer could even deploy truth detection to assess whether the claimant is likely to be telling the truth, and overlay that with historic data.
All this is combined to give a probability rating to the claim and if it’s over, say, 99 percent, an automatic decision is made, the claim approved, the claimant told, and the process for reimbursement put in motion. It’s quick, simple and everyone’s happy.
What does that mean for claims agents? Does it spell the end? Far from it. If anything, it makes them more valuable and higher skilled. Anything that comes in under that 99 percent probability rating gets passed to a claims agent who has more time to investigate thoroughly, because they’re not spending their time processing something that’s routine and low-value. Rather than humans doing processing that could be done by machines, they will use their intelligence and skills that robots can’t develop: empathy, creativity, the ability to go off script and solve complex problems.
So machines and humans will work together in harmony: machines giving humans the information they need, based on AI’s ability to analyse the kind of data volumes that are way beyond a human’s ability to process; and humans applying creativity, empathy and problem-solving skills in order to create positive experiences for customers.
The result will be a great customer experience, fewer fraudulent claims, bigger profits and lower premiums. It benefits the insurer and the customer. And claims agents, although their jobs may be different, will be more valuable than ever.