The insurance business is fueled by documents—contracts, policies, appraisals, claims, proposals, compliance requirements, customer service logs and more. These pieces of content make up over 80-85 percent of the data in most business organizations—and they are absolutely integral to many of the processes core to insurers’ business. Yet, an incredibly small percentage of this data (1-2 percent) is leveraged with existing analytics or automation technologies. As a result, the business processes that depend on this data remain highly manual, requiring extra time, cost and expert resources to manage on a one-by-one basis.
Executive SummaryIntelligent process automation is a form of artificial intelligence that uses deep learning technology to automate processes involving unstructured data—and it is part of the next wave of automation in the insurance industry, according to Tom Wilde, the leader of Indico, an IPA provider. Wilde explains the benefits of IPA beyond RPA and describes some use cases for the P/C insurance industry.
As insurance companies look to expand their digital transformation efforts, automating and augmenting the workflows related to these documents should be high on their list. In doing so they can address some core productivity issues while gaining significant potential benefit:
- Knowledge capture: One of the risks for insurers is that much of the knowledge within their organization about manual processes isn’t captured or codified anywhere. Experienced staff members leave the building every night with important knowledge about a given process. This makes it difficult to onboard new team members properly and limits scalability of processes across teams. Automation of these processes is a great forcing function to capture the specific steps and context required.
- Operational efficiency: Reducing the number of hands that have to touch any given process is an obvious path to greater efficiency. And freeing people from a lot of the mundane tasks that come with these processes enables them to focus on higher-value activities.
- Increased capacity: In recent years, many insurers have shifted their focus from cost control to capacity expansion—growing revenue without growing expense by enabling existing resources and team members to accomplish more. It’s a huge opportunity to expand margins and grow their business.
- Faster cycle time: For insurers, the competitive landscape is increasingly driven by customer service and response times. Many have built their brand around it. The ability to make quick decisions about claims, policy approvals, costs and appraisals can be a huge differentiator.
Existing Automation Approaches Fall Short
To date, the only practical approach to navigating the unstructured text and image content in documents has been some variant of keyword-based search, rules engines, regular expressions and OCR (optical character recognition) templating. These systems require elaborate rule-based systems to codify all possible variants of the information being processed. As a result, they are very brittle—i.e., they work as long as the rules in question completely capture the problems to solve. They are not designed to handle highly variable unstructured content that makes up most of insurerworkflows.
Unfortunately, in life and the insurance business, things evolve. The moment the keywords or concepts stray beyond the target’s knowledge, these approaches break down, requiring costly expert resources to update and maintain.
Many insurers have also made recent investments in Robotic Process Automation (RPA) software. It offers a simple, easy-to-understand benefit—process automation and cost efficiency—and has quickly replaced Business Process Management (BPM/BPA) as the new engine for enterprise efficiency. But as insurers look to expand their use of RPA to their document-based processes, they are discovering that it has limits. RPA is great with repetitive, deterministic business processes involving structured data (where there is no judgment involved). Tell it exactly what you need it to do and it can do it better, faster and cheaper than a human. However, it cannot make judgments about information or learn and improve with experience. Because of this, enterprise users are finding that RPA is ineffective with document-based workflows involving unstructured content—those that require some level of cognitive ability. (See related textbox, “RPA? BPA? IPA? What’s the Difference?”)
The Next Wave of Automation: IPA
Intelligent Process Automation (IPA) is a new approach that is well-suited to the insurance business for a few reasons:
- It is purpose-built for the document-based workflows that drive so many core business processes in the insurance industry. IPA has the ability to understand the text, images, documents and other unstructured data. It can “learn” a set of tasks related to a business process and in effect give the subject matter experts and business line owners “bionic arms” to dramatically improve the throughput and efficiency of the existing approaches.
- IPA facilitates collaboration between the data science teams and the line of business professionals that have the necessary subject matter expertise about the business processes being automated. It also makes it easy to codify that knowledge.
- IPA is explainable. As insurers automate more and more processes, there is an increasing need for transparency in how the technology they use works and makes decisions on people’s behalf. This is especially true when automating processes involving regulatory requirements and compliance issues.
It’s important to note that IPA does not replace RPA. It complements it, handling those workflows that can’t be automated using RPA alone by translating unstructured content into structured data that can be plugged back into an RPA platform.
Published reports citing Gartner and IDC estimates from 2012 and 2013 put the amount of unstructured data at business organizations at around 80 percent but also note that the figure grows annually.
- “Six Reasons Businesses Need to Pay Attention to Unstructured Data,” IT Business Edge
- “Structured vs. Unstructured Data,” by Christine Taylor, posted March 28, 2018 on damatision.com
Putting IPA to Work in Insurance
IPA can deliver significant benefits: up to 85 percent faster cycle times and up to a four-times increasein organizational capacity, based on our experience in working with financial services customers in insurance and banking. And there are a number of near-term applications and use cases in insurance that can benefit from it. The common thread is anywhere a given set of documents need to be evaluated, reviewed or classified by a number of different people. For example:
- Claims processing. IPA can be used to automatically classify and annotate a new claim such that it can be effectively routed to the right subject matter expert for evaluation and processing. This results in faster turnaround time and improved accuracy for a processed claim, driving improved customer satisfaction and organizational efficiency.
- Appraisals. IPA can process both written and image-based information for property and casualty-related appraisals to verify the assets being covered. Home insurance is an example, where photos of each room and exterior photos can be matched to the written property description.
- Commercial underwriting. Often involving thousands of pages of documentation, major commercial underwriting processes can be dramatically improved by creating underwriting criteria attributes that can automatically be recognized and “scored” using IPA resulting in major reduction in response times when submitting proposals.
- Policy analysis. A common challenge in insurance is the need to be able to traverse very large collections of policies that often span several decades to understand how the language within the policies is affected by changes in regulatory policies or the competitive landscape. IPA can understand specific clauses in policies and score and classify them for a given use case.
- Regulatory compliance. In a highly regulated industry, responding to regulatory inquiries in a timely manner represents a large expense for most insurance companies. IPA is able to create augmented responses to inquiries, dramatically reducing the response times and resources required.
As insurers expand their digital transformation efforts to business processes like these, I believe Intelligent Process Automation will be a key enabler of success.