The Insurance Industry: A Stubborn Diehard or a Wise Traditionalist?

If you think about it, insurance is an industry of intriguing contrasts, because even though customers’ behaviors, risk profiles, and expectations are changing in big ways, the industry has proven curiously resilient in the face of innovative disruption.

A prime example of this is that four of Europe’s five largest insurance groups—AXA, Allianz, Prudential, and Zurich—have all reported a marked increase in premium income over the past few years.

Meanwhile, even the most popular InsurTechs, like Bought by Many (UK), Lemonade (US), and Friendsurance (Germany) have remained niche players, the latter two showing significant losses (see here and here).

While these insurance Goliaths aren't changing gears quickly, some technology trends still turn into a movement that the majority of players willingly join.

The Input Management Appeal

One of these trends is the rising interest in input management, which is used by insurers to standardize data (like emails, documents, and digital forms) in their IT systems, with the help of artificial intelligence.

Last week’s BPM conference for insurance professionals in Leipzig showed a bunch of different automation projects that insurers are involved in, to achieve things like extracting data from incoming customer mails, processing claims submission using semantic text recognition, or routing inbound customer service calls with the help of conversational AI.

AXA Winterthur BPM Leipzig Event A full house at Versicherungsforen Leipzig

The continued emphasis on process efficiency is understandable. Most insurers have a large clerical workforce that manually processes huge numbers of incoming documents—customer requests, letters of termination, claims notifications, expert reports, and the list goes on.

Their task is to extract and convert relevant data into a “usable” format. “Usable” for the application used, such as the Claims or Policy administration system. After the data is captured in the right format, a rules engine can pick it up for further automated processing.

The Trouble with RPA

As a result, certain business transactions can take place without human interference, which is a potentially attractive business case for robotic process automation.

But whatever quick wins AI delivers, it will hardly contribute to greater organizational effectiveness. And by converting customer information into a proprietary data format, it’s doubtful whether that data will ever become available for product innovation or a better understanding of customers.

As Florian Hamel, Head of BPM at AXA Versicherungen, outlined at the Leipzig conference, digital natives have just recently become the largest population of insured customers, even when accounting for Europe’s older aged population. This is why AXA is investing in a new customer-centric service model. This is where AXA’s business case lies.

Florian Hamel’s arguments were echoed by Jens Schmitt, a guest speaker who was notably from outside the insurance business. “RPA is like putting a plaster on an open wound rather than treating the bleeding body. The more plasters you put onto your body, the more difficult any real treatment becomes,” he said, tempering the expectations of the 200 conference attendees, most of them coming from a system- or process-related background.

Insurance is rightly characterized as a slow-moving industry, meaning a sector offering long-lived assets (think insurance policies) that rarely change its design. However, it’s exactly that design change that customers are asking for—and what digital platforms can do to bring today’s Goliaths and smaller insurers into the present as well as the future.