AI and Automation: The Digital Differentiator for Life Insurers

By Truong Hoang Phuc, Director of Financial Services Group, FPT Software

Truong Hoang Phuc

Technology invasion in the insurance realm is driving radical changes, shifting the industry to a new era of efficiency and customer-centric services. According to a recent study by McKinsey, the greatest impact is likely to come through the introduction of AI and automation solutions, which have been earmarked to transform many of today’s practices, empowering insurance agents, improving efficiencies, reducing costs, and enhancing user experiences. Insurers have already been quick off the mark, embracing AI and automation to deliver bespoke services and seamless customer experience and drive disruptive changes.

The next level of customer engagement

The rise of AI has paved the way for lifestyle mobile apps and devices as young, tech-savvy customers nowadays are more interested in their quality of lifestyle and health. Underpinned by AI, these platforms present insurers with a more intimate way to engage with existing and potential customers. Insurance companies now blend into customers’ daily lives to promote knowledge sharing and related programmes to help them best achieve physical and mental well-being while gaining insights to offer personalised products that match customers’ needs. This, in turn, has established a multi-touchpoints engagement channel for insurers to bring a superior customer experience.

Next to that, dispensing with the frustrations created by self-services, such as time-consuming paperwork and complicated procedures, the implementation of a super app or customer application in the insurance sector also represents the next level of efficiency and ease of use for the customer. For instance, customers can now check the real-time underwriting status of their applications, or if requested, actions can be sent directly to the customer, i.e., customers can receive medical checkup requests, pending requests, or counter offers from underwriting.

The fundamental pillars of underwriting—risk assessment and policy premium determination—have long been a mixture of manual analysis and decision-making. To streamline the entire process and reduce reliance on manual labour, insurers are turning to intelligent automation solutions. By combining rules-based task automation with advanced AI components, comprehensive and instantaneous underwriting decisions can be made to enhance the customer experience. It has already been proven that cutting-edge AI/and machine learning (ML) technologies, such as language processing and text mining, and RPA solutions, can increase the Straight-Through Processing (STP) ratio up to 60% in operation.

With greater accuracy, not only will this accelerate the decision-making process, but it will also ensure judgments are based on a broad data-driven assessment. Leveraging rich historical data from a wide range of sources, such as past health records and lifestyle habits, insurers can train AI-based models to produce accurate decisions for new applications. As the frequency of cases increases, the system learns from these instances to improve its decision-making algorithm.

The claims processing, on the other hand, is typically complex, time intensive, and, at times, a frustrating process for both companies and customers, but its importance is unquestionable. A recent study by EY found that 87% of customers would renew their insurance with an insurer if their claim’s processing experience had been positive and speedy.

To this end, AI and ML algorithms can facilitate and speed up the claims handling process without human intervention. ML can help determine aspects of claims such as image recognition, data unification, data analysis, and flag fraud, with ML algorithms typically analysing images and sensors along with an insurer’s historical data, helping to speed up settlements. Meanwhile, tools like OCR are being used to automate and enhance the transparency of claims processing regarding data entry, document classification, and information extraction.

It’s also just as important to remember that while we can tout the improvements AI can provide, insurers must also not forget the value of a great customer experience is human interaction. Some of us are sold on the idea of a reliable, fast, and accurate digital service, while others still yearn for the human touch or just someone to speak to in an emergency. A balanced approach or a middle ground between a digital app and emergency assistance from skilled claim professionals will go a long way to building trust and loyalty.

The launch of AI-powered labour-saving tools like digital agent platforms, all-in-one apps, or chatbot assistants has helped insurers streamline traditionally slow workflow and free them from time-consuming administrative tasks, such as extracting information from documents, prioritising emails, and collating records of conversations. Especially, chatbot assistants establish an effective engagement channel thanks to their ability to provide recommendations for the right actions or products to help insurance agents win opportunities. This, in turn, allows insurance agent to do what they are best at: building better relationships with their customers and giving them the peace of mind that they have the right protection in place should the worst happen. It’s truly the best of both worlds: the customer gets a hyper-personalised service bolstered by the convenience of technology.

Can AI and automation be the digital differentiator?

In an ever-changing digital landscape, there will always be challenges for insurers to adapt and overcome. AI is by no means always correct, as it only supports automated decision-making from learned historical data, which can be biased, inadequate, and incomplete. While the answer can be found through regular audits and algorithm updates, remember the human touch to ensure transparency and accuracy.

The future of insurance lies in the hands of AI-powered automation as we embrace these technologies. The companies that seize the opportunity will deliver faster, more accurate, personalised services to their customers. Expect a few stumbles along the way. AI-powered automation will set the standard for excellence in the insurance industry.

About FPT Software

FPT Software, a subsidiary of FPT Corporation, is a global technology and IT services provider headquartered in Vietnam, with $1 billion in revenue (2023) and over 30,000 employees in 30 countries.

The company champions complex business opportunities and challenges with its world-class services in Advanced Analytics, AI, Digital Platforms, Cloud, Hyperautomation, IoT, Low-code, and so on. It has partnered with over 1,000+ clients worldwide, 91 of which are Fortune Global 500 companies in Aviation, Automotive, Banking, Financial Services and Insurance, Healthcare, Logistics, Manufacturing, Utilities, and more. For more information, please visit https://fptsoftware.com/