By Paul Hackett, Business Development Manager at Munich Re Automation Solutions
This next phase of digital transformation will carry the life insurance sector to a point where it can comfortably meet evolving customer expectations. But in order to get there, life insurers must look to transform and successfully digitise the end-to-end underwriting process. Attempting to make the digital breakthrough with short-term digital solutions that only automate certain aspects of a system will no longer suffice. In fact, this approach can actually create greater complexity within the process, and it does not get to the source of the sector’s digital difficulties.
Superficial digital transformation will not have a long-term impact on the way the life insurance sector operates and rather than edging closer in small steps, it will result in the sector falling further behind its insurance counterparts as the digital gap widens exponentially.
According to the Bank of England and Financial Conduct Authority’s’ recent report, the wider insurance sector has recently begun to enthusiastically champion predictive technologies. In fact, the insurance industry is growing its adoption of machine learning applications faster than any other financial sector. The report revealed that the number of machine learning applications in the insurance sector will increase by 163% in the next three years, bringing it level with the more traditionally digitally native banking sector on adoption. As part of the insurance sector, life insurance firms must match this mindset or risk lagging behind the insurance world.
Thanks to new technologies, including AI and machine learning, life insurers have an opportunity to do away with paper-based manual systems entirely, instead handing over this laborious and time-costly part of the process to the digital underwriter.
But evolving the underwriting process to embrace AI does not have to mean losing the human touch. If anything, in getting time – and budget – back, insurers will be able to devote more of themselves to their customers and business partners. And it can’t stop there. Continued innovation will be essential as consumers’ digital expectations mature and in using a digital underwriter, insurers will have more time to consider the industry’s big questions.
The next step for insurers is to embrace the potential of AI as a more adaptable, accessible and accurate approach for a centuries-old industry.
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