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Robo-advice must work in tandem with insurance employees

Insurers looking to employ the use of robo-advice must ensure the technology works in collaboration with, not opposition to, the current workforce.

Robotic automation is topical within financial services, with several markets looking to introduce robo-advisory facilities to their propositions. Among the markets already investigating the use of the technology are retail banking and wealth management, with insurance once again arriving late on the scene.

Still, better late than never, and insurers have already started to develop autonomous features to enhance their operations. But it is important that the tech takes a specific form in order to provide an adequate service to insurance customers, and also to protect the workforce.

The role of robotic automation within insurance is to help the flow and speed of processes. However, the question is how does the use of robotic technology make internal processes seem more seamless, and what happens to the human factor in both the back- and front-office?

Robotic automation can take one of three models within insurance:

  • Robotic tech completely replacing or overhauling a current service that was previously delivered by an employee workforce.
  • The rebuilding of several structures with technological elements.
  • The creation of a robotic feature that contains humanistic elements.

The main purpose of robotic technology is to reduce the overall reliance on manpower to drive the business. With this in mind, there will always be at least one part  of the business that does not stand to benefit from the introduction of autonomous tech. As an example, in January 2017 Japanese insurance firm Fukoku Mutual Life Insurance announced it had decided to replace several of its employees with artificial intelligence in an attempt to increase speed and efficiency when calculating claims. The new technology is based on IBM’s Watson Explorer, which allegedly has the ability to think like a human, and analyze and interpret vast quantities of data at a much quicker rate.

While the introduction of the new tech is likely to save on costs for the business and reduce the time taken to perform certain tasks, there is an increased likelihood of worker layoffs, which could damage employee sentiment due to the fear of job losses and redundancies. Coupled with this is the fact that dealing with complex risks often requires a multifaceted approach. The cover needs to be tailored, precise, and individualized to the party being insured. This is especially the case in commercial insurance, where large-scale risks can be complicated and require the services of a broker to find the optimum level of cover.

On balance, robotic automation is ultimately autonomous, meaning it is governed by a specific set of rules and functions. As a result, the tech is likely to be dysfunctional when operating out of its comfort zone, such as working to insure risks where there is no familiarity or where there is a certain degree of ambiguity. Therefore, the third of the three models listed above is recommended for insurers.

Even with the Fukoku Mutual Life Insurance example, where the technology employed was simply used to process information in relation to claims, data can still be misconstrued or misinterpreted, which could impact on pay-outs for the customer – especially if other, external factors are not accounted for when a claim is made. An employee supporting the tech used in this process would help reduce the chance of this occurring.

By Thomas McCourtie, General Insurance Analyst

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