Digital growth a significant part of insurance industry’s success

The insurance industry is possibly the final financial services frontier for digital transformation. The industry is widely perceived as inherently cautious in nature, conservative, and resistant to change. But that has been changing, at least when it comes to technology.

Early adopters of automated claims management systems gained a competitive advantage over their peers and that led others to move swiftly in an effort to catch up. Today, new technologies are enhancing industry efficiency across a range of areas from AI assisted risk pricing and product marketing to end-to-end enterprise resource planning solutions.

One company to embrace new technology with alacrity is Hiscox Ireland. “We have a committed focus to evolve with the digitising world,” says Ciara Weldon, development underwriter with Hiscox Ireland. “The evolution of our digital capabilities is something we have outlined as a key priority and a crucial part of our growth plans over the next five to 10 years. Hiscox Ireland is committed to helping our brokers self-serve and in turn, increase our e-trade business in 2021 and beyond.”

The company has just launched the Hiscox Online Platform (HOP), a dynamic new software tool and e-trading platform that provides a more streamlined, automated solution for brokers. “HOP increases the speed of turnaround for quotes, allows brokers to bind instantly, and combines multiple products into one policy,” says Weldon.

“This new platform encompasses a new technology for Hiscox and has mutual benefits for both our brokers and for us internally,” she continues. “It will remove the need for us to double key risk information and will automate that process. Ultimately, this platform will improve how we do business and enable our brokers to provide top-notch service to their clients.”

The Covid-19 pandemic has had an impact on the company’s digital agenda. “Like the majority of businesses, we had to adapt to working remotely and learn the tools of the trade that are involved to do this effectively,” Weldon notes. “We also completely refocused on how we carry out internal training and development and introduced gamification. Through a custom-built simulated insurance world, Hiscox employees can now experience online learning in a virtual world, where important skills are taught, and underwriters are challenged with scenarios that reflect real-life challenges in the insurance industry.”

Online offerings

The company has plans to expand its online offering by adding new products to the platform and eventually growing HOP to become a full-cycle platform for broker partners. “This will allow brokers to transact with us digitally for not only new business, but for renewals and mid-term policy changes,” Weldon explains. “This will be a first for Hiscox Ireland and will further align with our five to 10-year strategy of evolving the way we do business through digital means.”

One way in which the pandemic manifested for the insurance industry was a massive increase in customer contacts, according to Cal Muckley, professor of operational risk in banking and finance at the UCD College of Business. “When the pandemic struck, the insurance sector was particularly exposed with a huge volume of claims and enquiries coming in from customers,” he notes. “It was a major task to process all the contacts from customers and look at the exposure and exclusion clauses. Ten years ago, that would have been a manual task and that takes time, reduces customer satisfaction, and produces errors.”

The industry has had to look at automation due to the huge volumes of business it handles, he points out.

One of the key issues faced has been the nature of insurance contracts. “They tend to be unstructured and are not easily read by machines,” says Muckley. “The industry is starting to make them more understandable by using natural language processing (NLP) and machine learning. Work is also being done to standardise forms and contracts to help machines get through them quickly. By speeding this up you will improve customer experience.”

But the use of machine learning goes much further than simply speeding up processes. “Machine learning is really good at looking at what documents mean but it goes beyond that. The algorithms need to be able to pick up nuance. That’s where NLP comes in. The industry can always write down rules and tell the machine to look for every contract that insures a business against a certain loss and has certain exclusions. Computers can run through all these things, but they can make a lot of errors. What machine learning can do is devise its own rules. That’s where we move into the area of artificial intelligence. We will increasingly see technology substituting and at least supplementing human inputs.”

Irish technology

Anew wave of Irish technology companies is at the forefront of this digital revolution in the insurance industry. "We have an interesting confluence of a very strong international financial services sector and a young, vibrant indigenous digital technology industry and that has seen a number of Irish companies moving into the emerging insuretech space and Enterprise Ireland has been helping them grow and scale internationally," says Enterprise Ireland senior market adviser Jack Finucane Clarke.

One of these companies is CodeEast which has developed an insurance automation solution which simplifies the process for onboarding new customers, underwriting and so on. "They have got some great clients already in both the underwriting and broker communities and have just signed a deal with the Sychrono Group property and workers compensation underwriter in the US. Hopefully that will be the first of many."

Another company he points to is Unitek:AI which provides automation solutions for the full range of different workflows in insurance companies. "The solution can automate claims, applications, initial onboarding and so on but the secret sauce is that it integrates with the legacy systems that are already there. It can also integrate with Salesforce and HubSpot and so on, but insurers are inherently conservative and don't want to run the risk of losing anything."

Digital solutions will play an integral role in how the insurance industry operates in future, according to Weldon. “Being able to adapt to change is a key part of being successful in insurance and investing in improving technologies is a big part of this. Hiscox is clear, that over the coming years, digital growth will be significant in our success.”