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How insurance carriers can prepare for the COVID-19 impact

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Insurers will face several strategic and operational challenges as a result of the coronavirus pandemic. Social distancing has forced in-person interactions to come to a standstill, making insurance sales, marketing and business-development efforts more challenging. Insurers are being forced to interface with their insureds virtually, servicing them through 100% home-based call centers. Increased instances of fraud and malfeasance in business dealings are a threat to the bottom line.

The economic effect of the COVID-19 pandemic is widely expected to be long lasting, even though the risk exposure may peak and subside relatively quickly. To prepare for this sustained environment of slower growth, market volatility and ultra-low interest rates, insurers need to fire on all cylinders to maintain earnings in the short term and solvency in the long term.

Most important, they will need to do so with scaling of existing resources and without the luxury of building out capacity. This is where small automation enabled by artificial intelligence can help. 

Insurers in the United States should use four major levers to sustain earnings in their existing business models and look to applying intelligent automation and AI.

 

Lever

Opportunity from intelligent
automation and AI

Drive engaging customer
experiences

Personalize the experience at scale

Drive proactiveness and
provide great service

Streamline underwriting
and improve pricing

Take out cost and reduce manual efforts

Fine-tune risk-based pricing

Improve distribution
effectiveness

Enable direct-to-consumer in a
cost-effective manner

Enable my agency network

Drive self-service claims
and reduce claims exposure

Streamline claims processing

Reduce claims fraud

 

While insurance companies have launched business-continuity planning and crisis-management efforts to negotiate the short term, they will also need to pull in their cost structures and start laying the groundwork for when the economic conditions rebound.

Leveraging advanced analytics and AI to help with the coronavirus’ economic impacts will allow insurers to handle the situation here and now. For example, manually analyzing policies and claims for coronavirus impacts and settlement may not be practical given the time criticality. AI can help insurers streamline and accelerate policy and document review processes, and proactively surface policies likely to generate claims.

Coronavirus-induced mortality and morbidity analysis is another area where insurers can leverage AI to analyze their business books to surface such exposures. And fraud will be an unwelcome accompaniment of the current crisis. Insurers are already noticing an uptick in underwriting and claims fraud — an area where AI can help in detection and streamlining investigation. 

As insurers start preparing for the post-pandemic new normal, AI will help enable new operating models and ways of working. For example, insurers are preparing for 100% home-based call centers. In this situation, customer service agents will be challenged to have full customer and insured context to effectively serve high call volumes.

Further, cross-channel and increasing digital interactions mean service agents will need a complete real-time view of customer profiles. AI-enabled insurance agents assist capabilities to augment servicing agents and insured self-service and class deflection capabilities will enable insurers to provide cost-effective customer service at scale.

To be successful with advanced analytics and AI, businesses will need to start laying the groundwork around data and organizational AI capabilities. While it may be tempting to target data and AI capabilities as part of their cost-cutting efforts, insurers should take a more measured approach.

AI and related data capabilities are differentiating capabilities, and insurers should invest, not cut, resources in building data and AI capabilities to be prepared for the post-pandemic world. Indeed, AI can even help create a self-sustaining loop whereby tactical AI opportunities can free up capital and resources for subsequent investment.

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Max Kanaskar is AI Advisor (Financial Services) at CognitiveScale.