August 2023

Pioneering automation in the insurance sector

Insurtech Digital speaks to Duco’s Head of Insurance Jesse Power, discussing ways Duco is helping proliferate automation in the insurance sector, the current barriers to automation adoption, use cases of automation today, the rise of AI, and how to tackle data security issues.

Tell us about Duco, how is it helping clients in the insurance industry?

Duco is a data automation company, revolutionising how insurance companies manage their mission-critical data across their organisation.

Duco does this by providing a no-code SaaS solution that utilises the power of artificial intelligence to transform operational processes and ultimately allow our customers to better manage their data.

Insurance customers in the UK and around the world are leveraging Duco’s platform to automate data processes across different departments and use cases, including claims processing & payments, financial reporting, accounting & settlements, and investment operations, and to establish risk and data controls around their regulatory reporting frameworks such as SII and IFRS 17.

Duco enables our insurance customers to achieve this automation while also maintaining control and transparency over their data.

This is critical in today’s highly regulated environment, where insurers are looking to gain a competitive advantage through automation and the adoption of the latest technologies while also ensuring controls and governance are in place to protect customers’ interests. 

Through advanced automation, Duco aims to assist insurance companies in adapting to the rapidly evolving digital landscape while also achieving their business goals in today’s challenging environment.

What are some of the biggest challenges you see today preventing full-scale adoption of automated solutions in insurance?

Unlike other sectors within financial services, only in more recent times are we starting to see more widespread adoption of new technologies and automated solutions within insurance (SaaS is still a new concept to many!). There have been several reasons for this, but these are starting to dissipate. 

Many insurance companies rely on outdated, on-premise technology platforms that are not easily integrated with the modern toolkit. In addition, Excel and manual spreadsheets are still the go-to tools. 

Another challenge I often see is simply culture and mindsets. Change, even if for the best, takes time and requires effort and cost.

The retraining of staff, evolving operating models, embracing new ways of doing things, and investment in new technologies, can all be met with some resistance. In particular, this initial investment in upgrading systems and implementing new technologies can have significant upfront costs.

However, the opportunities and longer-term cost savings this investment can unlock are immense and businesses can no longer afford to miss out on this opportunity. 

Times are most definitely changing, and in a world driven by data and technological advancements such as generative AI, insurance leaders today know that you need to evolve and adapt or run the risk of being left behind.

What are some specific examples of how automation is being used in different aspects of the insurance sector, such as claims processing, underwriting, and customer service?

Automation is now playing a significant role in transforming many aspects of the insurance sector. Automation is being used to enhance claims processing by streamlining data collection, verification, assessment, and payment.

This is driving better customer outcomes – like faster claim settlements and payments – which should always be at the forefront of executives’ decision-making, and ultimately lead to improved customer satisfaction.

A great example of this is the insurtech Lemonade which broke a world record earlier this summer by settling an insurance claim within two seconds by using AI and machine learning.

Underwriting is another key area where automation is being widely deployed. Underwriters are heavily reliant on historical information and data, and insurers are leveraging technology and automated solutions to analyse large volumes of data, assess risks, determine appropriate premiums, and issue quotations. 

There are many other areas where automation (often through the use of connected data processes, machine learning, and AI) can be deployed to enable transformation: operations, data quality and controls, customer support, fraud detection/AML, and KYC.

This transformation leads to a reduction in costs, enhanced efficiency, and ultimately improves the end customer experience.

With the rise of artificial intelligence, how can insurers strike a balance between automated processes and maintaining a human touch in customer interactions?

I think it is important to ask ourselves: what can we automate vs what should we automate?

The end customer should be at the forefront of this debate and the impact on the customer experience should drive the decisions insurers make.

Although AI can bring many benefits and improve many aspects of the insurance process, a balance will be needed. Customers will demand this. 

For example, many middle office and back office processes where there is little customer interaction can and ultimately should be automated. This will lead to greater efficiencies, cost savings, and better customer outcomes.

However, customer-facing functions such as sales, claims processing, and customer support in particular will always require some level of human involvement and oversight.

Data security and privacy are critical concerns in the digital age. How are insurance companies addressing these issues while leveraging technology and automation?

With the move towards SaaS business models and cloud technology, insurers have had to implement robust cybersecurity measures to safeguard customer information and prevent unauthorised access. This requirement is often driven by regulation – data protection regulations such as GDPR for example.

Insurance companies also need to secure data transmission and data storage, usually through encryption and other protective measures.

Again, this is made much easier when deploying state-of-the-art cloud architecture when compared to legacy, on-prem technology.

Once encrypted and protected, data can be shared seamlessly across the cloud enabling better system integration and automation. You can see why the insurance industry as a whole is moving towards a SaaS operating model!

About Jesse Power

Jesse Power is Insurance Director at data automation company, Duco. Jesse graduated from University College Dublin with a degree in Actuarial Science and Finance. He began his professional career at Millman as an Actuarial Consultant before moving to Moody’s Analytics as Director and Sales Manager for Insurance Solutions across Europe and Africa. Earlier this year, Jesse joined Duco and was tasked with further advancing the insurance offering and strategy, and collaborating with existing clients including WTW. Jesse is a Fellow of the Institute of Actuaries (FIA) and a Chartered Enterprise Risk Actuary (CERA).

Originally published on Insurtech Digital.