Automated Policy Management Software for Insurance

Piotr Biedacha
April 30, 2024

McKinsey & Company Estimates that there is a $15 trillion in wages for jobs that can potentially be automated, but only 5% of jobs can be automated entirely. Other tasks still require human touch.

But we say – what can be automated, should be automated. And policy management is no exception.

  • How policy management can be automated?
  • What are the potential benefits of automating policy management processes?
  • How can we help you with it?

Read on.

The Evolution of Traditional Policy Management

Traditional policy management in insurance involves manual tasks such as data entry, document handling, and direct customer interaction for policy issuance, updates, and renewals. We don't have to tell you that having physical copies of policies is a menace. 7,5% of paper documents are lost

This process is time-consuming and prone to errors due to human involvement. Policy changes require paperwork and validation, which delays response times and impacts customer service. Additionally, traditional methods often lack the ability to quickly review policies and analyze large datasets, leading to less optimized risk assessment and pricing strategies compared to automated systems.

Not to mention meeting compliance requirements, moving these papers, or uploading them to cloud.

Insurers are already creating virtual policy management assistants that guide customers through updating or renewing policies by:

  • Automating data entry from source documents into policy systems
  • Answering queries and providing status updates via conversational interfaces
  • Integrating with authentication systems for secure self-service

This enhances the customer experience while reducing operational costs.

One example is State Farm, which incorporates AI and Machine Learning algorithms to read, analyze, and save tons of documents effortlessly. It resulted in:

  • 900% increase of employees productivity,
  • around 90% cost savings during contract review process,
  • 90% less time spent on the contract.

The tools are used for:

  • ingesting documents,
  • extracting the information,
  • scoring and risk assessment,
  • digitization.

The Role of Automation in Policy Management in Insurance Industry

Automating Mundane Tasks

According to Asana's Anatomy of Work Global Index, the average employee wastes 62% of workday performing mundane tasks. 40% of employees surveyed by Smartsheet reported wasting at least 25% of their workday on repetitive tasks. Workfellow reports that an office worker usually spends 10% of their work time on manual data entry and 50% of the time updating documents.

There is a potential to automate this work. This way, your employees can shift their creative and productive powers to more strategic tasks. 

This calculation is not taking into account the churn, recruitment, and onboarding cost caused by burnout.

Reducing Human Errors

Imagine your company losing $293 million because of your employee took an accidental nap. It happened in Germany, when a bank clerk transferred over €222 million instead of just €62,40.

NASA reports that human errors are responsible for 60-80% of failures and accidents in high risk industries.

Insurers risk losing up to $170 billion in global premiums over the next 5 years. This is due to policyholders becoming dissatisfied with poor claims experiences caused by inefficient processes and switching to other carriers as a result.

Additionally, inefficiencies in underwriting processes could directly cost insurance companies another $160 billion in losses over the same 5-year period.

In total, that amounts to a potential $330 billion hit to insurers' premiums and profits stemming from operational inefficiencies in claims and underwriting over the next half-decade.

Data Gathering and Management

Entering a single document is a labor cost of $3,75, considering the clerk makes no mistake. The probability of making a mistake is 18-40%, and taking that into account, the total cost of entering a single document rises to $4,50. Insurers handle 100,000 documents per year, which makes a total of $450 million cost of labor.

It could be a nice addition to your bottom-line.

Compliance Tracking and Version Control

Fulfilling compliance requirements and tracking all the changes of specific policies (especially with policy exceptions and non-standard underwriting) is tedious, time-consuming, and inefficient. It is where automated policy management system can help too.

Benefits of Automated Policy Management Process

Workflow Automation Results in Increased Efficiency

Depending on the source, an average employee is wasting 20-30% of their work time on repetitive tasks.

Freeing up 20-30% of your employees' work time opens up some interesting possibilities.

You have a choice:

  • reduce workforce, which oftentimes accounts for 70% of overhead costs of a company,
  • shift the capacity towards the development, to gain competitive edge.

Oftentimes optimizing existing processes can be a better move than looking for bringing new business that will add to inefficiencies.

Safety, Security, and Reputation

When migrating data, cloud-based policy management systems minimize data input errors and ensure that compliance with regulatory requirements is more straightforward and cost-effective. These systems enhance the safety, security, and reputation of the entire organization by ensuring that company policies are managed with precision.

You don't have to worry about missing documents or compliance, because it's already taken care of.

Improved Customer Service

Cloud-based tools accelerate policy document processing times and enable real-time updates, enhancing customer interactions and satisfaction. Chatbots and other resources provide immediate responses to customer queries, improving overall service quality. It adds up to a potential of self-service portal, where a piece of work is "delegated" to users themselves. It has two major benefits:

  1. Your labor costs drop.
  2. Your customers feel more empowered and in charge.

It's a win-win situation.

Scalability, Flexibility and Agility

It is far easier to add and setup another machine, than to populate a new branch or team. Finding a reliable technology partner, solid software, or a robot compared to finding and onboarding a human employee is no match.

Automated systems can scale efficiently to manage increasing workloads without additional staff, supporting organizational growth while controlling operational costs. With cloud-based automation, insurance companies can quickly adapt to market changes or updates in regulatory environments. This flexibility allows for rapid updates and the ability to review and approve policies with minimal disruption.

How to Choose Policy Management Automation Tool?

Choosing the right automated insurance policy management software involves several critical considerations:

  • Identify specific needs such as policy creation, management lifecycle, and compliance. Ensure the software is compatible with existing systems and can handle your specific types of insurance products.
  • Scalability: Select software that can scale with your business growth. It should efficiently manage an increasing volume of policies and adapt to evolving business and regulatory changes.
  • Security and Compliance: Choose software that offers robust security features to protect sensitive data and ensure compliance with industry regulations and standards.
  • Integration Capabilities: The software should integrate seamlessly with other systems (e.g., CRM, accounting software) to ensure smooth data flow and maintain data integrity across platforms.
  • User Interface and Usability: Opt for software with an intuitive user interface that simplifies tasks for users of all technical levels. Effective training and support should be available to ensure user adoption.
  • Analytics and Reporting: Ensure the software provides comprehensive analytics tools to extract actionable insights from policy data, aiding in risk assessment and strategic decision-making.
  • Cost-effectiveness: Evaluate the total cost of ownership, including initial costs, implementation, training, and ongoing maintenance. Ensure the investment is justified by the efficiency gains and potential revenue growth.

An example of such software is our Data Insurance Policy Administration System. The System is a comprehensive and modular insurance software solution designed to optimize the management of insurance policies

Each module targets specific areas of policy management, offering flexibility and customization to meet the unique needs of each insurance provider, whether for Life insurance, Property & Casualty (P&C) insurance, or both. Here’s how each module benefits a potential customer:

  • Policy Processor: This module enhances the efficiency of managing policy processes across the policy lifecycle. It uses an event-based architecture to structure every action and change within the policy, making the processes transparent, customizable, and easy to modify or extend. This module handles standard policy processes like applications, endorsements, and payments and allows for the automation of selected operations, significantly reducing manual labor and increasing accuracy.
  • Policy Register: Serving as a centralized repository, this module stores all policy data, including applications and historical changes. It acts as the sole source of policy information, which simplifies policy management by providing easy access to current and past data.
  • Policy Service Module: This module enables staff to manage policies efficiently through a user-friendly interface. It supports the graphical configuration of workflow processes that enhance operational support and task automation. It ensures workflow efficiency, security and compliance.
  • Payment Module: This module automates the collection and preparation of payment data, integrating seamlessly with banking and payment systems via API, and supports both manual and automated transaction management. It simplifies the financial operations related to policy management, reducing the potential for errors and ensuring timely payments.

You can purchase all 4 modules at once, or each module separately.

Do you want to automate your policy management? Reach out and share your use case. We will take care of the rest.

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