How is the Rise of Automation Impacting Insurance Companies?
Published: Sep 14, 2016 By Sabah Karimi
Automation is one of the biggest challenges in the insurance industry since it has traditionally been such as heavily regulated industry, undergoing very minimal changes during the technology era. Today, many insurance activities are becoming automated which means there is a growing demand for both tech-savvy insurance agents and web development teams. Emerging trends, such as the development of electronic consumer applications and automated systems that screen claims for fraud are forcing the insurance industry to evolve — albeit at a slow and steady pace.
Here’s a closer look at key ways automation is having an impact on insurance companies:
Replacement or Consolidation of Agent Workforce
According to this article published in the McKinsey Quarterly, up to 25 percent of full-time positions in the insurance industry will disappear by 2015. The biggest drop is in the area of operations where we will see a workforce reduction of 46% to 33%. This means insurance companies need to think about how to retrain and manage talent so they have enough qualified staff to handle the changes of the times and stay competitive during the digital age.
Targeting Customers in New Ways
Before web-based applications were readily available and insurance companies had their own website, the ability to fully understand the customer market was limited. Today, insurance companies are able to tap into a wealth of data to learn more about the buying market, attract qualified leads, and reach out to their customers via social media and email. Automating many of these activities, such as email marketing or even social media updates, can help insurance companies expand on their marketing efforts. As a result, early adopters of technology and online marketing strategies may be able to capture more customers comfortable shopping for insurance products in the online space.
Machine Learning Applications for Data
According to this report by Deloitte, machine learning is a powerful system for detecting patterns in data. Certain types of reports can help to make accurate predictions which play an important role in the decision making process for marketing and operations. For example, a database of information about online insurance purchases can help to understand buying trends among different demographic groups. The claims department may be able to harness the value of machine learning applications to detect fraud and look for patterns of inconsistency.
New Job Creation
Even though the traditional agent workforce may be getting smaller in the next decade or two, there is the possibility of new jobs being created in the digital space as more companies build out their technology infrastructure and rely on digital analysts, online marketers and developers to coordinate web-based sales. Skilled workers with advanced knowledge in analytics, machine learning applications and automation programs will be in high demand; those with an insurance industry background may be able to command higher than average salaries.
Insurance companies are already feeling the impact of automation. Rapid shifts in the digital world and changes in consumer buying behavior are requiring many companies to adopt new systems and hire workers with technology and Internet experience. Learn more about in-demand insurance careers and jobs to plan out your future career.