Not only did COVID-19 bring waves of disease and infectious variants across the globe starting in early 2020 – a tsunami of fraud soon followed the broad sweep of a pandemic that would engulf the global insurance industry.
A recent one report [pdf] of Deloitte highlighted some of the schemes that are proliferating as the regulatory and insurance environment adjusts to a period of intense demand and scrutiny. Among them are fake invoices between third-party vendors that go under the radar of most verification processes.
Addressing the rise in fraud is now a new and unique driver of AI in the insurance space, even in the context of simultaneous broad digitization opposite the financial services space. AI capabilities such as machine learning and those in larger document processing solutions can streamline repetitive workflows in verification and compliance processes in every sector.
Gartner reports that customer trust will soon surpass customer experience as the single leading positioning term for marketing differentiated services. In other words, the idea of building systems that ensure trust from a customer’s first interactions with a supplier is taking on new heights through demand that surpasses any marketing department. positioning language.
In an interview with Friss co-founder and CSO Christian van Leeuwen on the AI in Business podcast, Emerj takes a closer look at the principles of ‘trust automation’ from a company that pioneered the insurance market.
In this article, we extract three principle insights from our conversation about what ‘trust automation’ means to insurance leaders as a discipline they can bring to their organizations:
- Guaranteeing customer trust is key to streamlining CX workflows: Ensuring that firms know that customers and their claims information are reliable from their first encounter with the business is the easiest way to streamline workflows that ensure optimal customer experiences and maximum retention.
- Find opportunities in immediate challenges: From a tsunami of data on the horizon of IoT to other challenges – short-term digitization solutions must focus on offering new products to customers and delivering revenue streams that have never been considered.
Listen to the full episode below:
Gas: Christian van Leeuwen, Co-founder and CSO of FRISS
Expertise: Insurance, underwriting, strategy, risk management
Brief recognition: Before founding FRISS in 2006, Christian worked across financial services and technology spaces. He started his career in consulting, working for Capemigi and other firms starting in the mid-90s, and as a business analyst for Archmea when FRISS got off the ground.
Streamlining CX workflows by guaranteeing customer trust first
Before automation, insurance professionals traditionally built their workflows on a foundation of mistrust. The entire digital policy lifecycle from start to finish still depends on verifying information brought to the business by the customers, even today.
Yet long before COVID, customers expected service systems to be bureaucratic and pedantic. At the time, insurance providers used these expectations to guarantee their minimum possible risk. Even as digitization began, large firms would open an “online-only insurance” section of their businesses to insulate the greatly increased risk of ingesting only digital documents.
In the post-pandemic insurance space, customers now expect lightning-fast experiences and services with full data integration. As Christian puts it, the stakes for suppliers couldn’t be higher:
“When there is a claim, customers these days do expect it to have a smooth settlement, a quick payment,” Christian tells Emerj. “And if that doesn’t happen, the customer loyalty is simply not there anymore.”
These trends reveal an inherent tension in the beginning of insurance digitization with the digital policy lifecycle, as the speed and fluidity customers expect undermines the scrutiny needed to guarantee trust in insurance systems.
That tension is felt keenly by insurance professionals who are tasked with making increasingly risky decisions based on the information new clients give them:
“By automating a lot of these processes, we really need to support the insurance professionals and underwriters to return those trust decisions in real time, at the moment they need to make that decision. And so it’s not just about: ‘Can I trust the customer?’ but ‘Can I trust the risks presented to me in this underwriting process?’”
– Co-founder and CSO of FRISS Christian van Leeuwen
What is needed to resolve that tension – and where AI capabilities make the most significant difference in the insurance space, according to Christian – is to shift verification processes from systems of distrust by default to systems where the customer’s trust is already guaranteed from the very beginning start.
To achieve such a transition, AI projects in insurance and underwriting spaces should focus on developing APIs that:
- Automate all processes that involve validating customer information on first launch.
- Leverage data captured throughout the digital policy lifecycle to find trends that can reduce risk and grow healthier portfolios for providers.
Once that trust is guaranteed from the moment the customer walks in the door, firms can “really design their process around how they can best support the customer experience,” says Christian. Guaranteeing that trust through AI capabilities is what FRISS and a growing crowd of voices in the insurance space are calling “trust automation.”
Find opportunities in immediate challenges
As Christian points out, early AI and digitization projects dealing with underwriting and insurance claims face significant uphills in the short term. Among them is the flood of data on the horizon from the emerging IoT – especially in commercial insurance for small and medium-sized enterprises.
In his podcast appearance, Christian points to the development of smart buildings that will produce mountains of data that will require providers to improve their existing systems, and develop new ones to process properly.
However, Christian is quick to point out that in the development of those systems lie opportunities and new revenue streams that will define insurance and underwriting in the encroaching age of digitization.
Referring to a use case from China, Christian describes a business where merchants and consumers transact via an online payment platform where services are offered.
Once the insurance provider had a 360 view of the entire business through trust automation, they were able to pinpoint customer areas of the company with previously unforeseen increased risk exposure – and offer them built-in insurance to cover it.
Doing so, in turn, produced numerous cross-selling opportunities:
“They didn’t just offer the insurance to the dealers who didn’t have it [embedded] insurance before, now there was a new market. They also sold it to those who bought from the merger, offering embedded insurance as part of the products they bought, with the protection that the delivery was good and of high quality on them and that there were no lost items. “
– Co-founder and CSO of FRISS Christian van Leeuwen