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Insurance Automation
A Guide to Over 2x Profit Growth
ScienceSoft applies 12 years of experience in insurance IT and 35 years in digital transformation services to help insurance companies automate their business processes in a secure and compliant way.
Contributors
Lead Business Analyst and Insurance IT Consultant, ScienceSoft
Head of Information Security Department, ScienceSoft
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Insurance Automation: Key Aspects
Insurance automation aims to eliminate manual workflows across underwriting, billing, claim processing, policy updating, and other insurance-related processes.
Automated insurance systems rely on advanced techs (cloud, AI, big data, blockchain, etc.) to help insurers make their business operations more efficient and ensure the company’s sustainable growth.
- Key integrations: a CRM, payment gateways, accounting software, a BI solution, etc.
- Implementation time: 10–18+ months for a custom insurance automation system.
- Development costs: $200,000–$4,000,000+, depending on the automation scope and complexity. Use our free calculator to understand the cost for your case.
- A payback period: 6–12 months on average.
Main Insurance Processes to Automate
Underwriting
Rely on AI, RPA, and image analysis technologies to automate up to 90% of application processing, risk profiling, coverage pricing, and quoting tasks and enjoy a 2–5x faster writing cycle.
Policy management
Get policy creation, updating, and renewal automated to drive a 50%+ increase in the team’s productivity and benefit from over 60% cost savings across policy administration workflows.
Billing
Eliminate 80%+ of manual policyholder invoicing, dunning, and payment tracking tasks and decrease billing costs by up to 80% while establishing 2–3x faster processes.
Claim management
Combine rule-based automation with advanced cognitive techs to intake, validate, and settle claims in minutes rather than days. Detect fraud with 95%+ accuracy using ML algorithms.
Regulatory compliance
Be 100% sure of your adherence to insurance-specific legal requirements and data protection standards with real-time compliance checks and automated compliance reporting.
According to Accenture, 80% of insurance executives rank automation, AI assistants, and ML-based analytics as the top game-changing technologies for their business. A recent survey by OZ revealed that 80%+ of insurers already employ some degree of automation across underwriting, claims processing, and policy administration. Despite the high adoption, most firms say they are at early digital journey stages and plan to increase investments in automation.
Nearly half of insurers are pursuing aggressive automation strategies to retain a competitive edge. McKinsey stresses that insurance leaders are adopting automation not only to improve their operations but also to launch new digital service models.
Key Features of an Insurance Automation System
ScienceSoft creates automated insurance systems with functionality bound to each customer’s unique needs. Below, we share a comprehensive list of the features commonly requested by our clients:
Customer onboarding and pre-qualification
- Configurable self-registration forms for individual and corporate customers.
- Automated capture and validation of customer personal and business documents using OCR, RPA, and AI technologies.
- Instant routing of suspicious and contradictory customer data pieces for manual check.
- Geography-based KYC/AML verification for new insurance customers.
- Automated customer pre-qualification against the pre-set internal requirements: age, location, income sustainability, owned asset value, etc.
- Data-driven customer segmentation by user-defined criteria: age, gender, lifestyle (for individuals), industry, location (for businesses), and more.
- Automated processing of insurance applications.
- Rule- and AI-based assessment of customer risks based on the analysis of:
- Data provided by customers.
- Data available from third-party sources (local credit rating bureaus, medical information bureaus, business registries, title registries, environmental databases, GIS and telematics platforms, etc.).
- The customer’s past insurance coverage and claims history, if any.
- Risk scenario modeling and risk impact assessment based on custom actuarial models.
- Automated calculation of individual insurance premiums based on:
- The type of insurance policy.
- Requested coverage terms.
- Customer creditworthiness, health risks, location, claim history, and more.
- AI-supported recommendations on the optimal personalized premium amounts, coverage limits, and reinsurance options for particular customers.
- Template-based generation of insurance quotes and automated quote submission to prospects.
- Customizable templates for various types of insurance policies: life insurance, health insurance, auto insurance, etc.
- Automated policy generation and submission to customers (via email, messaging apps, or a customer portal).
- Automated policy endorsement (updating customer data, coverage and premium terms).
- Rule-based policy renewal and termination.
- Instant communication of policy updates to the policyholders.
- Template-based creation of customer invoices, including multi-currency and multi-language ones.
- Calculating a customer-specific premium and applying it to the invoice.
- Signing invoices using an e-signature.
- Support of multiple payment methods, including bank transfers, credit cards, checks, e-wallets, etc.
- Automated payment processing via the connected payment gateways.
- Real-time invoice tracking by status (sent, paid, due, etc.).
- Automated aggregation and processing of claims from a customer portal, emails, phone calls, etc.
- AI-based validation of claim-supporting documents: medical images and reports, accident reports, photos or videos of damaged property, etc.
- Automated identification of fraudulent insurance claims.
- Remote damage inspection using AIoT and computer vision technologies.
- Rule-based damage estimation and claims triaging.
- Automated assignment of claim management tasks based on employees’ qualifications, availability, location, etc.
- User-defined rules for claim approval or rejection.
- Calculating the due claim payment amount based on custom formulas.
- Instantly communicating claim-related decisions to customers.
- Automated payment of approved claims.
- Automated submission of claims under the reinsured policies for settlement to the relevant reinsurers.
- Calculating and monitoring the essential metrics: underwriting, claim management, financial performance, workforce, etc.
- Configurable analytical dashboards for various user roles: sales agents, underwriting specialists, claim managers, financial analysts, etc.
- Automated generation of insurance reports.
- Scheduled and ad hoc submission of the approved reports to the required legal regulators (e.g., FIO, NAIC, local insurance authorities).
- Predictive analytics to forecast insurance demand, revenue and expenses.
- AI-powered analysis of customer behavior and web sentiment.
Customer self-service portal
- Customer self-registration, managing and updating personal or business information.
- Template-based creation of insurance applications.
- Paying premium by a preferred payment method.
- Filing and submitting claims.
- Notifications to customers about the application and claim status changes, expiring documents, etc.
- Instant messaging.
- AI-powered virtual assistant to help customers solve operational, technical, and security issues.
- (optional) A self-service insurance price calculator.
Security and compliance
- Compliance with KYC/AML and OFAC requirements, FIO, NAIC, NICB, IFRS17, CCPA, CPRA, GLBA, SOC1 and SOC2, SAMA and IA requirements (for the KSA), MCEV principles and GDPR (for the EU), NYDFS (for New York), HIPAA (for health insurance), other relevant global, local, and industry-specific regulations.
- Real-time compliance monitoring.
- Scheduled compliance reports.
- End-to-end audit trail of insurance activities.
- Permission-based access control.
- Multi-factor authentication.
- Insurance data encryption.
- (optional) Insurance data hashing, timestamping, and recording in the immutable blockchain ledger.
Important Integrations for an Automated Insurance System
Connecting the insurance solution with relevant internal and third-party systems helps improve the efficiency of insurance operations. ScienceSoft recommends establishing the following key integrations:
- For calculating the expected demand and data-driven planning of distribution and marketing activities.
- For informing the insurance teams about the planned promotions of particular insurance products.
For instant processing and real-time tracking of premium payments.
For automated recording of insurance-related financial transactions in the general ledger.
For comprehensive insurance analytics and advanced visualization and intuitive reports.
Third-party data sources
For accurate risk assessment, insurance pricing, claim validation, and damage estimation.
Communication channels
For fast and convenient customer interaction.
Success Factors for Insurance Automation
ScienceSoft’s experience shows that an ROI for the insurance automation system can be achieved in 6–12 months on average. To maximize the solution’s value for the client’s internal processes and drive faster payback from insurance business process automation, we always cover the following important factors:
End-to-end automation
To eliminate manual workflows across the entire insurance cycle, from underwriting, through claim processing, to policy renewal.
AI-powered analytics
To get data-driven risk assessment and optimal, risk-based insurance pricing, promptly identify insurance fraud, and more.
Regulatory compliance
To process insurance data in accordance with up-to-date legal requirements (AML, FIO, NAIC, NYDFS, HIPAA, etc.).
Proper user training
To help insurance teams quickly learn how to apply automation to streamline their daily tasks.
Make sure your automation system and the data it uses are adequately secured against known and emerging cyber threats. Multi-factor authentication, role-based access controls, encryption of stored and transferred data, and intelligent user behavior analytics are examples of robust mechanisms for protecting your sensitive data and strengthening the system’s compliance posture.
Explore ScienceSoft’s Featured Success Stories
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Ways to Automate Insurance Operations
There are three main approaches to automating insurance processes, each having its benefits and limitations. Below, ScienceSoft provides a high-level comparison of the three. Our insurance IT consultants can help you define the more feasible option for your business situation.
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Ready-made insurance suite |
Platform-based insurance software |
Custom insurance automation system ScienceSoft recommends |
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Implementing market-available insurance software, which typically features automated application processing, risk scoring, quoting, claims processing, and policy administration and provides task monitoring dashboards. |
Building an insurance solution with customizable, easy-to-deploy process automation rules based on a low-code platform, e.g., Microsoft Power Apps, Appian, or Pega. |
Building custom automated insurance software to get all necessary functional and non-functional capabilities and digitally transform insurance workflows of any complexity. |
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Pros
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Cons
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Which Approach to Insurance Automation Fits Your Needs Best?
Answer a few simple questions and find out whether you should opt for a custom solution or a pre-built tool.
Do you need to automate specific or innovative insurance types, e.g., medical malpractice, kidnap and ransom, mortgage, pay-as-you-live life and health, or usage-based auto insurance?
Do you need to automate specific insurance tasks, e.g., risk scoring based on custom criteria, claims triaging based on custom rules, or loss inspection in hard-to-access locations?
Do you want AI-supported insurance automation, e.g., to leverage fully automated document processing, accurately predict risk events and losses, get suggestions on optimal premiums, or detect fraudulent claims?
Do you want to automate insurance tasks using blockchain smart contracts, enable premium payments in crypto, or get end-to-end traceability of insurance transactions and events?
Do you need insurance software providing compliance with the latest insurance regulations of the regions you operate in?
Do you need to integrate your automation solution with multiple back-office systems, legacy tools, or IoT-enabled software-hardware systems?
Do you need a solution offering advanced cybersecurity mechanisms (e.g., intelligent detection of cyber threats and instant enforcement of protective measures)?
Do you need an insurance solution with various interfaces for different roles (e.g., underwriters, policy administrators, claim specialists, analysts, customers/brokers)?
Do you plan to evolve the automation solution with new functional and non-functional capabilities in order to adjust it to changing business and legal requirements?
Do you have large teams involved in insurance processes and look to avoid the software fees associated with the per-user subscription model?
Please tell us a bit more about your needs
Answer at least 3 questions to get results.
You can go with off-the-shelf insurance software
Looks like market-available solutions are a viable option to meet your automation needs. Turn to ScienceSoft if you need help with choosing the optimal ready-made tools, their implementation, customization, or integration with your existing systems.
You definitely should consider custom development
A tailored insurance automation solution will help you reap the unique benefits that market-available software cannot offer. Turn to ScienceSoft to get the detailed assessment of a custom system’s feasibility for your business situation.
Custom insurance software is your best choice
Looks like market-available automation tools don’t fit your specific requirements and won’t be able to provide the expected operational and economic feasibility. Turn to ScienceSoft to get a consultation on custom insurance software and receive cost and ROI estimates.
Insurance Automation Costs
The costs and timelines of implementing custom insurance automation solution vary greatly depending on:
- The number and specifics of insurance processes (e.g., underwriting, billing, claim management, etc.) to automate.
- The functional complexity of the automation system, including the implementation of features powered by advanced techs (e.g., blockchain for insurance).
- Performance, availability, scalability, security, compliance requirements.
- The scope and complexity of integrations.
- The number of user roles.
- The sourcing model (full outsourcing, team augmentation, or all in-house) and team composition.
From ScienceSoft’s experience, an insurance automation project for an upper-midsize company may cost around $200,000–$1,500,000. Large enterprises with complex insurance processes should expect to invest $1,000,000–4,000,000+.
Want to know the cost of your insurance automation solution?
Key Benefits of Insurance Automation
Higher efficiency of insurance teams
Automated systems let insurers establish straight-through customer onboarding, risk evaluation, pricing, policy issuance, and claim decision-making flows. This brings up to a 50% reduction in employee workload alongside a 25–35%+ increase in the teams’ productivity.
Faster insurance processes
AI-supported insurance document automation allows insurers to process multi-format applications, risk evidence, and claim proofs over 50x quicker, which accelerates quote submissions and claim decisions by up to 12x. Insurance reports can be produced 2.5–75x faster.
Operational cost savings
By automating core servicing tasks, insurers benefit from a 10–25% decrease in operational expenses due to removed manual routines and enhanced team performance. Employing an AI-powered insurance solution can bring a 30–50% cost reduction.
Minimized fraud-associated losses
Leveraging intelligent automation tools for insurance fraud detection can reduce fraud-associated losses by up to 90% due to the timely prevention of illegitimate services, undue claim payouts, and malicious employee transactions.
Twofold growth in business profits
Insurance automation at scale can help large insurers achieve up to a 50% increase in business profits over five years due to optimized operational costs, minimized risks, and maximized revenue potential enabled by new digital service models.
Enhanced customer experience
Digitalizing customer interactions and bringing automation into the insureds’ self-service processes helps elevate customer experiences and drive a drastic increase in customer satisfaction, promising up to a 4% increase in insurer revenue and EBIT growth rates.
Insurance Automation with ScienceSoft
In insurance software development since 2012, ScienceSoft provides a full scope of required services to help insurance companies plan and introduce robust business process automation.
Insurance automation consulting
We design an insurance automation strategy tailored to your needs and accurately plan its launch. You get optimal features, architecture, and tech stack for your automation system and a detailed project plan for predictable implementation.
Implementation of insurance automation
We plan and develop a new insurance automation solution or upgrade your existing insurance tool. You benefit from smooth software integration with the required corporate and external systems. We can also conduct user training in your preferred format.
Our Clients Say
ScienceSoft demonstrated a deep understanding of our requirements, and their developers needed minimal supervision, keeping us updated on progress and potential hurdles along the way. What stood out was ScienceSoft's proactive suggestions for cost-saving architecture design and tech stack solutions. Their input ensured we stayed within budget without compromising on software quality. The value we derived from partnering with ScienceSoft is definitely worth the investment.
Jen Dalton, Chief Information Security Officer at Brush Claims
About ScienceSoft
ScienceSoft is a global IT consulting and software development company headquartered in McKinney, Texas. Since 2012, we design and build robust solutions to help insurance companies automate their business processes. Being ISO 9001- and ISO 27001-certified, we apply a mature quality management system and guarantee that cooperation with us does not pose any risks to our clients’ data security. Our mission is driving success for our insurance clients no matter what.