COVID-19 did not just bring waves of diseases and contagious variants across the world 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 report [pdf] from Deloitte highlighted a few of the schemes proliferating as the regulatory and insurance environment adjusts from a period of intense demand and scrutiny. Among them are bogus invoices between third-party vendors that go under the radar of most verification processes.
Addressing the increase in fraud is now a new and unique driver of AI in the insurance space, even in the context of simultaneous broad digitization across the financial services space. AI capabilities like machine learning and those in larger document processing solutions stand to streamline repetitive workflows in verification and compliance processes across every sector.
Gartner reports that customer trust will soon exceed customer experience as the single foremost 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 provider is taking on new heights through demand that transcends any single marketing department’s 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 tenets of ‘trust automation’ from a company that has pioneered its presence in the insurance marketplace.
In this article, we extract two principle insights from our conversation about what ‘trust automation’ means for insurance leaders as a discipline they can bring to their organizations:
- Guaranteeing customer trust is the key to streamlining CX workflows: Ensuring that firms know customers and their claims information are trustworthy from their first introduction to the business is the easiest way to streamline workflows that make for optimal customer experiences and maximum retention.
- Finding opportunities in immediate challenges: From a tsunami of data on the horizon from IoT to other challenges – short-term digitization solutions need to focus on offering new products to customers and delivering on revenue streams never before considered.
Listen to the full episode below:
Guest: 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 began his career in consulting, working for Capemigi and other firms starting in the mid-90s, and as a business analyst for Archmea as 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 distrust. The entire digital policy lifecycle from beginning to end 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 by design. Back then, insurance providers leveraged these expectations to guarantee their minimum possible risk. Even as digitization began, large firms would open a siloed, “online-only insurance” division of their businesses to isolate the substantially increased risk of intaking digital-only documents.
In the post-pandemic insurance space, customers now expect lightning-fast experiences and services with complete data integration. As Christian puts it, the stakes for providers couldn’t be higher:
“Whenever there’s a claim, customers nowadays do expect it to have a smooth settlement, a fast payment,” Christian tells Emerj. “And if that doesn’t happen, the customer loyalty simply is not there anymore.”
From these trends appears an inherent tension in starting insurance digitization with the digital policy lifecycle, as the speed and fluidity customers expect undermines the scrutiny necessary to guarantee trust in insurance systems.
That tension is felt keenly by insurance professionals tasked with making increasingly riskier decisions about the information new customers are giving them:
“By automating a lot of these processes, we really need to support the insurance professionals and underwriters in giving back those trust decisions in real-time, at the moment that they need to make that decision. And so it’s not it’s just about, ‘Can I trust the customer?’ but ‘Can I trust the risks that’s being offered to me in this underwriting process?'”
– Co-founder and CSO of FRISS Christian van Leeuwen
What’s needed to resolve that tension – and where AI capabilities are making the most significant difference in the insurance space, according to Christian – is to move verification processes from systems of distrust-by-default to systems where the customer’s trust is already guaranteed from the very beginning.
To accomplish such a transition, AI projects in insurance and underwriting spaces must focus on developing APIs that:
- Automate all processes involving validating information from the customer on the first introduction.
- Leverage data derived from throughout the digital policy lifecycle to find trends that can minimize risk and cultivate healthier portfolios for providers.
Once that trust is guaranteed from the moment the customer steps in the door, firms “can really design their process around how they can most optimally 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 call ‘trust automation.’
Finding Opportunities in Immediate Challenges
As Christian points out, early AI and digitization projects dealing in underwriting and insurance claims face significant uphill climbs in the short term. Among them is the flood of data on the horizon from the emerging IoT – particularly in commercial insurance for small- and medium-sized businesses.
In his podcast appearance, Christian points out the development of smart buildings that will produce mountains of data that demand providers enhance their existing systems, and develop new ones, to process properly.
Christian is quick to point out, however, that in developing those systems lies opportunities and new revenue streams that will define insurance and underwriting in the encroaching age of digitalization.
Citing a use case from China, Christian describes a business where merchants and consumers make transactions 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 could point out to the customer areas of the company with previously unforeseen heightened risk exposure – and offer them embedded insurance to cover it.
Doing so, in turn, produced numerous cross-selling opportunities:
“Not only did they offer the insurance to the merchants who didn’t have [embedded] insurance before, now there was a new market. They also sold it to the ones buying from the merge, offering embedded insurance as part of the products, which they bought, with the protection that the delivery was good and high quality on it and there were no lost items.”
– Co-founder and CSO of FRISS Christian van Leeuwen