Intelligent resilience: 3 strategies for persevering through uncertain times

June 19, 2023

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The insurance industry is, of course, not immune to the tumultuous economic climate in which businesses are operating today. Carriers are feeling the adverse impact of the ongoing shocks on their brands, workforce and financial performance. During periods of unrest like the one we’re currently experiencing, the natural tendency is to double down on stability and maintain the status quo. Although it may seem counterintuitive, this is actually prime time for forward-thinking players in the insurance space to make robust decisions and raise their risk appetite.

In this blog, I’ll explore three areas where carriers should focus their efforts in order to drive organizational change and promote resilience in the face of uncertainty.

Automation technology

Many aspects of the claims process have gone unchanged for decades. With ongoing advancements in insurtech, like straight-through processing, robotic process automation (RPA), artificial intelligence (AI) applications and more, carriers today have an ideal opportunity to reset their operating models using a technology-led agenda.

Elements of the claims journey are ripe for automation — which, when implemented at scale, can reduce the number of touchpoints and related delays, promote greater efficiency, deliver cost savings, and enhance the end-user experience. A great example is our innovative, automated solution to help carriers handle high volumes of water losses using a no-touch/low-touch approach to human intervention on low-complexity residential property claims. Whether it’s automating intake, eligibility validation, communication with underwriting systems or other pieces of the claim lifecycle, tech-driven process disruption can have a transformative impact on insurance services organizations and how they take care of policyholders. We further hope that Sidekick, Sedgwick’s newest application leveraging generative AI to supercharge how our claims professionals perform their daily work, will do just that.

Certainly, developing and implementing automation tools (or partnering with the right vendor to do so) involves significant upfront expense; a strong and well-thought-out business case will help ensure it’s a smart move for the business and the right step change for the time. This type of analysis generally prompts forward-focused thinking, further future-proofing new operating models and boosting resilience in a post-COVID dynamic risk culture. The cost savings yielded from automation in the long run can be used to reinvest in more technology or fuel other leading-edge agendas, such as mergers and acquisitions; diversity, equity and inclusion (DEI); and environmental, social and governance (ESG) efforts — creating a continuous loop of progressive change.

Human capital

While automation can handle some heavy lifting in the claims process, even intelligent technology is agnostic and therefore no substitute for human connection. Insurance outcomes have deeply personal consequences, so a caring human touch should not be viewed as dispensable.

Expanded use of technology in claims — combined with economic inflation, geopolitical tensions and other disruptive factors — may have some insurance professionals concerned about their job security. With a looming talent crisis as many seasoned adjusters look to retire, as well as a persistent labor shortage, employee retention and development is critical to the sustainability of leading organizations and the insurance industry as a whole. Giving people challenging assignments in which they can make a meaningful difference for others (as opposed to rote “check the box” tasks, which can often be automated) helps employees grow in their careers, builds loyalty, and improves claims outcomes.

Amid all of today’s uncertainty, empathy in claims is needed more than ever. The implementation of greater automation in the claims process must be coupled with strong execution, clear communication, and strategic plans for redeploying human capital in ways that leverage their much-needed soft skills. Carriers should be developing their workforce to establish a harmonious relationship with technology and ensure that the appropriate intelligent resource — whether automated or human — is deployed on the right claims at the right time.

Alternative models

A third complementary strategy for solving the riddle of how to build intelligent resilience is by adopting new approaches to managing risk. Perhaps the most popular is by forging strong and trusted relationships with outside partners who can support your organization — before, during and after periods of unrest. Partnerships offer the benefits of their expertise, as well as their investments in technology and human capital that can bolster those made by your organization. Well executed outsourcing models can help insurance carriers better serve niche markets, stay on top of emerging trends, weather talent shortages, promote efficiency, and focus on their core competencies.

Another alternative model that merits mentioning here is the use of captives, which are wholly owned subsidiaries that provide insurance to their non-insurer parent companies. The current hard market has given rise to new captives, driven existing captives to adopt more data-led strategies, and shined a light on the need for more effective handling of smaller claims to better manage risk.

The post-COVID economic storm in which we find ourselves may be a long one, but prompt and decisive action can yield real upsides for the insurance industry. When budgets are tight, the prospect of change is that much scarier and the risks that much higher. The choices are to simply retreat and focus on the status quo, or to look to the sky above and see beyond the clouds. With the right mix of forward-focused automation, human capital and alternative risk management solutions — and balancing it with an understanding of where innovation may not be the right fit for traditional establishments — insurance organizations can persevere and even thrive during periods of unrest by adapting their models to their unique markets and customer bases.